Posts tagged as 'Manufacturing'

Teradyne – Managing Demand: How Agility Replaces Predictability – SupplyChainBrain & Kinaxis Video Series

MelissaClow
  • by Melissa Clow
  • Published

SupplyChainBrain attended our annual Kinexions user conference, and while there, they completed a number of video interviews with customers, analysts, and Kinaxis executives. And, we’d like to share them!

With consumer markets more volatile and unpredictable than ever before, companies need to make up for a lack of forecast accuracy with supply chains that can rapidly respond to changing demand, says Chris Vosse, business systems analyst with Teradyne.

Demand planners agree: the forecast is always wrong. “We haven’t been able to accurately forecast for a long time,” says Vosse. But rather than try to hone their predictions further, companies should be looking to improve their agility in responding to unexpected shifts in demand.

Vosse speaks of the process of “informed risk decisions.” At Teradyne, many components have a lead time stretching over two quarters, and require 26 weeks to procure. Yet customers expect delivery to occur within eight weeks or less. The solution, according to Vosse: “You need to start acting sooner in order to respond later.”

Watch now: Teradyne – Managing Demand: How Agility Replaces Predictability

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Your supply chain is costing you money – Reason #5 Not having a supply chain risk management process

JohnWesterveld

supply chain risk management

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:

Reason #5: Not having a supply chain risk management process

In today’s society, unless you are rich enough that you can afford to replace your possessions, pay for your health care, and cover your liabilities, you have insurance (unless you are poor enough that you can’t afford the premiums). Insurance is a form of risk mitigation. Insurance protects us against theft, fire, accidents, and health emergencies and if this were to happen, it can provide for our family when we pass. Yet, a surprising number of companies (while they have traditional insurance) do not have a supply chain risk management “insurance” aka a supply chain risk management process. To put it another way, they have insurance to protect them if someone trips on their property and sues, but don’t have a risk management process to mitigate against their top supplier going out of business. The insurance covers what could be a million dollar risk, supply chain risk management protects against what could be a MULTI-BILLION dollar risk.

Supply chain risk can be broken out into multiple different types;

  • Geographic: This includes natural disasters and political unrest. These are the types of issues that impact supply for an entire region. We saw this type of issue over the past several years with the Japan earthquake / Tsunami in and with the Thailand floods. Political issues can also have a significant impact on supply. Conflicts, government policy changes, regulatory changes and coups can mean that supply is suddenly turned off or that a market is no longer available.
  • Supplier issues: This includes quality issues, delivery reliability, financial stability, reputation, strikes, and pricing changes. We talked about many of these issues in the first post of this series – “Offshoring without getting the full picture”. The key point here is that in today’s connected supply chain, your suppliers are an extension of your own business. If your supplier fails financially, it will impact your business. If your supplier goes on strike or can’t deliver for some other reason, it will impact your business. If your supplier has had a shaky human rights record, your business’s reputation can get tarnished. If your supplier decides that you need to pay more or global currency exchange rates drive up the cost of a component (and you have no alternatives ready to go) your margins can be significantly impacted.
  • Customer Demand: Interestingly, this is often ignored when people think about supply chain risk however, it can be one of the biggest factors. If your demand decreases, you have excess inventory or idle capacity. If your demand disappears completely you are out of business. If your demand increases significantly, your supply chain can be overwhelmed and delivery becomes an issue.

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Your supply chain is costing you money – Reason #4 Making key decisions by modelling the supply chain in Excel

JohnWesterveld

Reason #4 Making key decisions by modelling the supply chain in Excel

Making key decisions by modelling the supply chain in Excel

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:

In my career, I’ve had the pleasure of working with several top tier supply chain companies. Companies that are household names. Companies that have been in business for decades. Companies worth billions of dollars. Companies that are forced to use Excel to manage large swaths of their advanced supply chain planning. Companies that are starting to realize that while Excel is a powerful tool and can be used for lots of things, it isn’t the tool to use to run your supply chain.

Excel excels (if you’ll pardon the pun) at many things. But modelling complex supply chain relationships isn’t one of them. There are many issues with using excel that have been written about numerous times in this blog. A sampling are here, and here.

I can briefly summarize the main points;

Companies use Excel because their traditional planning systems don’t allow them to view and understand aggregate data and more importantly, don’t allow them to effectively react quickly to change. However, because people need this information and because people (especially those in supply chain) are very smart and come up with ingenious ways to solve problems, they extract data from their ERP systems and build complex models in Excel.

