Posts tagged as 'Manufacturing'

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 even 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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Three Distinct Capabilities of Best in Class – From the supply chain leadership series

CJWehlage
  • by CJ Wehlage
  • Published

supply chain leadership seriesAs I mentioned in my last post of this series, I am starting a blog series on “supply chain leadership”. I hope to pose thought provoking, and forward looking questions to executives in my supply chain network. This series will provide insights into the most pressing challenges, innovative items in supply chain leader’s budgets, and how these executives have handled talent, complexity, end-to-end S&OP, and technology. Next up is Clarence Chen, Partner at AT Kearney. I have known Clarence from his days at PRTM as Partner of Electronics & Semiconductors. His background and opinions on the future of supply chain is truly fascinating.

1. As we enter 2014, how would you describe the most pressing supply chain challenges?

Some of the most pressing supply chain challenges in 2014 continues to be that of delivery, quality and cost. I think the factors that compound those challenges are changing at a faster pace than most industries are able to cope with, thereby making attainment of the core supply chain objectives even more challenging.

There are two vectors for those factors:

1) At a geo-demographic level there are the shifting patterns of demand and growth along with cost factors rising quickly in some geographies/countries and inputs into production.

2) At a technological level, the pace of innovation continues to accelerate. Not only is the pace of NPI increasing in technology, but that same clock speed is now moving into broad sectors as trends such as the internet of things/devices become more pervasive beyond traditional high tech penetrating into industrial, healthcare, automotive sectors, etc.

To cope with these factors, companies have to rethink the core supply chain capabilities of plan, source, make, deliver and the skills and resources required to manage supply chains in 2014 and beyond. Companies will need to manage with greater precision, tightness, and control over their supply chain assets and partners. Those who don’t master that well will risk high E&O and overall inventories, supply-demand mix issues which impact service levels, and slow response times to changing market demand patterns

 

2. The End-to-End supply chain strategy has been well documented. What capabilities does your company have that is better in class for integrating end to end?

The best-in-class companies have three

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7 Life Sciences Supply Chain Processes That Require an Integrated Approach

TrevorMiles
  • by Trevor Miles
  • Published

The emerging or intensifying industry dynamics that I discussed in an earlier blog post,, along with significant shifts in strategy, are having a direct and material impact on the way Life Sciences supply chains must operate. The compounded effect of a host of complexity drivers is creating the need for supply chain transformation. By satisfying the following seven supply chain processes in an integrated manner, Life Sciences teams will be better equipped for success in today’s new, complex world.

  1. Collaborative launch management – clinical, regulatory and commercial
  2. Jurisdictional control to respect regulatory needs during planning
  3. Consensus demand planning across affiliates and countries
  4. Risk evaluation and recovery to deal with shortages and FDA shutdowns
  5. Shortage analysis and reporting for FDASIA compliance
  6. Supply and capacity planning to balance demand across regions
  7. Expiry management to balance long supply lead times and shifting demand

Let’s take a look at each of these in more detail.

Coordinated Launches

The effective launch of a new product is critically important in any industry, but it is of particular importance in the Life Sciences industry given the long time it takes to bring a new drug to market from discovery through clinical trials and commercialization, with regulatory oversight and conformance throughout the process. When the ‘long tail’ trend is coupled with shorter patent protection, the margin and market captured during the early launch period will be crucial to the recovery of the R&D investment, and thus the pressure to streamline and coordinate clinical trials and the regulatory process with the commercial launch has become intense.

Revenue Trends throughout the Product Life Cycle

phamacutical supply chain graph

Jurisdictional Control

In addition, mandates by regulatory bodies require jurisdictional control of demand satisfaction

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Supply Chain Leadership Series: High Tech executive focused on global external manufacturing

CJWehlage
  • by CJ Wehlage
  • Published

I am starting a blog series called “Supply Chain Leadership”, where I hope to pose thought provoking, and forward looking questions to executives in my supply chain network. Posted monthly, this series will provide insights into the most pressing challenges, innovative items in their budgets, and how these executives have handled talent, complexity, end-to-end S&OP, and technology.

First up is a high tech executive in the enterprise storage industry. He is leading the global external manufacturing group and based in Ireland. His deep experience in working with the complexity of outsourced manufacturing, to me, is the most extensive I have known.

1. As we enter 2014, how would you describe the most pressing supply chain challenges?

Supply Chain challenges are coming at us from multiple fronts. The ones we know about are increases in regulations, e.g. BIS, and finding the right balance between cost and the ability to service our customers in the most efficient way from an availability and lead-time standpoint. The biggest challenge, however, is being prepared for the next major Supply Chain disruption. Over the past 3 years we have had many natural disasters including ash clouds, earthquakes, flooding & hurricanes. While these events have had a really terrible impact on people lives within the region where they have occurred, they have also had a significant impact on the supply of materials to many locations world-wide. From a Supply Chain standpoint, our challenge is to prepare as robust a supply chain as possible to deal with other natural disasters that will certainly happen in the future, but we just don’t know where or when.

 

And the data supports his concern:

  • Japan Quake/Tsunami – $210B cost
  • Thailand Floods – $30B cost
  • Volcano Ash Clouds – $5B impact to global GDP

 

Global Billion-Dollar Economic Loss Events by Region

2. Looking back at the past few years, what parts of supply chain have improved and what have you seen as the contributing factors for that improvement?

Rather than specific processes, applications or techniques, I believe the biggest improvement over the past couple of years is the general acceptance that manufacturing in, or sourcing material from, the lowest cost region is not always the right option. Many manufacturing companies, particularly in the high-tech sector, are focusing on the concept of “Right-Shoring”, which is basically optimizing multiple locations to take advantage of total cost, time to market and other factors such as consumer’s pride in “Made in x” or concerns about worker’s conditions is certain regions.

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The Innovator’s Dilemma: How Does it Apply to Supply Chain?

CJWehlage
  • by CJ Wehlage
  • Published

It has been said that the business book that most influenced Steve Jobs was ‘The Innovator’s Dilemma’. Considering the success Jobs experienced in his lifetime, I’m intrigued as to what he learned from it. We all know Jobs was a highly successful businessman, for example, Apple stock increased nearly 7,000% during the time Steve returned to Apple in August 1997 until passing the reins over to Tim Cook in August 2011. It made me wonder what this book means to the supply chain business. So I decided to read ‘The Innovator’s Dilemma’. But when I read it, I inserted the word “Supply Chain” where “Product” was mentioned.

I’d like to share some insights I gleaned from the book:

Clayton Christensen, author of “The Innovator’s Dilemma’ said,

“The reason why successful companies fail is they invest in things that provide the most immediate and tangible evidence of achievement.”

In ‘supply chain speak’, that means the inability to link strategy with execution. Most of us get caught in the day–to-day challenge of running the business. For example, planners spend endless hours on finding and resolving exceptions. There’s just not enough time in the day to focus on strategy and innovation.

A very good method I have used when leading supply chain strategies, is to focus on the decisions, rather than the information. Asking, “What margin do I need this network to have for the first three months of NPI?” is better than asking “How can we get safety stock data to match between systems?”

Why is this better? I say because of…

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