Posts categorized as 'Supply chain collaboration'

Your supply chain is costing you money – Reason #9: Relentless pursuit of one metric at the expense of other metrics.

JohnWesterveld

supply chain metric

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 #9 Relentless pursuit of one supply chain metric at the expense of other metrics

Imagine that your child brings home their report card and it’s a mix of good and fair grades. You tell them that the only grade that matters is their geography mark. You tell them that you expect an A in geography – and you don’t care what happens to their Math grade. History? Don’t care. Social studies? Pshaw. Just focus on geography and forget about anything else. Sound ridiculous? It should. Yet, these are similar instructions as what is passed down to the supply chain from executives focused on a specific supply chain metric.

One example that I’ve seen several times is around inventory targets. The typical example is as follows;

  • A company uses complex software to model the supply chain considering a desired customer service level, lead time data, and statistical analysis of supply and demand variability.
  • This software then calculates the statistically correct, time phased safety stock levels across multiple levels of the supply chain, providing the optimum inventory in the optimum location.
  • If you sum this inventory across all locations, it represents the minimum inventory needed to achieve the desired service level given the current capabilities of the supply chain.
  • The executive team then provides the supply chain planning team with new inventory targets that are (of course) much lower than those values calculated by the inventory optimization tools.
  • The supply chain team then ramps down the inventory to the new target and responds to the inevitable stock-outs by expediting short materials and shipments.
  • The result is a lower inventory level, but much higher expedited costs and reduced customer service.

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Kinaxis on the road: 12th American Supply Chain & Logistics Summit

MelissaClow
SCL Summit

The American Supply Chain and Logistics Summit, now in its 12th year, brings together senior executives from across the Supply Chain and Logistics fields to enjoy an unbeatable mix of networking, expert case studies, interactive debates and master classes over three exceptional days.

Join Benji Green, Director of Global Sales, Operations, Supply and Inventory Planning at Avaya for the Kinaxis supply chain optimization workshop on December 9th. Register using the link below to receive 25% off your registration.

December 8-10, 2014
Dallas, Texas

Learn More and Register for the Summit

Schedule Meeting

 

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Your supply chain is costing you money – Reason #8: Keeping supply chain information in silos (and preventing your users from making the best decisions)

JohnWesterveld

supply chain information silos

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 #8 Keeping supply chain information in silos (and preventing your users from making the best decisions)

Don’t ask… you don’t want to know. I can’t tell you how many times I’ve heard that phrase from different people in different contexts. Sometimes it’s true. I probably don’t want to know. Sometimes (like when I hear it from my son) I probably not only want to know, I NEED to know. Not because I want to pry (well… maybe a little) but mostly because I care and if I know I might be able to help.

When companies deploy supply chain solutions, they often make the decision for users… “you don’t want to know”. They do this by preventing them from getting (or making it very difficult to get) any more information than they absolutely need to do their specific job. Sometimes this information limitation actually prevents them from doing their job adequately.

Sometimes this is intentional and necessary;

  • Some companies (especially publicly traded companies) restrict access to revenue / margin information to prevent unauthorized financial data from getting out.
  • Some companies prevent access to data to prevent trade secrets (or in the case of US military manufacturers ITAR regulations prevent foreign nationals from accessing manufacturing data)

Sometimes this is intentional and questionable;

  • One company I’ve talked to told me that they limit information to their planners because they wouldn’t know what to do with it… that it would just confuse them. But in my opinion, there are few things more complex than supply chain management. Planners are smart people and if educated (APICS training should be a prerequisite in my opinion), they likely will have no problem absorbing and using additional information.
  • In other cases, information is limited because of interdepartmental rivalries, for example, “I don’t want demand planning to see my supply planning information. I’ll tell them what they are getting.”This is just plain wrong on multiple levels. If you hear this rational, then I’d look at your management levels and how people are being rewarded. In today’s competitive manufacturing environment, the only metrics that count are how a change impacts the company’s goals. Departmental goals should be secondary.

