Posts categorized as 'Best practices'

Why Having a Green Supply Chain Has Become a Necessity


A green supply chainIn honor of Earth Day I thought I’d take the opportunity to outline in my humble opinion why having a green supply chain is no longer a nice-to-have – it’s a necessity. Gone are the days when consumers would look the other way while companies rode roughshod over the environment in pursuit of a more profitable supply chain. Nowadays even governments (the good ones at least), are actively involved in making sure Mother Nature is protected, at least to some extent. Are you doing your part?

There is a growing need for sustainability integration into supply chain management and if you haven’t already started down the path to greener pastures you’re falling dangerously behind the trend, and it could be costing you more than you know.

According to a recent World Economic Forum report written in collaboration with Accenture, companies like UPS, SABMiller, DHL, Unilever and Nestle are among 25 multinational companies that have increased their revenue by up to 20% while cutting supply chain costs as much as 16% thanks to a focus on sustainability. Beyond Supply Chains: Empowering Value Chains outlines 31 best practices for businesses to follow in order to see similar results, in what they’ve termed “the triple supply chai

Read the full story

Know sooner, act faster and accelerate your supply chain performance!


A globe with highlighted routes representing supply chain performanceWhen things happen in supply chain, knowing sooner and acting faster can mean the difference between a major catastrophe and a minor hiccup in your supply chain performance. It can mean the difference between late orders and angry customers and the ability to win additional market share. It can mean the difference between getting fired and getting a promotion.

Imagine this scenario; you are a supply chain executive for a major U.S.-based electronics manufacturer. It’s a Sunday morning in May 2008. You’ve woken up and are reading the Sunday news. Suddenly you read something that makes you spill your coffee. There has been a major earthquake in Chengdu, China… where several of your key items are manufactured. This is bad…. very bad, but you know you have the tools to respond. By end of day Monday, you have identified the key items that are manufactured in that region, identified the customers and revenue impacted by the loss of those items, identified alternative sources, and were able to shift to new suppliers and reschedule orders. All with minimal impact to your customers.

Is this kind of performance too good to believe? Can you imagine your supply chain planning team being able to pull this off? Supply chain performance like this is not out of your grasp. It takes two things:

  1. Knowing sooner
  2. Acting Faster

Read the full story

Push vs. Pull Strategies: Dealing with the On-Demand Market


Analog rabbit ears represent push strategies, streaming represents pull strategiesOur partner Celestica recently published the following article, ‘Staying Ahead of Today’s On-Demand Market: Push Versus Pull Strategies.’ The author, Robert Rejano, Processes and Applications Advisor, Celestia, discusses the key differences between push and pull strategies and their impact on the supply chain.

Rejano asks ‘So why does technology even matter when supply chain principles haven’t really changed in decades?” We explore the answer.

You can start the show… whenever you’re ready

Using an interesting analogy centered on the rapidly changing television industry, Rejano suggests push strategies are akin to old analog rabbit ears – you can watch the programs you’re interested in, but only when the network decides to air them. Pull strategies are more like today’s on-demand options. Think digital video recording (DVR) and online streaming. They allow you to choose what you want to watch, and when you want to watch it.

Read the full story

Forecast Accuracy: Keep Your Demand Management Process Honest


forecast accuracy represented by a dart boardOur partner Celestica recently published the following article,Are you keeping your demand management process honest? The author, Eric C. Lange, Director of Demand Planning and S&OP Services at Celestica, examines forecast accuracy and the main components of a demand management measurement tool and process. We’ve outlined his recommendations below so you can help improve your forecast accuracy, leading to improved business operations and ultimately greater success.

Reporting Forecast Accuracy

Even with an established Sales and Operations Planning (S&OP) process, if you’re neglecting forecast accuracy measurement and reporting you’re missing a critical piece of the puzzle for demand management success. Yes, it’s often a difficult, time-consuming and complex endeavor, but not doing it limits the prospects for success for the entire process.

While calculating forecast accuracy is important, it’s not enough. You also need measurement and accuracy reports to determine the effectiveness of the entire demand management process.

There are three main components of a demand management measurement tool and process:

  • Decide the method to calculate forecast accuracy
  • Determine how to calculate and eliminate any forecast bias in the process
  • Manage all necessary data to evaluate the effectiveness of the demand management process

Once these components are in place, it’s time to move on to determining added value in the forecast.

