Posts categorized as 'Supply chain management'

Supply chain pain points: Automotive

AlexaCheater

6 speed bumps on the road to automotive supply chain success

Automotive supply chainA trending move from regional to global supply chain processes is adding complexity to the automotive supply chain at an unprecedented level, driving a growing need for automation and collaboration. That’s revving up interest in realignment, consolidation and optimization of supply chain activities. The problem is, limited investment in top tier suppliers is causing constraints, and the rise in connect devices (including cars) means requirements for further innovation must extend beyond environmental footprint and safety.

Emerging markets like Brazil, Russia, India and China are further changing the automotive landscape, as automakers look to streamline distribution and better serve these areas, who combined represent 40% of the world’s population and have gross domestic product (GDP) growth far exceeding that of more fully developed countries.

Staying competitive has become harder than ever. Here are just a few of the other challenges facing the automotive industry.

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Does your supply chain hear the change coming?

JoeCannata

What rapid adoption of virtual assistants means for CPG supply chains

CPG supply chainI recall watching the original Battlestar Galactica series in the late 1970s, and there was an episode where Commander Adama was dictating his log. Before him was a computer screen recognizing his voice, taking his spoken words and translating them to perfect text for all to see. The capitalization and punctuation were perfect. Who knew back in 1978, when a home computer was slightly more than an expensive toy, and large computers were mainframes that ate punch cards and spewed paper and hole-punched tape, that this stunning scene would be a reality in my lifetime?

Now let’s move on to December of 1983, when a small company owned by Exxon Enterprises, named Verbex, interviewed me for a Systems Analyst position. Verbex had nothing to do with oil. They were one of the early pioneers of voice recognition technology, and produced a device about the size of a small paperback book, that had an active vocabulary from 300 to 10,000 words. It was being used at the time for everything from bridge painting to package sorting. I didn’t get the job, but I was made quite aware that the “future” shown in a 1978 TV show was five years closer to becoming a reality.

Now if we fast-forward to present day, we have the likes of Siri, Alexa, Cortana and Bixby, all on personal devices. I have spoken into my phone to Google to get directions on numerous occasions. People dictate text messages. And now, using technologies like Amazon Echo, people can order whatever they want, any time, from any place. This fundamental shift in the shopping paradigm is posing unique challenges for supply chains. Already, supply chains have had to adapt to online shopping, and crazy fulfillment demands. After reading a recent article in SCM World by Kevin O’Marah, I learned that CPG companies have felt extreme upstream pressure, as he puts it.

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10 must ask supply chain data security questions

AlexaCheater

Supply chain dataWhen it comes to cyber safety, your supply chain could be your biggest weakness. Approximately 80% of data breaches originate from within the supply chain, and the financial impact of a breach could do more than destroy your bottom line. It could ruin your credibility with your customers.

In 2013, Target, one of the largest retailers in the US, fell victim to a massive data breach when a cyber intruder stole credit and debit card information on more than 40 million customers and personal details like addresses, phone numbers and email addresses of 70 million customers. It cost Target more than $88 million in damages. Attacks like these have become the number one threat to many organizations and their associated supply chains, but protecting yourself isn’t enough.

Target’s breach was traced back to malware installed on its point-of-sale system. The attack came through one of its vendors, making it even more important that you have end-to-end visibility through all tiers of your suppliers – not just the top few.

While cyberattacks aimed at stealing data remain the most visible risk, attacks designed to deny or disrupt service are also gaining in popularity. These types of cyberattacks jeopardize production and delivery schedules, causing delays and negatively affecting customers. Nodes along the entire supply chain can feel the impacts.

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Sustainability vs. profitability: Is it one or the other?

AlexaCheater

SustainabilityHow 25 multinational companies achieved sustainable supply chains

I’d like to think that most companies have moved beyond the point of believing that sustainable business practices aren’t a priority. I hope they recognize the importance of environmental protection and the value of leaving the planet a little better than they found it. Sadly, the reality it seems for many is that it’s all about the tradeoffs. Do we implement greener policies at the cost of our bottom line?

But does it really have to be one or the other? In my opinion, thankfully not. And I’m not alone in my assessment. Building sustainable supply chains has been a growing trend for years, and as it turns out, those early adopters may actually be seeing an increase in profits.

According to a World Economic Forum report, companies like UPS, SABMiller, DHL, Unilever and Nestle are among 25 multinational companies that focused on sustainability and ended up increasing revenue by up to 20% while cutting supply chain costs as much as 16% as a result. Beyond Supply Chains: Empowering Value Chains outlines 31 best practices for businesses to follow to see similar results. The primary idea behind the best practices is simple – work to achieve profitability through measures that also benefit society and the environment.

