Wouldn’t it be nice if supply chains could run themselves? Well, between automated scheduling, production machinery, and even logistics planning, you can achieve a fair approximation using the right tools. Even so, there are plenty of places along the value chain where things can go sideways. The headaches may be less frequent, but they are no less real. No matter how seemingly care-free your supply chain, there are aspects you’ll want to closely monitor to ensure that smooth running continues. Crucial to each of these is the visibility into your processes that comes with Industry 4.0 technology and a solid supply chain management solution.
Have you ever headed out for a family picnic, only to arrive and find your favorite meadow has been dug up to make way for a new housing development? Or left the house for a walk, and had it start pouring rain once you were ½ mile away? Did you have a contingency plan for that picnic, a backup location already selected? Were you carrying a raincoat in your backpack on that walk? These are examples of real-time planning in the regular world, but the concept transfers directly into the manufacturing realm in the form of being able to adjust and pivot as necessary. This real-time planning ability relies on more accurate demand forecasts, better visibility into the production line, and greater reporting functionality. In order for your company’s APS (advanced planning and scheduling) to be effective, let alone real-time, there are some contingencies that you’ll need to take into account.
Is your ERP working for you? Or against you? Sometimes businesses can get so entrenched in “how we’ve always done things” that they don’t see how the old ways are actually hindering their forward progress. And when it comes to a smoothly functioning sales & operations planning (S&OP) process, this hinderance can become fatal. S&OP is a constantly evolving, cross-departmental, high-level set of processes that are deeply entwined in and around multiple business units. It focuses on developing a future outlook, using historical data as its source material. Being locked into an archaic ERP system can throw up a brick wall in front of that future vision. To be sure we’re all on the same page as we get started, here are brief summaries of the major terms we’re working with today, ERP and S&OP.
Is your boss starting to ask uncomfortable questions? Like what your average order cycle time is? Or what the latest shrinkage numbers are? Sounds like it’s time to line up your metrics and develop a solid plan for tracking and reporting to management.
Has your supply chain management situation changed recently? We’d wager it has. With the introduction of Industry 4.0 technologies to the value chain over the last few years, things have been changing at an ever-increasing pace. Where once there were information silos, spreadsheets, and clipboards, now there are SCMS solutions, AI-powered advanced analytics, and IoT sensors. Rather than being the purview of autonomous managers acting in their own departments’ best interests, there are CSOs (chief supply chain officers) acting in the best interest of the whole company. And along with that shift has come a renewed understanding that the company’s best interest is generally synonymous with the customer’s.
Of all the stages of the supply chain, logistics often gets a bad rap. This appears to be largely due to a combination of the seeming unpredictability of the unknowns like weather patterns and fuel costs; and the skyrocketing costs associated with last-mile delivery in recent years. This potent combo makes it all the more unexpected that logistics is also quite often overlooked when it comes to applying learnings from demand forecasting. The predictive analytics used by demand forecasting solutions takes historical data, runs it through advanced AI algorithms and generates predictions for demand in a specified upcoming time period. That sounds pretty useful for cutting logistics costs and leveling out some of the uncertainty that’s endemic to this sector, doesn’t it?
There’s a coffee shop down the road known for ham & cheese croissants. So you stop by one morning only to discover that they’re out. The barista says they only get 3-4 each day and that they’re generally gone before 8:00 AM. The 2 people behind you sighed and said they were looking for the same thing. This is the best (and smallest scale) analogy I’ve ever seen for poor demand capacity planning. The shop knows there is a demand for the item, and they know the bakery makes more than they order, yet they never have enough to even come close to meeting demand. Leaving many unhappy, and unsatisfied, customers debating the breakfast options down the street. For you, the demand capacity planner, this is the scenario you dread more than anything—being unable to meet your customers’ demands and losing them to competitors as a result. Follow along with the following steps, and you’ll be on your way to avoiding this situation by keeping production and demand evenly matched.
How are you using your ERP software? Strictly for resource planning, as intended? Or are you stretching that definition to include aspects of your supply chain management needs as well? ERP solutions are an offshoot of financial software, and most of it functions as such and can be clunky when pressed into alternative uses. A dedicated SCM software solution, on the other hand, is as flexible and multifunctional as your supply chain itself. Think of it like this: would you rather build your personal daily calendar out of an Excel spreadsheet, which is totally doable, or just use a ready-made calendar tool like Google Calendar? Yes, both are workable solutions, but only one is actually made to help you keep track of lunch dates and offer reminders for those important meetings you just can’t miss.
Imagine you’re hosting the family reunion this year. 75 people are going to be expecting a great venue, amazing food, and some planned activities. But you’re just one person, with some help from your girlfriend. Are you going to cook all the food, decorate the community hall, schedule and set up for the band, AND be there to greet everyone as they arrive? I certainly hope not. You’re going to hire a caterer for the food, be sure the band brings their own crew to set up and tear down the stage, and rope your girlfriend into being the greeter so you can still supervise the proceedings. On the other hand, if you’ve got a wife, 3 grown kids with their own significant others, and a circle of close friends, maybe you can do it all in-house. This is the power of outsourcing, it keeps the playing field even for even the smaller players. The question is—how do you maintain control over the cooks, musicians, crew, and cousins?
The manufacturing industry is in a bit of a pickle. Emerging technologies are coming at it from every direction, as digital transformation and integrated supply chains are being touted as the solution to all their woes. Industry 4.0, Logistics 4.0, AI, IoT, RFID, there are enough buzzwords and acronyms to make even the most seasoned production planner’s head spin. What’s a planner to do? As with so many areas of life, the key is to move one step at a time. See if any of the following five challenges apply to you, and if so, start by addressing them. Then, when you can see your way clear of that challenge, you’ll have a better understanding of what to address next for the greatest impact.