Posts Tagged ‘Customer’

Your supply chain is costing you money – Reason #10 Failure to adequately train your supply chain planning staff

Published December 12th, 2014 by John Westerveld 0 Comments

Supply chain career pathOver the years, working for and with numerous manufacturing companies, I’ve seen many supply chain practices that cost companies money.  Over the next several weeks, I’ll outline these issues and discuss some ideas around how to avoid these practices. You can find the previous posts here:

Reason #10: Failure to adequately train your supply chain planning staff

When you think about it, your supply chain planning team is responsible for making decisions that can impact millions of dollars. A bad decision can result in missed orders, significant inventory, or scrapped materials.

Yet, when you look at the background of many supply chain planning workers, you’ll find a huge variation in education and experience. From people with a basic education that worked their way up from the shop floor, to people with engineering degrees that fell into supply chain planning, to business majors who have never been to the factory floor, to recent graduates with a supply chain planning background, but don’t have real-life experience on how manufacturing and supply chains work.

Having worked with a cross section of these people, I’ve seen the very best and the very worst. The very best include people that not only understand supply chain from end-to-end, but can also come up with creative solutions beyond what the typical supply chain education can prepare you for.

The worse have me wondering why they decided on a career in supply chain at all.  These are the planners that don’t know and don’t care how supply chain works. They do their jobs moving inventory from here to there, opening orders that the system says should be opened, cancelling orders that the system says should be cancelled, yet never questioning why or whether it makes sense.

Why is this a problem?  Lesupply chain management training t’s look at a quick example. Have you ever seen a situation where some result from a system– whether a bill from the phone company, a stock report or MRP recommended actions have been messed up?  It might be a programmatic error but more likely it is caused by bad data.  So imagine that you are a supply planner and the MRP report is telling you to increase orders 10x for an expensive component.  Do you do it?  The computer told you to, right?  If you are one of those planners that just blindly execute what the system says to do, then you probably would order it.  However, better supply chain planners might question that recommendation.  They use their knowledge of how planning systems work to peg up to find the source of the change and determine that someone changed the wrong record causing the change and confirm with the planner that the change was intended.  By doing this, they could potentially save the company millions of dollars in excess inventory.

There will always be people that just want to do things the way they always have. Don’t want training and aren’t interested in learning.  However, there are also those people who have a real drive to learn and would like to understand supply chain better. These are the folks you want to do everything in your power to give them the education they need.

While traditional supply chain training isn’t the only way to get really good at supply chain (I’ve met some planners that instinctively “got” supply chain – and knew their way around the system better than most) it certainly helps to have a good foundational knowledge of supply chain concepts.  One very good source of supply chain training is APICs (American Production and Inventory Control Society).  They have multiple resources as well as two certification programs; CPIM (Certified in Production Inventory Management) and CSCP (Certified Supply Chain Professional). CPIM is broken out in to 5 modules that each have an optional instructor led review course.  At the end of each module, the student is encouraged to write the exam.  Once all 5 exams have been passed, you achieve your CPIM certification.  CSCP consists of three workshops followed by an exam for certification.  Many companies have paid for their employees to achieve their certification and some have even brought instructors into the workplace to do the certification training there.  In reality, providing training in this way is a win-win for the company and the employee. The company gains by having better educated planners, the employee gains by having a certification that is recognized my many companies around the world.

Supply chain is a very complex world. Yet, it’s one place where practitioners can have a huge effect on the business yet have minimal education…and I really think that’s kind of cool!  But your supply chain team could be much more effective if given the right tools and some basic supply chain education.

How did you learn about supply chain?  Do you have any education advice for people just starting out and wanting to learn?  Comment back and let us know!

