4 Benefits of An Integrated Supply Chain
Nick Ostdick - October 11, 2016
People. Processes. Infrastructure. Capacities.
In today’s global automotive industry, supply chains function most efficiently when all the major elements are integrated from end-to-end. Because so much of the modern supply stream consists of disparate production networks, complex partnerships, and markets and customer pools spread out across the globe, the ability to coordinate the people, processes, and products critical to effective supply chain management is key in such a variant-rich industry.
Of course, as with any principle or concept, it’s important to understand what supply chain integration truly means. Full supply chain integration means much more than simply managing the movement of materials and resources and addressing logistical issues thereof. Rather, supply chain integration means an acknowledgement that production stages of the supply chain must exchange data, and analytics, and time-sensitive information in real-time with other points in the supply network.
Whether it’s the sourcing of raw materials, assignment of planned production programs, transportation and warehousing, or delivery and customer management, companies in today’s automotive industry have realized the value-added in integrating their supply chain across all touch points in order to fully control their overall supply situation and gain valuable insight into the functionality and efficiency of their value chain. This is due to more and more companies taking a holistic view of their supply pipeline and understanding how sales, planning, production, reporting, and analysis are more interconnected than ever before, especially with the deployment of intelligent planning solutions that continue to break down functional silos and encourage collaboration across platforms.
But for companies who have realized the importance of an integrated supply chain in fostering lean principles and long-term, sustainable growth, what are the benefits? What competitive advantages have these companies experienced? With this in mind, here are 5 benefits of an integrated supply chain for automotive companies in a complex, global landscape.
1). End-to-end collaboration of dynamic supply networks. As we’ve discussed before, a common fixture for OEMs in today’s supply stream consists of production facilities and hubs spanned out across the globe, creating an increasingly difficult network of production platforms to manage. End-to-end (E2E) visibility is critical in overseeing these networks and ensuring the right products are being produced at the right time at the right facility given various rules or restrictions. A fully-integrated supply chain allows planners and managers to make adjustments or modifications to planned production programs - often while component parts are in-transit or even during the pre-production stage - in real-time to secure on-time delivery, efficiency, and cost-effectiveness.
2). Transparency of materials supply, flow, and inventories. Because of a number of intelligent planning software solutions and strategies such as BOM management, Plan for Every Part (PFEP), Every Part Every Interval (EPEI), and container management strategies, a fully-integrated supply chain allows planners and managers to view, track, and modify the movements of parts, inventories levels, and container pull strategies based on demand or production levels. The sharing of information between the sales and planning stages of the value chain also allows for OEMs to create more accurate forecasting based on previous performance to ensure coverage levels are met and productions can continue as scheduled.
3). The nimble orchestration of production networks. It’s no secret that one of the most important bottom lines in today’s automotive supply stream is the ability to adapt to changing parameters of production, fluctuations in inventory or material levels, and bottlenecks or disruptions. If we think of an integrated supply chain as a game of telephone where there’s no variation in what is said between the players, it’s easy to understand how the sharing of valid, up-to-date, and detailed information is critical in promoting a robust production platform capable of withstanding on-the-spot modifications and alterations. Accuracy of data and information is perhaps at the core of creating a nimble, responsive production network.
4). Real time communication about product information. Imagine a planned production program calls for X number of parts to be pulled from a container in the yard; however, after the pull has been order, the customer requests an alteration to the order requiring fewer parts from the container. In a time before intelligent planning solutions and integrated supply chain concepts, this modification could mean a significant disruption as more time and resources would be needed to make the adjustment. But with a fully-integrated supply chain where players can communicate data or product information in real-time, planners and managers can adapt to this order fluctuation the moment it happens to pull the right quantities of parts from the right container in the right fashion. This means an overall reduction in costs and increased efficiency as OEMs will have fewer special handling situations to address to meet changing customer needs.