Archive for August, 2005

A blog on Response Management wouldn’t be complete without a definition. We’ve had the opportunity to work with many of the leading OEMs and contract manufacturers in the world and have developed Response Management solutions to meet critical business challenges they face. So, we define Response Management as follows.

Manufacturing success is increasingly defined by how fast you act and how well you react to the volatility at the point-of-action—where real world variances in demand, supply, product and capacity occur. Response Management goes beyond traditionally historic scorecarding and performance metrics. By providing access to real-time information and facilitating multi-enterprise collaboration, manufacturers are able to reach optimal decisions that align with corporate objectives and rapidly drive effective action.

At the manufacturing operations point-of-action there are unique requirements and a demanding environment. You cannot “plan your way out of

By John Sicard, Vice President of Customer Services

When considering the outsourcing of your manufacturing, it’s important to understand the full impact of that decision. It’s equally important to conduct detailed due diligence of the potential contract manufacturing (CM) partner in order to ensure that you’ll experience the full benefits of outsourcing without sacrificing your own customer relationships.

Here are five things OEMs should focus on:

1. Don’t sacrifice visibility and control
It is important to understand you lose a level of visibility to what is happening on the factory floor when you outsource. It’s important to choose a CM partner that offers a “glass plant” service to provide you with the ability to see an up-to-the minute view of your order status. It is highly unlikely that your CM uses the same IT infrastructure that you do, so requesting a demonstration of its capabilities in this area is an important requirement.

2. Proactively manage inventory liability
In most cases, outsourcing to a CM doesn’t relieve you of the financial responsibility for the inventory that your partner acquires on your behalf. Look for a CM that can provide timely updates on your inventory liability position and who deploys best practices for optimizing available inventory across all of the sites that build your products. Ask for examples of its ability to collaborate between sites.

3. Measure the ability to respond to change
Your CM’s ability to respond rapidly to your requested changes is a critical factor in ensuring that you have the ability to be responsive to your customers. Why? Despite the fact that a delay or a disruption is technically out of your control, your customer holds you accountable. Even when the disruption stems from customer-requested changes to an order or delivery date, their expectations for swift action and rapid delivery remain. Delivery performance is critical.

4. Check the ability to introduce new products
The window of opportunity for introducing new products to market can close rapidly, especially in the electronics industry. The speed at which Apple’s competitors were able to produce a device that mimicked the iPod was extraordinary. When that collides with the incumbent’s inability to meet demand, the lost opportunity that represents can be fatal. To ensure that your CM is prepared for new product introductions (NPI), ask the executives to cite cases of how they’ve rapidly and successfully ramped up their factories to respond to these engineering changes and NPIs for other customers.

5. Map their geographic presence
Whether your business has a global footprint or specific geographic reach, inquire whether your CM has a plant in, or as close as possible to, those regions. It just may be that you’ll save time and money and be speedier to market if your goods are being produced in the market they are ultimately destined for.

The best test is to simply ask the potential CM partner to describe to you its core competency in Response Management. If it includes references to the five key capabilities listed here, chances are, you’ll be in good hands.

By Dave Haskins, Executive Vice President of Development

Since Response Management is all about empowering people to respond rapidly to changing circumstances, there are some underlying technology requirements critical to making this happen.

First, to promote broad adoption and provide value to all the people that need to be involved in responding to changes, you need a familiar, flexible spreadsheet-paradigm with real-time ‘what-if’ scenarios. You want the user community to be able to determine the impact of any change in demand, supply, capacity or product and to be able to do so at any process point and immediately see the impact on all levels of the business.

Given today’s global supply chains and emphasis on specialization, you have to have both internal and external users participate in the evaluation of alternative responses to a given circumstance. And, you need to arm these people with a scorecarding capability that evaluates alternative responses against business metrics.

Such an approach eliminates the traditional weaknesses of today’s favored solution - the spreadsheet (its amazing how frequently we replace spreadsheets). It ensures a consistent view of multi-enterprise data spanning all layers of the planning process. It includes complex manufacturing analytics (e.g. MRP, CRP, etc.) and powerful scenario management enables cross-enterprise collaboration.

It’s the unique combination of these capabilities (you can see more here) that really change the way organizations can respond to change and we’ve seen it be successful time and again at some of the world’s leading companies.

I was asked the other day if I could provide an example of a market leader who is benefiting from adopting a Response Management solution, so I wanted to share the following success story with you.

If you track the electronics market you know that Jabil Circuit is a leader in contract manufacturing. They are consistently viewed as one of the best run companies in this very demanding space.

Among the many things they’ve done to achieve this position is broadly adopting Response Management. Jabil has a discipline planning process, including corporate planning, supply chain planning, financial planning, etc. But they also realized that things change so frequently that there are a lot of problems they just can’t plan their way out of. This is where Response Management comes in.

Unlike a planning application that may be used by a handful of highly trained users, today there are about 4,000 Jabil employees that utilize Response Management software to more effectively respond to change. This software works in the ad hoc fashion that rapid response requires and provides these users with immediate access to the information they need to respond effectively.

For more information on Jabil, see the case study here.

The manufacturing market has been going through dramatic changes over the last few years as the markets have truly become global and outsourcing has enabled global sourcing while creating a host of new challenges.

Kinaxis software is now enabling Fortune 500 customers such as Casio, Coty, Honeywell, Jabil Circuit and Raytheon to gain a competitive advantage by simultaneously reducing costs, shrinking cycle times and increasing customer service levels.

The goal of this blog is to create a dialog on the issues confronting manufacturers and how market leaders are leveraging Response Management solutions to gain a unique competitive advantage. We’ll comment on industry trends and news, analyst opinions, customer best practices and results, and much more.

We welcome your active participation in this dialog.