The Importance of Supply Chain Event Management
Nick Ostdick - July 26, 2016
In a recent entry, we discussed strategies and solutions for managing a production network and how such management serves as something of an aircraft control tower where companies can most effectively avoid bottlenecks, production stoppages, and ensure cost-efficient production strategies across what are often expansive networks - many of which are in new and emerging markets with varied and unique production challenges. And much like working in a control tower, production managers and planners have to consider and coordinate a multitude of factors to successfully ensure production moves safely and on-schedule.
But how do planners and managers coordinate these factors? If managing a production network is similar to operating a control tower, what tools do OEMs have at their disposal to orchestrate the movement and flow of planned production programs, parts, and products? Like how radar is a crucial technology in the control tower to directing aircraft from takeoff to landing, supply chain event management (SCEM) solutions are for OEMs to effectively align production programs with inventory levels, delivery schedules, and production rules and restraints.
SCEM solutions allow companies to manage and track in real-time the location of parts and products in the supply chain and how certain events could impact their status of associated planned production programs. And again, much like radar in a control tower, SCEM solutions let companies view, analyze, evaluate, and plan for potential conflicts in the movement of parts and products to avoid large-scale disruptions and delays. This capability gives OEMs enhanced control over their supply chain logistics in order to leverage as lean a value chain as possible, which is a key driver in remaining resilient and agile in today’s global supply network.
Though part of any intelligent, integrated supply management strategy, it’s probably fair to say there’s still some uncertainty about what SCEM is, how SCEM functions, and how to best define it. In today’s global economy, which is fraught with intricate trade and tax laws and geopolitical conflicts of all stripes, successfully managing supply chain events to maintain production and delivery schedules can be one of the most troubling aspects of the automotive supply industry - the ease of movement of products and parts between countries and regions can turn on a dime and seriously hamper a company’s ability to meet customer expectations.
With this mind, let's quickly examine just a few misnomers, miscues, and misunderstanding about SCEM solutions and the realities behind these statements.
1). SCEM is less valuable because it doesn’t execute or assist with sourcing, planning, producing, or delivering an actual part or product.
Not quite. While it’s true SCEM does not actually assist OEMs with actual planned production programs, what it does do is equally as valuable in ensuring parts and products are in the right place at the right time in the right volume. Through SCEM solutions, companies can monitor in real-time the hand-off of products between supply chain entities; the movement of product from order to delivery; the movement of shipments between nodes; and how, when, and status of products placed in storage, containers, or other vessels.
2). SCEM create communication silos by limiting the dissemination of data to one agent in the supply chain.
Wrong. SCEM solutions actually work to break down functional silos by allowing multiple players at each step in a company’s value chain to see the status of parts and products, evaluate that status, and make cost-effective decisions based on pre-established definitions, rules, or restraints. And because this information is being transmitted to various partners in real-time, companies can leverage this capability to enhance visibility and coordinate with other supply chain management schemes such as BOM management, PFEP, inventory optimization, and others, each of which are integral in fostering increased communication and collaboration both inside a company’s supply stream and out.
3). SCEM solutions only impact certain aspects of the production and supply process and cannot be applied to the supply stream as a whole.
Incorrect. Effective SCEM deployment impacts all points of the supply stream including order management; production and sequencing of planned production programs; production network management; warehouse management; container and yard management; transportation monitoring; and even customer relations. As a holistic solution focused on monitoring events at each touch point of the value chain - production modifications, transportation delays, and customer needs - SCEM solutions can and should be applied en masse to engender the ultimate in transparency and agility.
Benefits of SCEM
Now that we’ve dispatched with some negative information about SCEM solutions, it’s important to discuss the benefits derived from SCEM and how companies can leverage such a solution as a value proposition for creating, sustaining, and growing a truly lean supply chain.
Imagine a production delay is detected at some point in the supply chain due to an inventory issue at a given facility. The customer is contacted about this possible delay, which is when the manufacturer discovers the customer actually needs the product sooner than expected. In order to meet the customer’s needs, the manufacturer reallocates production of this part to a new facility which he/she knows can handle the order within the specified production window.
This is the kind of power, control, insight, and flexibility SCEM can offer companies - to view, analyze, and combat changes or modifications in production to avoid potential breakdowns. But that’s not the only benefit companies can leverage with SCEM solutions, and two others include:
- Decreased inventory - A reduction in unnecessary inventory means reduction in storage and other associated costs, which allows manufacturers to reallocate resources to other, more pressing elements of production and supply. This also means manufacturers can operate on leaner budgets and timetables for greater responsiveness and agility.
- More accurate planning - If you have access to up-to-the-minute data about the status of your inventory, facility restraints, current planned production, and delivery timetables, you’ll be better equipped for more accurate demand capacity planning for new and existing customers. Because SCEM functions like a radar system allowing for full-view of the supply stream, planners and managers are able to create more accurate planning strategies.
SCEM As Value
In variant-rich industries like automotive production and supply, it’s easy to see how SCEM is a value added as companies require more and better solutions to cut through the complexity of today’s global supply chain and empower their own logistics and practices. If there’s one name of the game in the 21st Century supply chain, it’s control - the ability to control, review, and evaluate actions and data from orders to production to delivery.
SCEM provides companies that degree of control via a holistic, unique visible view of the supply network from top to bottom, a capability that cannot be understated in remaining competitive and growth-oriented in a rapidly changing and evolving industry.