Solving the Supply Chain Planning Puzzle
The variety of products available through a growing number of distribution channels is truly amazing. Competition between brick and mortar and e-commerce retail channels, often within the same company, has led to a proliferation of products and services. In fact, on a recent trip to a Nike store I explored the NIKEiD program they launched a few years ago that allows customers to customize their footwear. Once configured, your customized shoes are produced and delivered to your house in a matter of a couple of weeks.) I can’t wait to receive my Michigan State themed shoes — GO GREEN, GO WHITE.)
Delivery of “make to stock” products to a home or business is now available within hours of making a purchase. A growing number of connected, smart devices that have the capability to anticipate the need for a product are available for purchase. Consider the smart refrigerator that orders a gallon of milk based on the quantity of milk in the refrigerator and its average consumption. Consider the smart printer that orders replacement ink cartridges based on amount of ink remaining and an average use rate. Furthermore, 3-D printers are becoming more common allowing companies and consumers to make their own products on-site. What’s next? Products beamed right into your house. Beam me up Scotty!!
Back to reality, today’s manufacturers face a long list of difficult supply chain challenges including increasing demand variability, inventory proliferation, manufacturing capacity constraints, increasing risks both nature and human based, more environmental compliance regulations, intense global competition, increasing customer expectations and a shortage of talent. To survive in today’s highly competitive global environment, manufacturers need to piece together the many parts of the supply chain puzzle to lay the foundation for more mature capabilities in the future.
An estimated, 75% of available supply chain data originates from outside the ERP system. Complexity opens risks of miscommunication and disruptions, often from incorrect or incomplete data. Clean and consistent data is required to harness the power of investments in analytics, digitization, optimization, machine learning, big data and other advanced supply chain capabilities. A supply chain Master Data Management (MDM) solution provides consistent, harmonized, standardized and actively managed data from across the extended supply chain.
Accurate demand forecasts lay the foundation for an effective supply chain. With greater forecast accuracy comes greater predictability ensuring downstream supply chain processes run smoother at less cost. To be successful at demand planning requires an in-depth knowledge of your business, experience forecasting your products, and an advanced demand planning solution. Demand planning solutions use science to automatically apply a variety of forecasting methods in an unbiased way to create forecasts for all stages of a product’s life cycle.
Manufacturing facilities are pressed by market demand to provide greater product variety and shorter delivery times. Shifting to production lines that are more flexible and closer to customer demand helps produce a greater variety of products with shorter lead times with smaller batch sizes and more frequent change overs. However, multi-plant sourcing and scheduling increases complexity and the need for enabling technology to develop an integrated plan for both aggregated levels of production and site level production to meet customer orders.
Eliminating excess and obsolete inventory is a priority for many manufacturers. Effective inventory reductions are best achieved by synchronizing demand forecasts, inventory quantities, and supply capacity throughout the extended enterprise. Multi-echelon inventory optimization replaces rules of thumb with science to optimize where and how much inventory should be held across the extended supply chain.
Many manufacturers find it extremely challenging to align supply capacity to variable demand, while meeting corporate objectives. Marketshare can be won or lost based on how well a company predicts and reacts to demand shifts. A well run Integrated Business Planning (IBP) process supported by an advanced IBP solution can mean the difference between success and failure. Companies that take a spreadsheet driven approach spend too much time manipulating data and not enough on value-adding activities.
Manufacturing supply chains have many moving parts, each with their own challenges and potentially conflicting objectives. Only a scalable, interoperable supply chain planning and optimization platform can ensure a company’s supply chain performance is optimized.
For more information download the Logility E-Book, “Solving the Supply Chain Planning Puzzle: 6 Capabilities Every Manufacturer Needs.” As always I welcome your thoughts and comments at firstname.lastname@example.org.