 

Posted in General News, Products, Response Management, Sales and operations planning (S&OP), Supply chain management


Your supply chain is costing you money – Reason #7 Making decisions based on bad data (supply chain data accuracy)

Published November 19th, 2014 by John Westerveld 2 Comments
English: Book shelf

Over the years, working for and with numerous manufacturing companies, I’ve seen many supply chain practices that cost companies money.  Over the next several weeks, I’ll outline these issues and discuss some ideas around how to avoid these practices. You can find the previous posts here:

Making decisions based on bad data (supply chain data accuracy)

I went into a store the other day.  I’d driven an hour to get there.  I went to that particular store because their web site confirmed that they had 12 units on hand of the thing I was looking for.  When I got there and went looking, I couldn’t find it… the slot was there but there was nothing on the shelves.  I found someone from the store and asked about my item.   Yes, the computer shows they had 12 units on hand.  They went looking at the shelf the computer said the item was on (the one I just checked).  Not there.  They looked in the back.  Nope, nothing. They searched the shelves around where the item was supposed to be. Nowhere to be found.  “I’m sorry sir.  It looks like the computer made a mistake…we don’t have any”.  Hmmm… So I went back home and ordered it from Amazon.

A couple things struck me about that interaction.  Having wasted time going to that store, I’d be less inclined to use that store in the future – at least I’d be much less likely to trust their website’s inventory.  The second is that it likely wasn’t the computer that made a mistake, it was a mistake made by a person or process somewhere along the way.  And finally the same types of mistakes and process failings that resulted in my wasted trip occur all the time in supply chain. In addition to losing customers like me, those mistakes result in bad data that cost manufacturing companies millions of dollars.

Bad data in supply chain seems like it should be a minor thing.  I mean, it’s just numbers right? Let’s look at some typical supply chain data errors and think about the potential costs;

Lead time
If the planned lead-time is longer than actual, you get excess inventories. If the planned lead-time is shorter than actual, you get stock-outs and late customer orders.

Bill of Material
The Bill of Material drives material requirements through-out the supply chain. Missing components, extra components, bad effectivity dates, incorrect quantity per values will result in excess inventories, scrapped items, inaccurate costing, late customer orders, stock-outs and increased WIP.

Cost and price data
Inaccurate price and cost information impacts decisions based on margin. It can make unprofitable products appear to be profitable, and profitable products appear unprofitable.  In accurate costs can also impact pricing decisions driving higher or lower prices based on cost assumptions.  Finally, inaccurate cost information may cause you to make incorrect sourcing decisions.

Part master – ordering rules (Lot sizing, policies, etc)
Part master data controls how the system creates new supplies.  Bad data here can cause you to order too much driving excess inventory or too little driving additional ordering costs.

On Hand Inventory quantity/status
Decisions on when and how much to order are based on how much inventory the system thinks you have.  If inventory quantities or status is incorrect, excess inventory, excess costs, late customer orders and stock-outs can be the result.

Routing
The routing table describes how material flows through the shop and includes information on how long work should be scheduled across each work-center.  If this information is wrong, material will end up at the wrong work-center or the right work-center at the wrong time.  As a result, you can expect increased WIP, late customer orders and stock-outs.

Safety Stock rules/quantities
Safety stock influences the inventory levels expected on an item by item basis.  In addition to mistakes when calculating safety stock or setting safety stock rules, safety stock values can get stale.  In other words, the inputs (demand variability, lead time, etc.) that went into setting the safety stock value at the time they were set, may not be valid now.  Inaccurate safety stock values can drive excess inventory, excess costs due to expediting, late customer orders and stock-outs.

Demand (Actual Orders)
Inaccurate order information impacts in two ways; 1) an unhappy customer – especially if they don’t get what they ordered and 2) Increased costs due to excess inventory, excess costs from expediting.

Demand (Forecast)
Forecasts are always wrong.  Yet forecasts are what drive the business in many industries.   When forecasts are wrong, the result is too much inventory of some items and too little inventory of others.   This puts you in the unenviable position of having to explain to your stockholders why you have excess inventory while at the same time can’t meet revenue numbers because of stockouts.

Historical demand
Historical demand is the record of what was sold and when.  Historical demand is used to drive statistical forecasts, safety stock calculations and more.  Errors here will cause inaccurate forecasts, excess inventory, excess costs, late customer orders and stock-outs.

