Tag: supply chain

POV: 3 Ways Layered Technology Differs from the ERP Add-On

Most manufacturers have, at one time or another, deployed an “ERP add-on.” These are the bits and pieces of functionality sold through third parties that round out the capabilities of an ERP system. Common ERP add-ons can include core functionality like Advanced Planning and Scheduling (APS) and Supply Chain Planning (SCP), but for major ERP systems, there are dozens if not hundreds of add-ons available.

Because add-ons are such a familiar term to manufacturers, we’re often asked if this is what we mean when we talk about deploying a layered technology approach to Demand-Driven Manufacturing. Not exactly, but before I go into the differences, let me bring everyone up to speed by sharing Gartner’s viewpoint on the layered approach so we can put the differences in context.

Gartner’s 5 Stages of Supply Chain Maturity

In a recent report, Supply Chain Maturity Assessment for the Demand-Driven Supply Chain, Gartner defines 5 Stages of Supply Chain Maturity. On one end of the spectrum, Stage 1 is a reactive environment where the manufacturer primarily uses manual processes (for example, spreadsheets for scheduling). On the other end, Stage 5, is a fully integrated enterprise, leveraging algorithms and predictive analytics for continuous improvement across the supply chain.

Progression through each of these stages does not require replacing an inadequate ERP system with one that is more fully functional. Instead, Gartner advocates layering on technology to progress to ever-higher levels of supply chain maturity. The layered approach allows manufacturers to apply maturity-enabling technology at a targeted and affordable pace. It also drives a faster ROI than a traditional ERP implementation. Here’s an example:

3 Ways the Layered Approach is Different

So, how is what Gartner is recommending different from the add-ons ERP vendors have been offering for decades? We see three major differences. There is some overlap with what some add-on vendors offer, but when taken together, the layered approach is a major step-forward for organizations looking for a fast, affordable way to leverage technology to improve operational performance.

Philosophy before function. Add-on applications tend to focus on addressing capability weaknesses within an ERP system. For example, an APS application may offer the ability to do finite capacity planning. That’s good, but finite capacity planning is a point-solution to a specific problem.

Layering technology provides a broader, more business objective-oriented approach to systems than simply adding on an application to plug a hole. For example, our Demand-Driven Manufacturing layers help manufacturers achieve a leaner, more agile environment by implementing philosophies like Lean, Six Sigma and constraints management.

Source agnostic; big picture. Add-on vendors are getting better at working with disparate ERP systems, but there’s often still an integration challenge to be addressed before the add-on can start providing the promised benefits. If there are multiple sources, e.g. financials, CRM, home-grown point solutions, the project can get very complex. Many questions need to be answered such as: What format does the data need to be in? How do we ensure the data gathered is current? How do we combine the data from multiple sources?

Furthermore, because the add-on is focused on a specific challenge, it only provides one aspect of the big picture. Any given role in a manufacturing organization needs analysis from multiple systems. Requiring that the user access reports and dashboards across systems to get what they need wastes time and resources.

Our approach involves layering technology that can connect to any data source – even raw data from the machines on your shop floor – and standardize the data so that it can be aggregated, analyzed and visualized across the enterprise in real-time. Users don’t have to access multiple point solutions or machines to get the information they need.

Supply chain ready. Layered technologies are web- and cloud-based, where a shared pool of resources are available on-demand. The subtle but important difference is that our approach means that the technology layers can be used across supply chain partners for end-to-end supply chain visibility and management.

Related Resources:

White Paper: The Demand-Driven Supply Chain

Article: The Changing Role of ERP in Manufacturing

February 26, 2018
It’s Time to Revisit Vendor Managed Inventory

A few decades ago, Vendor Managed Inventory (VMI) was a hot topic. Many manufacturers saw it as a way to reduce inventory levels and costs. If they could get their suppliers to maintain ownership of raw materials or subcontracted components until consumed, inventory levels would naturally drop—on paper anyway. Because they were giving most, or all of their business to one supplier, they were also in a position to negotiate better terms. For the supplier, VMI was a win, too, because it allowed them to lock in the manufacturer’s business.

But VMI came with inherent risks to both the manufacturer and the supplier. On the supplier’s side of the equation, the risk lay in the manufacturer’s ability to forecast demand. Unless the contract between manufacturer and supplier had some sort of “shared responsibility” clause, the manufacturer had no incentive to minimize actual inventory levels. Safety stock and reorder point levels could be set high, with minimal risk. And if the forecast was overstated, the manufacturer didn’t need to worry about excess vendor-managed raw material or contracted-components inventory.

From the manufacturer’s point of view, the risk lay primarily in the reliability of the supplier. If the supplier didn’t hold up their end of the bargain or a shipment had material defects, the manufacturer risked a material shortage and significant production delays. While these problems could occur with any supplier, one of the visions of VMI was to reduce the headaches that come from managing supplier issues.

As a result, many manufacturers limited their use of VMI to Class C items that were relatively inexpensive and easily sourced. That way, high safety stock levels didn’t impact their balance sheet much, and supplier reliability issues had a minimal impact on production schedules.

Demand-Driven Manufacturing Technology Makes VMI Easier

The technologies our customers use to manage their internal Demand-Driven Manufacturing initiatives have the added benefit of making VMI feasible once again. Electronic Kanban (eKanban) software is a classic example.

