Posts tagged as 'Supply chain management'

Inventory Management: Technology Enablers

AndrewDunbar

Woman touching a virtual screenThe modern day inventory manager described in this series is the backbone of your company’s inventory planning process. She has a strong understanding of supply chain fundamentals and is an expert at controlling the key levers impacting the inventory company’s investment in inventory. All that’s left is to add a planning system that enables her to work effectively. If you leave her to build reports and metrics that she needs in excel then she’ll spend all her time crunching numbers instead of planning your company’s largest asset. So, what features should you look for in a good planning system?

  1. All your data’s in one place. Your planning system should combine all your company’s data in one system. It should be up-to-date (daily at a minimum), and include all the input data required to make your inventory planning decisions.
  2. Closed Loop. If you don’t execute with your planning system, there should at least be a closed loop between the systems so you don’t spend all your time transcribing after making a decision.
  3. Built in reporting systems should immediately alert your inventory manager to changes requiring response. Agile response can make all the difference.
  4. Your inventory manager needs a dashboard that can give her a clear picture of the current status of the inventory plan and provide insight that guides her actions each day. It’s also useful to have more in-depth tools that provide a visual representation of a wide array of metrics simultaneously to help identify concerning trends and improvement opportunities across all the levers in her toolbox. While it can be hard to find time for it, exploratory analysis often pays big dividends.
  5. I covered this last week, but I really can’t stress enough how important it is to select metrics that support all of your business goals. It’s important that the impact of you planning decisions are visible across all parts of your organization. These metrics should be using live data, and you should instantly see the results of the changes you make.
  6. Interactive charts and graphs. The metrics on your dashboard should be interactive to enhance their analysis value. You should be able to hover your mouse over charts to read key figures, and you should be able to drill into the details with a single click. Metrics should update immediately when you make changes and you should be able to filter the input data to dig in to areas of concern.
  7. Hierarchies. Data hierarchies allow you to see your data at various levels of aggregation. Imagine being able to see your metrics at a global, regional, country, or site specific level with a click of the button. Hierarchies can be built into dashboard and reports to allow instant filtering to look at key details.
  8. What-if scenarios allow you to immediately calculate the results of changes you make so you can evaluate the results before committing the changes to your master data. You can easily lose a whole day if you have to wait for your ERP system to refresh overnight before you can understand the impact of a settings change.

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Inventory Metrics: From Insight to Action

AndrewDunbar

Abstract depiction of metricsOver the last several weeks, this blog series on Inventory Management has explored the objectives and roles of inventory managers and outlined several of the improvement levers available to them. This post will discuss some of the metrics and analysis tools that an inventory manager needs to identify risk and opportunities and to make intelligent decisions to optimize the performance of their inventory.

When determining the metrics required for any business process, the first question you need to ask yourself is, “What are the business goals of the process?” Once you can answer that, you need to understand where the business process fits into the organization. What processes are upstream of your current process? Who relies on the outputs, and what are their priorities? These are all important questions to help you select metrics that facilitate a balanced decision making process and allow you to understand the trade-offs between proposed scenarios.

The metrics you choose should answer the questions your organization is asking, without requiring additional analysis. If you find your organization spending too much time completing repetitive ad-hoc analyses, you may want to re-evaluate your metrics. Each metric requires context. This could be a target level, or simply historical data that allows the reader to understand how the current situation compares to the ideal. Your dashboard metrics should highlight issues requiring immediate action and should be supported by details that can tell the whole story. If your organization wants advice on data visualization techniques for dashboard design, communication, or analysis purposes, I highly recommend checking out the work of Stephen Few.

So, what do you need to measure to manage your inventory?

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What your Dad can teach you about effective supply chain

AndrewDunbar

Co-author: Alvaro Fernandez

Dads can teach you a lot about supply chainHappy Father’s Day to all those hardworking dads out there! Ever notice how your dad’s advice always seems to come from a place of experience? He’ll always let you make your own mistakes, unless he’s already made those same mistakes himself. In honor of these dads’ accomplishments in the field of trial and error, I’ve compiled a list of the top 10 lessons your dad can teach you about supply chain.

10. First pants, then shoes – Whether you’re getting dressed for work or increasing your supply chain maturity, it’s important not to get too far ahead of yourself. Make sure your supply chain solutions help you excel at each capability as you progress through the maturity model.

9. Know the risk – Ex. In principle, just-in-time processes are very efficient. You get to hold on to your hard earned money for longer, you don’t have to store extra inventory, and your workspace isn’t cluttered with things you don’t need yet. In practice, these high rewards comes with high risk. Dads have learned this the hard way by applying this approach to things like anniversary gifts, anniversary cards, and sorry-I-missed-our-anniversary flowers. It’s important to understand the risks in your supply chain, and to have the right mitigation strategies in place.

8. Never trust the salesman – As the saying goes, if it looks too good to be true, it probably is. Save yourself the hassle and choose proven and recognized solutions.

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Inventory Management Levers – Success Through Collaboration

AndrewDunbar

Inventory management requires a collaborative effortSo you’re an inventory manager, and your CFO just asked you to reduce inventory by 10% before year end to free up some capital for next year’s big investment in R&D. At first glance, it’s not so bad; you’ve got nine months to do it. But then you look at historical trends and see that lately, your inventory has been growing by 3% each quarter. Suddenly, you need to be about 20% below your current year end plan! That’s a big challenge! On top of that, you know you’d better do it without negatively impacting your customer service levels, because you can’t afford to spend all your time fighting fires for your customer service representatives.