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Your supply chain is costing you money – Reason #3 Not having end-to-end supply chain visibility

JohnWesterveld

LA freeway is like complex streets of supply chain

Not having end-to-end supply chain visibility

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:

Imagine this scenario. You are a supply chain leader. It’s Friday afternoon and your thoughts are turning to the upcoming weekend with your family. The phone rings – it’s your VP of sales. A prospect that your company has been chasing for years has finally agreed to place an order. It’s a big one and they need it fast. Really fast. Inside cumulative lead-time fast. The question is can you do it. Can you commit to this order with confidence that you can deliver?

Traditional ERP offers a couple possible options. 1) Load and pray. Accept the order and hope / pray that everything aligns and you actually can deliver on time… maybe event at a profit. The problem with this approach is that very often, you can’t deliver and you lose a customer and worse your reputation. 2) Fire drill (I knew a company that actually called it that). This is where you e-mail each node in the supply chain with the order requirements, have everyone do a feasibility analysis on accepting the order and then wait for the results. The results, however may take several days / weeks to come in. By that time the customer and their lucrative order have moved on.

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Your supply chain is costing you money – Reason #2 Poorly executed or non-existent sales and operations planning

JohnWesterveld

sales and operations planning gears

Reason #2: Poorly executed or non-existent sales and operations planning

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 post here:

Tell me if you’ve heard this one before. Your company has implemented an S&OP process. At first it showed some promise, but now it has turned into a blamefest attended if at all by lower level representatives that aren’t empowered to make decisions. No one trusts the numbers, inputs are late and you aren’t seeing any improvements month over month and people are starting to wonder “why bother”. Sound familiar?

So how does a poor S&OP process cost money?

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Your supply chain is costing you money – Reason #1 Offshoring without getting the full picture

JohnWesterveld
Here, there and everywhere | The economist
Here, there and everywhere | The economist

Reason #1: Offshoring without getting the full picture

Over the years, working for and with numerous manufacturing companies, I’ve seen many supply chain practices that cost companies money. In a series of blog posts, I’ll outline these issues and discuss some ideas around how to avoid these practices.

We all understand the appeal of moving manufacturing offshore; In many cases, offshore manufacturing is considerably cheaper, is apparently easier (just send the requirements and they build it!) But before you pull the trigger, make sure you understand these cost factors that don’t often get considered;

Longer lead time – The product that at one time was manufactured in your plant and then shipped to your customer (often in the same country) is now being shipped by boat. Instead of a 1 week lead-time, you are looking at a month or more. This significantly changes the supply chain picture and must be considered in terms of additional safety stock requirements (which will drive up inventories) and your order promise policies.

Communication issues – Dealing with people in other countries has its challenges; language barriers can make communicating detailed technical issues a challenge. Meetings are difficult to set up because one side or the other will need to take the call outside of normal business hours. And if you decide to meet face to face, you are looking at long travel times.

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What the Analysts Are Saying About…A&D Supply Chains

BillDuBois
  • by Bill DuBois
  • Published

What the Supply Chain Analysts Are Saying About A and D Are you looking for some reading material to pass the time on your next flight? Even if you’re not you should check out Supply Chain Insights, Supply Chain Metrics That Matter. For the past several years, Supply Chain Insights has been delivering this research series. What caught my eye is that for each report, they do a deep dive on a specific industry and use a mix of financial data, survey research results and interactions with their clients to help get a better understanding of various industries’ supply chains.

I spread my Supply Chain wings at an Aerospace company and since Aerospace and Defense is a key vertical market for Kinaxis, the recent Supply Chain Metrics That Matter: A Focus on Aerospace & Defense report was downloaded on my laptop to read on my next flight. The research benchmarks A&D companies against other industries and looks at the top five A&D companies over the last decade. Although it didn’t give any suggestions on what to do when you find yourself in row 32, you know the one next to the washroom, it did discuss the challenges the industry is facing as well as offering up solid recommendations for areas of improvement.

From a challenges perspective, here are the highlights covered in this report.

The obvious challenge is the complexity in the A&D industry. The report uses the Boeing 747-8 International as an example. It has about 6 million components which are manufactured in 30 countries by 550 unique suppliers. Think about those design, sourcing and delivery challenges.

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