Capacity data
Capacity information determines what amount of work can be done in a given work center.  In finite systems, orders will be moved around to respect the available capacity.  In infinite capacity systems, planners will manually move orders around to level load work centers.  If capacity information is wrong, you can expect to see overloaded or under-loaded work-centers, excess costs due to expediting, increased WIP inventory, late customer orders and stock-outs.

As you can see, there are a variety of ways that inaccurate supply chain data can cost you money (and I’ve really only scratched the surface here).  So what can be done?  There are a number of tactics that can be used to improve supply chain data accuracy;

  • Audits – At a company I worked at in a previous life they recognized, through an earlier failed ERP implementation, the importance of data accuracy.  As such, they implemented a weekly MRP data audit where several parts were picked at random and the part master, BOM and Routing parameters were checked and validated.  In my previous post, Reason #6 Not effectively managing inventory, I talked about cycle counting.  This is a similar type of auditing targeting inventory accuracy.  In both cases, the key to improvement is root cause analysis.  If data is wrong, simply correcting the problem just fixes the data issue for that part.  Understanding how the error occurred and fixing the process that caused that error means that the error is less likely to happen again.
  • Data responsibility/data security – Ensuring that the right people are responsible for a given segment of data and that only those people can change that data is difficult and can be frustrating for some.  However, the risk of not locking down the data is that there is no control… anyone can change anything.  In the vast majority of cases, people won’t sabotage data (although that can happen).  No, usually, bad data gets created because people make changes without fully understanding the impact of what they have done.  Again, in a past life, we had one lady responsible for all item master changes made to the ERP system. Any change needed to be requested via a paper form. This form needed to have various approval levels before she would make the change.  While it did slow things down and admittedly was relatively inefficient, it ensured that any item master change was well thought out and vetted before it was made.  As a result our data accuracy percentage was consistently in the high 90s.
  • Alerting and what-if – With more advanced planning tools, you have a few more options around how to identify and correct some types of data errors.  Automatic detection of errors like missing cost data, missing sourcing data, order policy mismatches can all be detected and alerts generated that inform those responsible of potential issues.  In addition, advanced planning tools enable, through the use of simulations, the ability to try different planning parameters to see what the impact would be without actually driving any change to actual production.

Data errors if uncaught can result in millions of dollars of losses.  That being said, with some focused effort and perseverance you can eliminate the majority of data errors and get your supply chain running like the well-oiled machine it should be.

What data errors have you seen and how did it impact your supply chain?  How do you manage data errors in your supply chain?  Comment back and let us know.

 

Posted in General News, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management


Industrial manufacturing supply chain success story: Satisfying profitability and customer expectations

Published August 16th, 2013 by Melissa Clow 0 Comments

Today, we want to feature a couple of case studies from our industrial manufacturing customers. We know that  industrial manufacturing supply chains typically operate relatively low-volume, non-commodity businesses, this doesn’t prevent them from having demanding customers or complex supply chains. Increasing outsourcing…faster order delivery expectations…rising commodity costs: The result is a situation where profitability and customer expectations are often at odds.

To thrive in today’s environment, industrial manufacturers need to shift from a role of controlling all aspects of manufacturing, to one of coordinating activities, with in-depth input and interaction with customers and suppliers.

We want to share how these companies have turned to Kinaxis to help them face these challenges head on and are seeing breakthroughs in operations performance as a result.

Industrial manufacturing customer testimonials

“We have hundreds of users pulling ad hoc reports from RapidResponse every day. I can’t begin to list all the benefits, but they include improved inventory management, supply/demand alignment, better information to buyers, and identified PO split opportunities.” Read more

“For any report that must be written quickly, we use RapidResponse. Report development time in SAP is months versus same day in RapidResponse.” Read more

Check out the case studies of two industrial manufacturing supply chains

enterprise industrial manufacturing supply chain case study

industrial manufacturing supply chain case study

Other industry case studies:

If you would like to check out other case studies similar to this one, visit our TechValidate page and you will find 28 cases studies, which you may browse by industry.

More about our supply chain survey

As you may have read in our first blog of the series, we completed a customer survey project with TechValidate and are very pleased with the over 150 survey responses and the many stories we can share. And so, for our Friday posts, we have been featuring the customer results on how they are using RapidResponse in their supply chain and the benefits they are realizing.

