Simplify SCM by improving visibility across complex supply chains.
One result of globalization has been an increase in supply chain complexity. Execution and responsiveness within complex global logistics systems requires the orchestration of the “three flows of commerce” (goods, information and funds) across a large number of trading partners and wide geographic areas. As a result, lead times are extended and become less predictable (or more variable), resulting in pressure to increase inventories. Industry Week notes, "even minor supply chain disruptions, such as a port delay, a vendor losing an order, or a container not passing inspection, can have significant impact on the supply chain.”
So, how do you deal with increasing complexity and greater variability in your supply chain?
The Control Tower Approach
A complex and variable supply chain requires tight control. A report by the Aberdeen Group, “Supply Chain Visibility,” termed this the “control tower approach” in recognition of the need to “see” everything that’s going on and respond appropriately.
How does a manufacturer go about achieving supply chain visibility? These are the strategic milestones outlined in the business report by the Aberdeen Group:
- Improve internal cross-departmental visibility.
- Streamline processes.
- Improve timeliness and accuracy of data exchange.
- Increase B2B connectivity and visibility into supplier side processes.
While these are no doubt important topics to address, many businesses will be looking for more tangible steps they can take.
How can I improve supply chain visibility now?
Here are a few actionable steps that will help you achieve the strategic initiatives listed above:
1. Link Production and Inventory Control
Manufacturers need the ability to check that materials are available to match demand and schedules. Tight linkage and cross-departmental visibility enables earlier identification of possible issues. When the ERP system provides forecasting tools, decision-making becomes easier and more transparent.
2. Utilize Customer Relationship Management (CRM)
Sales teams need to know the status of each order, so customers can be kept appraised, potential delays are identified quickly, and appropriate corrective actions taken. CRM also helps manufacturers with forward planning (by showing how orders are likely to rise or fall). This helps to ensure that sufficient capacity will be available.
3. Implement a Supplier Portal
Addressing strategic point 4 (B2B connectivity), a supplier portal allows order tracking and prediction of future demand. Communication improves and potential bottlenecks and delays are spotted earlier, allowing corrective actions to be taken. Some ERP systems allow for built-in supplier scoring and Approved Manufacturers for explicit product structures, so you can leverage relationships with a track record of success to build a reliable product.
4. Integrate ERP with Quality Management
Yields can be unpredictable, materials can fail to meet specifications or perform as expected, and suppliers may encounter quality problems of their own. When the quality system is linked to ERP early alerts are provided of problems or shortfalls, letting management implement appropriate actions before shipments are delayed, corrective action can be taken before issues snowball.
Top benefits of improving supply chain visibility
Improving supply chain visibility can benefit manufacturers in many ways, most notably:
- Reduced inventory levels as lead time variability falls, confidence grows in the ability to detect and respond to problems early.
- Increased manufacturing efficiency as late schedule changes due to stock-outs diminish.
- Less time spent expediting purchases and deliveries,allowing greater focus on inventory management and cost reduction.
- Improved on-time shipment performance as the frequency of events disrupting production falls.
Visibility Addresses Complexity
Increasingly complex supply chains pose challenges for manufacturers like those in the electronics and high tech industry. By gaining better visibility into the supply chain they can identify problems earlier and address sources of variability. As predictability and stability improve, meeting customer expectations becomes easier and satisfaction improves.
