Posts Tagged ‘Manufacturing’

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

There’s a good article at IndustryWeek entitled “IT deemed critical to manufacturing success.”  The article discusses the role of manufacturing software and how IT systems are critical to ensuring business success.

I posted a comment on the site and have included it here as well.

** My comment **

One of the challenges we see manufacturers facing is that large investments were made in legacy supply chain planning systems that failed to deliver.  These systems cost millions of dollars, had excessively long and costly deployment cycles and, if ever completely deployed, ended up being used by a small handful of highly trained people.

Making matters worse is that the world has radically changed since these systems were designed and built.  They were developed with a paradigm that assumed a vertically integrated manufacturing environment with reasonably static business assumptions.  Thus, they use complex mathematical models, programmed with these business assumptions, to compute and optimized plan.

The problem is that we now live in a heavily outsourced and extremely dynamic world, where assumptions are changing all the time.  What do you do if the optimal plan is wrong?  What we find in most organizations is that despite these investments, their users are relying on spreadsheets to try to cope with constant change.  The result is a heavy maintenance toll on a system that isn’t providing the value the company needs and, thus, they suffer with less than market leading customer satisfaction, operating costs, margins, etc.

So, IT is in a bit of a dilemma as it seeks to provide systems that meet changing business requirements while they deal with legacy investments that have failed to deliver and they still have the maintenance toll on these systems.

What companies need today are integrated and collaborative demand-supply planning, monitoring and response systems that empower people to leverage the right human judgment to make necessary course corrections in the face of all these changes.  They need systems that can solve a variety of supply chain management business challenges from a single system.  And, they need systems that get away from the sequential demand planning, supply chain planning paradigm that slowed responsiveness and agility to an integrated view the immediately facilitates rapid demand-supply balancing when unplanned events occur.

And, IT organizations today are seeking to leverage on-demand services to address the businesses supply chain management challenges.  This is critical to deal with the unrelenting budget pressures that IT has been under both in terms of staffing and overall spending, since on-demand services provide the needed functionality without the capital equipment expenses and with dramatically reduced operational fees as well.

IT is faced with a series of challenges, but there are options available to allow IT to provide better manufacturing software tools to the business.

I found a very good article at CFO.com discussing the supply chain management challenges companies are facing today in light of the rising logistics and commodity prices.  I posted a comment, entitled “integrating financial metrics into day-to-day supply chain management processes“ at the site and have included it here as well.

** My comment **

Great article covering the challenges that manufacturers in all verticals face today.  The increase in shipping and commodity prices is hitting everyone and forcing them to re-evaluate all aspects of their supply chain management strategies - from network design, to logistics, to sourcing, etc.

At the heart of the challenge is the reality that volatility is on the rise.  Whether it be customer demand expectations changing rapidly, supply disruptions or volatile costs, the fact is that things are changing at a faster pace.  And, the implications of not being able to adapt are significant.

Too many manufacturers have a disconnect between their business and sales and operations planning (S&OP) processes and day-to-day supply chain management processes.  Plans are put into place, metrics are passed down, but then people have to do their day jobs.

Given the rise in complexity and volatility, there are more and more high impact decisions that need to be made on the spot by your front-line responders.  Taken individually, these decisions may not have a material impact on your financial metrics, but in aggregate, it can be very material.

What manufacturers need are to develop supply chain management processes, supported by the right tools, that integrate financial metrics directly into the supply chain management processes.  The key is to ensure that the necessary high impact judgment calls are always aligned with the financial metrics of the company.  Without clear and immediate visibility to the impact a proposed action would have on these metrics at the point of action, your risk saying yes to the customer and dealing with the ramifications later.  The only way to ensure a profitable response to change, is by integrating financial metrics directly into the realities of today’s supply chain management processes.