Take a look at past topics we have explored in this series:

If you visit our TechValidate page, feel  free to share any of the content we’ve published to-date, select the share button to distribute through various social media channels.

Happy Friday!

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Posted in Demand management, Response Management, Sales and operations planning (S&OP), Supply chain management


High-tech supply chain success story: Supply chain visibility is at the core

Published August 2nd, 2013 by Melissa Clow 0 Comments

Today, we want to feature several case studies from our high-tech customers. We know that high-tech/electronics manufacturers are faced with a need to innovate to satisfy ever changing customer requirements while reducing costs, largely through the outsourcing of manufacturing.  And delivering to customer expectations while coordinating the extended supply chain in an environment of constant change, is challenging.

We want to share how these high-tech/electronics industry have turned to Kinaxis to help them face these challenges head on and are seeing breakthroughs in operations performance as a result.

High-Tech customer testimonials

“With RapidResponse, we have visibility across the supply chain, including across contract manufacturers.” Read more

Finished Goods Inventory was reduced by 20% within 3 months of deploying RapidResponse.” Read more

“RapidResponse provides one integrated plan of record.” Read more

“RapidResponse helps the master scheduler improve scheduling…” Read more

Check out the case studies of two high-tech supply shains 

improving our inventory turns

TriQuint Semiconductor supply chain

If you would like to check out other case studies similar to this one, visit our TechValidate page and you will find 28 cases studies, which you may browse by industry.

More about our supply chain survey

As you may have read in our first blog of the series, we completed a customer survey project with TechValidate and are very pleased with the over 150 survey responses and the many stories we can share. And so, for our Friday posts, we have been featuring the customer results on how they are using RapidResponse in their supply chain and the benefits they are realizing.

Take a look at past topics we have explored in this series:

Voice of the customer part 1: Supply Chain Flexibility

Voice of the customer part 2: Supply Chain Visibility

Voice of the customer part 3: Supply Chain Planning

Voice of the customer part 4: What-if Analysis

Voice of the customer Part 5: Response Management

Voice of the customer part 6: Alternative Technologies

Voice of the customer part 7: Competitive Advantage

Supply chain success story: Pharmaceutical customer significantly improves inventory management

Automotive supply chain success story: customer greatly improves on time delivery performance

If you are eager to check out all the results, simply go to our TechValidate page. If you wish to use or share any of the content we’ve published to-date, click on the asset you wish to use and then select the download button to save. You can also choose the share button to distribute through various social media channels.

Happy Friday!

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Posted in Demand management, Inventory management, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management


Supply chain success story: Pharmaceutical customer significantly improves inventory management

Published July 19th, 2013 by Melissa Clow 2 Comments

Today, we want to feature a case study of one of our pharmaceutical customer’s supply chain. We know Life Science companies are faced with fragmented demand chains with varying regulatory requirements as well as an aging product portfolio …leading to reduced margins.  Increasingly, these bio-tech/pharmaceutical companies are turning to third party operators at all levels of the supply chain to reduce costs, satisfy local demand, and enhance capacity flexibility. Because of this, Life Sciences companies are adopting process improvements and new technologies targeted at removing business “silos,” improving collaboration, and increasing productivity.

We want to share the success of one global pharmaceutical customer and how they are facing these challenges head on and seeing breakthroughs in operations performance.

Testimonials

“RapidResponse improved our event management for supply without conformance. It improved adherence to inventory targets above 95%, and consistently managed abnormal scrap 20% below budget.”

Check out the case study of a global pharmaceutical company’s supply chain

Pharmaceutical customer significantly improves inventory management

If you would like to check out other pharmaceutical case studies similar to this one, visit our TechValidate page and you will find them in the pharmaceutical case study section. In addition, you may want to check out Trevor Miles’ brand new whitepaper: “Diagnosing the Impact of Life Sciences Industry Trends on the Supply Chain: Understanding the 7 Factors for Treatment“.

