Supply Chain Management
Supply chain management is not a new concept for manufacturers and it is an easy concept to understand when reduced to its most simplistic level: synchronizing supply (production capacity and inventory) with demand (orders and forecasts).
Supply Chain Management (SCM), supported with the right business processes and facilitating technology, positions manufacturers to know how and when to fulfill orders profitably. SCM increases operational flexibility and responsiveness while it reduces costs and improves customer service.
With these benefits, no wonder that a recent Industry Week Magazine survey of manufacturing executives found that 91 percent of them ranked SCM as either “very important” or “critical” to the success of their business. This positive perception of supply chains is supported by the size of investment companies have made. In 2006 alone, industry analysts estimate that manufacturers spent $5 billion on supply chain management software.
Unfortunately, few manufacturers have seen the benefits of this investment. In fact, the same Industry Week Magazine survey found that a mere two percent of executives ranked their supply chains as “excellent.” Even worse, when asked what steps they were taking to improve their supply chains, nearly 60 percent of respondents said they had no strategy at all.New Supply Chain Challenges
These numbers reveal a strong disconnect between the concept of supply chain management and the daily business reality that most manufacturers experience. A significant portion of this can be attributed to new supply chain challenges in manufacturing:
1. Seeing the entire Elephant
The first new supply chain challenge facing companies is a lack of enterprise-wide visibility. In recent years, manufacturers of all sizes have evolved into truly global businesses with production facilities, outsourced capacity, warehouses, suppliers, and customers scattered across the world.
Unfortunately, many manufacturers lack the ability to see beyond the “four walls” of their factories and, therefore, cannot truly understand their enterprise-wide supply and demand needs.
Attempting to manage and improve a global supply chain without enterprise-wide visibility is much like the ancient parable of the four blind men who came across an elephant for the first time. Each blind man touched a different part of the elephant and came to radically different conclusions about what the unknown animal was like—a rope, a wall, a tree, and a snake.
Companies that lack a “big picture” understanding of their supply chains suffer the same result as the blind men. Each division, factory, and even department can have very different perceptions about what is happening in the supply chain and jump to the wrong conclusion about what is facing them and what they need to do.
To cope with this challenge, manufacturers need a unified, consolidated, and real-time view of their supply chains. This global view enables manufacturers to manage supply and demand more effectively, as well as achieve their strategic business objectives.
2. Make what is selling, not sell what you make
The second challenge facing manufacturers, oddly enough, is overcoming the original bias of supply chain management. In fact, its name says it all—supply chain management traditionally focused on coordinating production and inventory (i.e. supply) rather than worrying about demand. Now popular new manufacturing strategies such as Lean, Flow, Pull, and Just-in-Time are turning the tables.
These new concepts place a premium on understanding what customers want and using that information to drive all downstream activities.
This demand-driven approach is being applied to entire supply chains with great effect. By understanding demand better, companies can make what is selling instead of selling what they make. This enables companies to drive costs out of their supply chains and become more responsive.
More accurate demand information also benefits companies by increasing the level of accountability.
Accurate demand information allows for operational objectives to be established clearly—for the entire enterprise and each individual production facility—and measured.
To overcome this challenge, manufacturers must be able to collect and aggregate global demand for their products accurately and assign it intelligently to individual production facilities for fulfillment.
Manage 1 Constant
The final challenge facing manufacturers is often jokingly referred to as the industry’s only constant: change. Companies must not only deal with customers who change their mind about orders, but they must also deal with engineering changes to their products, new product introductions, late shipments from suppliers, unexpected production line failures, and more.
Manufacturers who cannot cope with these changes often suffer the consequences—product
Today’s manufacturers need supply chains that are dynamic, responsive, and intelligent. To be dynamic, manufacturers need real-time information about what is happening within their supply chains—both at an enterprise-wide level as well as at individual production facilities.
To be responsive, they must be able to process this information quickly and, where appropriate, make adjustments. Finally, they must be able to understand the various trade-offs and impacts of those adjustments to make informed decisions about their supply chains.
To address these supply chain challenges properly, manufacturers must adopt new business processes and implement new technology.
Supporting Supply Chains with IT Technology
These IT applications enable companies to support their SCM strategy. “Sperry Swiss Business Consulting” supports the following IT applications
We also have quite some knowledge in regards with Industry solutions. We refer to Mills, Mining, Oil.
All our people have a very strong R3 background. We do not promote this separately. We consider this a commodity these days