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

JohnWesterveld

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;

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Supply Chain Professionals Speak on Delivering Better Business Outcomes with Kinaxis

MelissaClow

I wanted to share this video compilation of several supply chain professionals that we have interviewed over the years. In the following clip these supply chain practitioners share their opinions on:

  • What is the primary change we are seeing in today’s supply chain?
  • What are key supply chain challenges organizations are faced with today?
  • How does Kinaxis compliment and extend ERP investments?
  • How is Kinaxis helping improve supply chain processes and deliver better business outcomes?
  • How is Kinaxis unique in helping solve complex supply chain challenges?

Hear customers from Qualcomm, TriQuint, Flextronics and Jabil speak on how RapidResponse has transformed their supply chain.

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Humans-In-Loop – Part 3 of Kinaxis & Cognizant Series

PrasadSatyavolu

Trevor Miles and I have been having a healthy discussion on the Internet of Things and how these technology changes are shaping the way we work.

This is part 4 in our series.

analytics-velocity

As the IoT (Internet of Things) unfolds across multiple aspects of human life, we should expect an exponential increase in human connectivity. Relying on a shared computing environment to having more than 2 computing devices per person and counting- Computing and Connectivity have come a long way for Supply Chain professionals. As the graphic below suggests, the Analytics velocity is also increasing with time.

Consumption of the Analytics output in Supply Chain can both be human centric as well as an automated control action. We know that operations environment demands an Agile and Effective Fulfillment which requires individuals in the Supply Chain organization to make fast decisions in real time. There is ample scope of automating several of these decisions with multi-dimensional information input and in Memory Computing based engines. However, not all scenarios can be modeled even with the availability of perfect information. Thus posing a limit to this automation and paving the way for human intervention. These limits are being challenged as new paradigms emerge.

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SMAC in the Middle of Supply Chain Change – Part 3 of Kinaxis & Cognizant Series

TrevorMiles

digital natives versus digital immigrantsMy friends at Cognizant and I have been having a healthy discussion on the Internet of Things and how these technology changes are shaping the way we work.

This is part 3 in our series.

Some colleagues and friends think I am nuts to put so much emphasis on the Digital Natives, and perhaps I am. Being a Digital Immigrant myself, I am only too aware of the command and control structures with which I grew up and which have been the foundation of all organizations for which I have worked. I’m not so naïve as to think that this change will happen quickly.

Throughout history major changes in technology have driven changes in social and business structures, the classic being the Pony Express and the steam train. But more fundamental change came from the printing press. This is a closer equivalent to the impact digitization will have on business structures, including a major shift in business models and therefore winners and losers.

We used to go to an office (many still do) because this was the easiest way to organize a workforce and structure work. Similarly with factories. People have to go to where the machines are. But in a digital world the only reason to have an office is for the management, which are almost always Digital Immigrants, to enforce a structure and linear decision making processes, the very things that Digital Natives find most constrictive.

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Your supply chain is costing you money – Reason #6 Not effectively managing inventory.

JohnWesterveld

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:

Not effectively managing inventory.

Reason #6 Not effectively managing inventory

I had to throw out some carrots yesterday. I hate throwing food out but there was nothing to be done for it…all I can say is that I’m glad the carrots were in a bag….and it didn’t leak. That got me thinking about why I was throwing away what had been perfectly good food;

  • I had forecasted needing a certain amount, but the customers (my family) didn’t take what I’d forecasted.
  • I thought we would want carrots, but everyone wanted broccoli…which I didn’t have.
  • I lost track of how many carrots we had and ended up buying more when we really didn’t need any.
  • Spoilage can happen. In the case of my carrots, there was a limited shelf life – but they could have been dropped or stolen (hey, it could happen!).

That was carrots. All in all, it cost me a couple of dollars. Unfortunately, all the same kinds of things can happen to your supply chain inventory. Except that your inventory costs millions of dollars.

Those of you that manage inventories know how hard it can be to get the quantities just right. If you maintain too little inventory, you have stockouts, line stoppages and unhappy customers. If you have excess inventory, it ties up working capital and is at risk of damage and obsolescence. The worst possible world is when you have too much of something you don’t need, and too little of something you do need.

So what strategies are out there to maintain inventories at the “right” level? There are many but let’s focus on some of the high runners;

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