More about our supply chain survey

As you may have read in our first blog of the series, we recently completed a customer survey project with TechValidate and are very pleased with the over 150 survey responses and the many stories we can share. And so, for our Friday posts, we have been featuring the customer results on how they are using RapidResponse in their supply chain and the benefits they are realizing.

Take a look at past topics we have explored in this series:

Voice of the customer part 1: Supply Chain Flexibility

Voice of the customer part 2: Supply Chain Visibility

Voice of the customer part 3: Supply Chain Planning

Voice of the customer part 4: What-if Analysis

Voice of the customer Part 5: Response Management

Voice of the customer part 6: Alternative Technologies

Voice of the customer part 7: Competitive Advantage

If you are eager to check out all the results, simply go to our TechValidate page. If you wish to use or share any of the content we’ve published to-date, click on the asset you wish to use and then select the download button to save. You can also choose the share button to distribute through various social media channels.

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Posted in Pharma and life sciences supply chain management, Response Management, Supply chain management


96% use RapidResponse to help improve inventory management in their supply chain

Published July 12th, 2013 by Melissa Clow 0 Comments

As we described in our first blog of the series, we recently completed a customer survey project with TechValidate and are very pleased with the over 150 survey responses and the many stories we can share. And so, for our Friday posts, we have been featuring the different customer results on how they are using RapidResponse in their supply chain and the benefits they are realizing.

In this series, we will explore the following topics:

Voice of the customer part 1: Supply Chain Flexibility

Voice of the customer part 2: Supply Chain Visibility

Voice of the customer part 3: Supply Chain Planning

Voice of the customer part 4: What-if Analysis

Voice of the customer Part 5: Response Management

Voice of the customer part 6: Alternative Technologies

Voice of the customer part 7: Competitive Advantage

If you are eager to check out all the results, simply go to our TechValidate page. If you wish to use or share any of the content we’ve published to-date, click on the asset you wish to use and then select the download button to save. You can also choose the share button to distribute through various social media channels.

We asked our customers, what operational benefits they were now seeing in their supply chain operation?

Decision latency is a key measure of both supply chain process efficiency and effectiveness. Every minute you can give back to the physical supply chain adds exponentially to its agility, so making good decisions quickly is of tremendous value. Check out a few examples of how RapidResponse is enabling our customers to make better, faster decisions, thereby increasing financial and process efficiencies across the enterprise to gain a competitive advantage.

Inventory Management and the Supply Chain

inventory management supply chain

inventory management supply chain

Operational Benefits

inventory management supply chaininventory management supply chainiinventory management supply chain

RapidResponse Ensures Processes Deliver Results

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Posted in Miscellanea


More than half surveyed chose RapidResponse over SAP and custom solutions

Published July 5th, 2013 by Melissa Clow 0 Comments

As we described in our first blog of the series, we recently completed a customer survey project with TechValidate and are very pleased with the over 150 survey responses and the many stories we can share. And so, for our Friday posts, we have been featuring the different customer results on how they are using RapidResponse in their supply chain and the benefits they are realizing.

In this series, we will explore the following topics:

Voice of the customer part 1: Supply Chain Flexibility

Voice of the customer part 2: Supply Chain Visibility

Voice of the customer part 3: Supply Chain Planning

Voice of the customer part 4: What-if Analysis

Voice of the customer Part 5: Response Management

Voice of the customer part 6: Alternative Technologies

Voice of the customer part 7: Competitive Advantage

If you are eager to check out all the results, simply go to our TechValidate page. If you wish to use or share any of the content we’ve published to-date, click on the asset you wish to use and then select the download button to save. You can also choose the share button to distribute through various social media channels.

We asked our customers, what alternative technology did you use or evaluate when your were looking for a supply chain management solution? And, how does it compare to competitive solutions? From our results, it is clear that investing in a patchwork approach for integrated demand and supply chain management is a gamble, at best, and the industry as a whole is questioning the merit of ERP supply chain suites. With a growing focus on sales and operations planning (S&OP) as a means to ensuring agility, alignment and adaptability, the limitations of ERP systems and their associated modules are becoming very apparent.

more than half of survey organizations chose rapidresponse over sap and customer solutions

better planning capabilities

quick supply chain visibility

displaced SAP APO

better response times

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Posted in Control tower, Demand management, Inventory management, Response Management, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management


Is Your Order Process Costing You Customers and Money?