So, what improvement levers can you pull to accomplish this goal? Do you have the authority to act on your own? Even if you don’t, you can be sure that you’ll be held accountable anyway!

Below are five levers that I believe should be available to an inventory manager to help them effectively plan and manage inventory. I’ll refer to Figure 1 below, a simple representation of the inventory of over time for a single part with safety stock, to explain the impact that each lever can have on your inventory levels.

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Gartner Supply Chain Executive Conference – High Stakes in the Desert

TrevorMiles

A group of smiling kids just like Trevor Miles was all smiles at the Gartner Supply Chain Executive ConferenceI love attending the Gartner Supply Chain Executive Conference. Much has changed in supply chain over the past 25 years, though there are many that date from that time, many of whom I run into at the conference, who would deny this. For me it is like a summer camp I have attended for many years. One of my younger colleagues walked with me through the hallways to a meeting and remarked afterwards that he thought we would be late because of the number of times I stopped to talk to people. What he doesn’t realize is that this is due to familiarity, as much as I wish it were true that his assumption of stardom was correct.

What continued presence at the conference has given me is the long view of how supply chain management, and my focus area, supply chain planning has evolved. When I first started attending the Gartner Supply Chain Executive Conference no one had a degree in supply chain management and vendors were not welcome. Most business people were in fact very unfamiliar with computers and the majority of the vendors had advanced degrees in Operations Research. Nevertheless the core focus was on process, with people (skills) coming second, and technology excluded from the conference. This year there must have been 50 exhibitors at the conference, some of whom were more focused on people and process, the majority of whom were focused on planning.

What I find strange in all of this is that almost always the central theme of the Gartner Supply Executive Chain Conference is about technological changes that will drive process changes and the need for skills development. This was as true this year as it was last year, and the years before. And yet within the community of supply chain practitioners the three horsemen of people, process, and technology are often portrayed as being in conflict. In fact the usual mantra is that you have to get the process right first, recruit/train to fill the roles, and then buy technology to satisfy the process. Hogwash.

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Is your inventory manager a firefighter or an air traffic controller?

AndrewDunbar

An Inventory Manager uses a tablet to check stockManaging inventory can be a challenging job! Inventory managers have to balance multiple conflicting priorities, support multiple internal and external customers, and are typically responsible for millions of dollars spread across multiple sites. They often manage their company’s single largest asset and receive little thanks for their efforts.

Unfortunately, many inventory managers don’t have the tools necessary to meet these responsibilities effectively. Supply chain complexity is increasing as companies find new ways to provide value to their customers. The inventory manager needs tools to exploit this complexity to get the most out of your inventory investment. All too often inventory managers are stuck spending all their time building reports and urgently responding to the latest shortage. They become experts at transferring and reallocating inventory to put out the latest fire, but can’t always track the true impact of their actions on the organization. Training and professional development is often sidelined to maintain focus on daily issues.

As companies increase the maturity of their inventory management process, the role of the inventory manager often evolves. The best planning systems provide users the ability to visualize and plan their inventory, monitor their inventory performance, predict issues before they happen, and prescribe improvements to maximize the benefits of your inventory. Once a plan is set, the system should alert the inventory manager so they can effectively respond where adjustments are required. With the right tools and training the inventory manager can evolve from a firefighter to an air traffic controller and become an expert at manipulating the levers that set a company up for success, not just today, but 3, 6, and 12 months from today.

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How Confident Are You in Your Supply Chain?

AlexaCheater

A new survey shows most aren't confident in their supply chainIt’s a simple question really. How confident are you in your organization’s supply chain, and its ability to actually perform in a way that supports your business needs? If you answered ‘not very’ you may be surprised to learn you aren’t alone.

According to the results of Deloitte’s third annual supply chain survey, a measly 38% percent of executives claim to be ‘extremely’ or ‘very’ confident their current supply chain has the competencies required to meet their needs. To me, that number seems frightening. It means almost two-thirds of executives aren’t confident about their supply chain’s capabilities!

What’s more, just 43% consider their supply chain organization to be ‘excellent’ or ‘very good’ when it comes to strategic thinking and problem solving.

But it’s not all bad news. Most of those surveyed recognize the rapidly changing landscape means they need to start increasing their supply chain’s capabilities. Deloitte asked respondents about what it calls 13 fast-evolving technical capabilities:

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Is knowing tomorrow “good enough”?

DominicThomas

supply chain planning means knowing todayMy wife and I just moved into our new home that we spent a good deal of our lifesavings building. We worked with our builder on every detail—windows, floors, paint, lighting—you name it. We met with so many of the tradespeople who invested so much time with us making everything just right—under my wife’s watchful eye I might add. Shortly after we moved in, one key decision that we were left with was which company to use to install and monitor our alarm system. You see, I travel a lot for work and knowing that all is well at home is something that’s pretty important to me.

These days there are so many security companies to pick from, each one trumping the other with the latest and greatest innovation. From controlling access from your mobile device, to motion detecting camera systems, the common thread is “innovation”. When securing your family and the things you cherish most, would you rely on old technology? Would “Hey, if we detect a burglar in your house, we will let you know tomorrow morning after our next batch run” make you feel good about your security company?

Shouldn’t the same go for your supply chain? Companies have invested hundreds of millions of dollars, pounds, euros and yen in supply chain planning systems since the late eighties. For a few, planning may have improved. For most, however, smart users have figured out ways of working around each of their disparate ERP and planning systems to make their businesses work. It is no secret that Microsoft Excel still remains the number one supply chain planning system in the world today.

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