Read the full story

Sales and Operations Planning (S&OP) – How to Stay the Course


Two men discuss S&OPI came across this blog on sales and operations planning (S&OP) from the Institute of Business Forecasting and Planning (IBF) the other day. The article, S&OP and Culture Change: How to Stay the Course, written by Kathleen Winter, describes how corporate culture can derail an otherwise successful S&OP implementation.

Interestingly, it also describes the warning signs to look for if your S&OP process has fallen off the tracks. I suggest reviewing the blog to get a more detailed explanation of the warning signs, and what you can do to counter each, but I’ll summarize things here.

Read the full story

Tools for Master Scheduling: Hug Your Master Scheduler Part Two


A master scheduler plans out numerous shipping routes on a mapIn part one of this blog we determined that the Master Scheduler has a challenging job with Master Scheduling, but you may be thinking that ERP system you’ve spent millions on buying and implementing must make the Master Scheduler’s job so simple it’s as easy as pushing a button, right?

Well… not so fast. Traditional ERP systems are notoriously difficult to customize. If you want to perform your MPS process the exact way your ERP vendor has designed their ERP module, you might be OK. But if everyone does their process the exact same way, where is your competitive advantage? The reality is that every company has unique requirements and no one implementation can meet those needs without some customization. And ERP customization is expensive. Very expensive.

Typical ERP systems don’t allow you to simply try something out before committing it to production. The ERP idea of simulation is copying the database to another machine and running it there… several hours later you might be able to do some scenarios. Even if you could try something out, you don’t know the impact of what you’ve tried until you’ve explored that change all the way through your supply chain. If the change you are thinking of making will cause an overload on a constraint that is defined on another ERP instance at a different site, you won’t know there is a problem until you start executing. And then it’s too late.

Your ERP system has the capability to do rough cut capacity planning. That should help, right? Well, yes, rough cut capacity planning is better than nothing and it can give you some hints as to where problems might be. It does this by having you create “representative routings” that boil very complex routing and bill of material information into an approximation of key resource and key material needs. You see where this is going, right? You can have a perfectly achievable plan based on rough cut capacity planning and still not have a plan you can actually execute because you don’t have insight into the detailed realities of your supply chain.

Combine all this with the fact that managing any data in an ERP system is a cumbersome, part-by-part process and there is no wonder that many of the Master Schedulers resort to building complex models in Excel to do their jobs. Except… Excel is not the answer either. As has been commented on previously, while Excel can be effective for one-off analysis, Excel is error prone, non-collaborative and no matter how good you are at modelling, you simply cannot represent the true complexity of supply chain in a spreadsheet.

So, what is the answer?

Read the full story

Supply Chain Risks: Big or Small, Plan For Them All


Supply Chain Risk I suspect that few folks in the supply chain management world would argue with the fact that supply chain management is risky business.

The reality is that risk comes in many forms (including anticipated risk, uncontrollable risk and unanticipated risk). It’s constantly changing. And the amount of risk being faced by supply chain professionals has been on the rise for the past 20 years.

When we talk risk, we’re not just talking about headline-making tsunamis, floods and earthquakes. We’re talking everyday risks as well. (Some might even argue that risk in daily business activities and decision making can be just as, if not more, impactful than exceptional risk events.) Ensuring success in ‘normal’ operating conditions and when faced with catastrophic supply chain disruptions is why developing risk management strategies should be a top priority.

Read the full story

Lean versus EOQ? What’s best for your organization?

  • by Andrew Dunbar
  • Published

manufacturing lean versus oeqA colleague and I started our morning off with a coffee and a conversation about integrating EOQ (Economic Order Quantity) into MPS (Master Production Scheduling). In no time at all we were debating between lean versus EOQ. While each approach has its merits, the two concepts present some conflicting advice. Here we go again! It doesn’t matter if you’re a technician working on the shop floor or an executive in the board room, if you’re in the business of manufacturing then this is a conversation you’ve had before. Without the right data it’s a debate that’s impossible to win, but I’m convinced that neither solution is perfect in all cases.

EOQ attempts to optimize lot size by balancing manufacturing cost (Fixed + variable costs) with things like inventory holding costs and capacity utilization. Lean relies on minimization of, among other things, lot sizes, inventory and waiting. Traditional ERP systems take fixed (often part specific) inputs for planning parameters and spits out a plan without any thought as to the efficiency (financial/shop capacity, etc.) of that plan. Master schedulers can manipulate the planning parameters to create lean or EOQ optimized schedules, but how do you decide which way is right for your organization?

Read the full story