Published March 14th, 2013 by John Westerveld 2 Comments

OrderIt’s just after lunch on a Friday afternoon. The phone rings.  It’s a company you’ve been trying to turn into a customer for years. They have a big order with your competition that they can’t get in on time and have decided to give you a try.

The problem is – they need the order in two weeks – less than the lead time for these items and you don’t have enough finished goods inventory to satisfy this order. To make matters worse, they want an answer by close of business or they will look elsewhere.  If you can get these orders on time, you could be able to win significant future business from them.  The stakes are immense.

What factors need to be considered when deciding on a course of action?

  • What is the impact to revenue?
  • What is the impact to margin?
  • Can I accept this order if I’m willing to make other orders late? If so, what other orders will be put at risk?  What are the customers associated with those orders?
  • What components are blocking this order from being completed on-time?
  • What options do I have for resolving those blocking components?

With traditional ERP systems, responding with confidence is nearly impossible.  Batch based calculations mean that you simply can’t know the impact on the supply chain unless you run the various processes that rebalance the plan. This can take several hours at least – and are typically run at night or over the weekend.  Further, many companies have different versions of ERP in different sites.  Worse, companies may have grown through acquisition resulting in different ERP systems across the various sites.  This means that visibility across the various nodes of the supply chain is limited.  Once the calculations are done, the ability to visualize the impact of the change and the required response is very limited since ERP systems tend to be stuck in the 70’s model of presenting information, part by part, on a single screen. How do companies respond in this environment? Typically, things go one of four ways –

1)       They quote a standard lead time and refuse to consider an order inside that lead time because they can’t know whether meeting the customer request date is even possible. Order lost.

2)       They promise the order and “hope” they can get the order done on-time. Operations try to scramble to get it done at a significant cost – and often can’t – so then customer satisfaction suffers.

3)       They have extensive models built in Excel that “approximate” the supply chain – and promise based on that, which can never provide the full and accurate picture, and so, customer satisfaction suffers.

4)       They build up large enough buffers of inventory to ensure they have enough for when unexpected orders come in, which results in poor inventory turns performance, and typically ensures that you have lots of inventory… of exactly the wrong part!

So, what alternatives are there?  If you were to develop a supply chain planning tool, what capabilities would you include?  Maybe you would come up with something like the following:

  • Supply chain wide visibility – What if you had visibility across the entire supply chain, regardless of the ERP system or version?  What if you could instantly see the impact of a demand change down to the lowest component across multiple sites?
  • What-if simulation – What if you could model your change using the same logic that exists in your ERP system in a sandbox-like environment where nothing is official until you are ready to share it?
  • High-speed analytics – Time is critical. What if you could drop an order in and instantly see 1) when that order would be available 2) what is preventing that order from completing on time and 3) the impact that order drop in has across the entire supply chain?
  • Responsibility based collaboration – No one person can solve all the problems across the supply chain. What if you could do something like drop-in an order and instantly see who in the organization was impacted by that change?  Then, what if you could share the scenario with that team to see if they could come up with alternative ways to resolve the lateness?
  • Scenario comparison – Your team has come up with several alternative approaches to solving the problem.  Some may have an impact on margin and others have an impact on delivery metrics.  Which approach is best?  What if you could evaluate the various resolution approaches in a simple view that compared the various scenarios against a set of weighted metrics and targets?  What if each scenario was scored so that you could immediately see which scenario performs best based on the companies goals and objectives?
  • Alignment – Once you’ve decided on a course of action, what if you could share this information across the entire organization ensuring that everyone knows what is expected? What if you could communicate this information back into the ERP system?

To those who have been fighting in the supply chain trenches for years, this probably sounds too good to be true.  Before you get back to work, check out this case study showing how one company has made significant gains in order promising and clear to build assessments.

 

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Posted in Demand management, Inventory management, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management, Supply chain risk management