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Supply chain pain points in the Aerospace and Defense industry

AlexaCheater

7 barriers to aerospace and defense supply chain success

Aerospace & DefenseAs air travel demand soars, aircraft equipment manufacturers continue to innovate in areas like jet engine fuel efficiency, navigation technology and materials science. These improvements, especially around fuel efficiency, are driving demand for newer aircraft models, and speeding up the replacement of previous generations as a result.

For supply chains in the aerospace and defense industry, keeping pace with original equipment manufacturers (OEMs) who are dramatically increasing production rates for components, systems and services, is a major challenge. As the flying public continues to demand lower airfares, a ripple effect is running through the entire supply chain, from OEMs to tier one suppliers and lower, as everyone struggles with the ongoing challenge of competitive pricing.

The global defense industry is also facing new challenges, including how to grow profitably in the face of a potential market decline and how to cut costs to maintain acceptable financial performance. These organizations are cutting costs to maintain their margins in this declining revenue environment. Successful defense companies have anticipated defense budget cuts, already reducing staff, cutting overhead costs and getting leaner. They’re accelerating process automation instead of hiring more staff, resulting in higher operating earnings per employee.

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Career advice: Keeping your edge as a supply chain professional in the face of change!

Dr. MadhavDurbha

Supply chain professional advancementThere is a standalone vehicle emission check shop that I visit to get my car checked prior to the annual tag renewal. For those who are not familiar with the emission check process, you drive your car into the shop. As you wait in your car, a technician hooks your car up to his computer, measures emissions and prints a certificate. The whole process takes about 5 minutes. Just about 4 or 5 years ago the service had cost $25. The aforementioned shop was one of the very few shops providing the service in the vicinity. However, over the next few years, nearly every auto mechanic shop in the area started offering an emission check service. For them, it was simply a loss leader to get the cars in. Then they took advantage of the opportunity to sell higher margin services they offer. Soon, the prices for the service started dropping. The cost of an emission check went down to $20, then $15, and now stands at $10. It wouldn’t take a genius to figure out where the trend will continue to go!

The moral of the story is simple. When a service gets commoditized, the differentiation disappears, and the price that one is willing to pay drops. It doesn’t have to be a service. It can be a product, or even a professional like you and I. We get commoditized, too! Jack Welch said it – “If the rate of change on the outside exceeds the rate of change on the inside, the end is near”. While he said it in the context of organizations, this could very well be true for individuals, as well.

Let’s talk about the implications of this for supply chain professionals. Supply chain management is quickly evolving to be quite an interdisciplinary field. Just recently, I was talking to a youngster studying industrial engineering with specialization in SCM. The curriculum he is going through is quite well rounded with coursework and internships that included industrial engineering, operations research, big data analytics, systems engineering, and programming. Besides majoring in industrial engineering, he is also getting a minor in computer science.

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How Kennametal developed an integrated supply chain by connecting its data dots

AlexaCheater

Integrated supply chainFaced with growing global complexity and increasing demand volatility, Kennametal set out to improve its supply chain maturity, increase data integration and improve its bottom line as outlined in a recent case study published on Kinaxis.com. According to Kennametal, what was required for supply chain success was finding new ways to connect data, process and people.

As Jochen Kraetschmer, Manager of Global S&OP at Kennametal, explains in the case study, driving the decision to change was the impact of market demands on Kennametal’s revenue. Inventory levels were bloated, customer satisfaction levels were low and a very high SKU count and complex supply base across all continents meant it was a challenge to keep data connected and processes optimized. Complexity overlaid nearly every aspect of the global manufacturer’s operations.

So how could Kennametal overcome it?

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Where are you on your capacity planning journey?

BillDuBois

Tight ropeBalancing capacity can be as challenging as walking a tight rope. It’s a fine line between staying balanced or plunging to your death. Not enough capacity and you lose balance when it comes to delivery and customer satisfaction. Too much capacity and you lose your balance when it comes to costs and margins. All companies are walking this fine line with capacity planning, but some are continuously waving their arms trying to stay upright, while others have secured their footing.

At one end, you have what you might call the “order toss” approach. Let’s throw the orders over the wall and try not to listen to operations scream bloody murder. Planning decisions are made with the best of intentions but for reasons that aren’t always clear, those decisions are made without much consideration for capacity.

At the other end, you have organizations with finely tuned collaborative processes that consider capacity at all levels of the planning horizon. From business planning, sales and operations planning (S&OP) down to detailed material planning, capacity planning is part of the conversation at all levels. Utilization is a key metric for high capital equipment. Capacity and inventory planning work closely together to manage prebuild plans against inventory targets. In overloaded conditions – and let’s face it, regardless of how good your processes are it will happen – demand, supply, inventory and capacity planners are all in sync to balance revenue, margin and delivery targets against utilization, inventory and cost reduction goals.

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