Most readers of this blog are probably familiar with Kanban. They are the automated replenishment signals that are so vital to Lean and Demand-Driven Manufacturing environments. Kanban comes in multiple flavors such as the manufacturing Kanban that signals the need for internal replenishment of materials; the supplier Kanban that initiates replenishment from external suppliers or outsourced manufacturers; and a customer Kanban signals from the customer to the manufacturer for finished goods or replacement parts. Often tugger routes are introduced into the process to deliver materials as needed (regularly or on demand pull) from the warehouse to point of use.

The eKanban system enables real-time, electronic signaling. As materials are received into inventory, they are scanned into the system – and, they are scanned again when consumed. Upon consumption of a Kanban, a signal is sent to a supplier or contract manufacturer, bypassing the standard procurement process and shortening cycle times.

Demand-Driven Manufacturing Reduces the Risk of VMI

OK, so eKanban can make VMI more functionally feasible and efficient than it was twenty years ago, but what about the risks inherent in VMI?

That’s where Demand-Driven Manufacturing comes in.

Technically, implementing Kanban replenishment signals doesn’t automatically qualify your approach as Demand-Driven Manufacturing. You could be in a traditional manufacturing environment using reorder point planning (ROP) to trigger replenishment. For example, your bin sizes are based on ROP calculations that have little to do with actual demand. Since the signal comes from downstream consumption, some would consider this to be pull manufacturing, but it is not in the same way that Lean or Demand Driven environments consider “pull”. Pull is getting close to the actual demand signal; the more inflated the bin sizes, the further the process is from pull – and the larger the bullwhip the process will create.

In true pull-based or Demand-Driven Manufacturing, replenishment is based on actual demand or consumption. (And some buffer stock which we talked about here.) Projected and actual demand, demand variability, and supplier reliability are monitored and inventory is right-sized to meet these specific attributes of the item. The allows Demand-Driven manufacturers to continually adjust their Kanban Loop sizes so they are always in alignment with demand, supply expectations and actuals. As variability is removed and lead-times are reduced, the Kanban Loop adjusts to become one step closer to demand.

Demand-Driven Manufacturing makes VMI far more attractive for your suppliers. They understand that the signals they receive for replenishment aren’t based on some pie-in-the-sky forecast that will leave them sitting on tons of materials in the supply chain that they will eventually have to write off. And, it puts you in a better position to negotiate the kinds of service levels agreements (SLAs) you need to reduce the risks associated with supplier variability.

If you’d like to learn more about eKanban, here are a few additional resources:

White Paper: Gaining Control: Exploring Push vs. Pull Manufacturing

Article: Moving From a Manual to an eKanban System

Case Study: Continuous Improvement Immersion Plus the Right Tools Proves Profitable for Dynisco

January 8, 2018
3 Prerequisites to a Modern Demand-Driven Supply Chain

In 2010, Gartner estimated that manufacturers outsourced about 70% of the products they make to other manufacturers. I haven’t seen a recent statistic, but that still feels about right.

So, it only makes sense that, for most manufacturers, implementing modern demand-driven or pull-manufacturing techniques will require collaboration with many partners across the entire supply chain.

Before you can collaborate with your supply chain partners, you need to get your own house in order. Here are three things you need to do:

#1 Digitize. The demand-driven supply chain runs on data—the right data in the hands of the right people at the right time. Before you can make this happen, you may need to address a few data issues in your own operations. It’s not unusual for us to work with companies that have two or three ERP systems, especially if they’ve grown through acquisition, in addition to several point solutions for things like maintenance, scheduling, time management and so on.

For those of you who have been in the industry a while, the idea of a data standardization and consolidation project may send you reaching for the Tylenol bottle. You’ll be glad to know that with the right technology, you can get through this relatively headache-free. For example, we helped Orbital ATK, an aerospace manufacturer of custom composite parts, connect over 100 individual data sources to collect data from more than 61,000 tags. At a recent conference, Paul Hardy, Application Architect at Orbital ATK, gave a fascinating presentation on how they use this data to improve operations. You can access his talk on our YouTube page here.

#2 Synchronize. The next prerequisite is to synchronize everything (people, processes, materials, machines and data) at the order level. If production flow isn’t aligned to customer orders inside your own facilities, you can’t deliver the right data to your supply chain partners.

This synchronization alone can have a dramatic impact on performance. We worked with GIW Materials, a manufacturer of heavy-duty centrifugal slurry pumps, to help them lower cycle times and improve on-time performance. The crux of the solution was to optimize product flow and control cycle time by synchronizing everything to orders: pattern information, flasks, combination equipment, engineering revisions and capacity. The impact was so noticeable to their customers that GIW doubled their revenues in two and a half years. You can access their case study here.

#3 Visualize. Once you’ve digitized your data and synchronized production flow to customer orders, you need to put the right data into the hands of the right people. These days, there is almost no limit to the amount of data we can collect. In the demand-driven supply chain, more is not necessarily better because you can easily overwhelm people. Here are the three areas where you should focus your efforts:

Demand and supply – visibility and synchronization of the demand signal, material and resource availability to drive uninterrupted production flow.

Production flow indicators – visibility into stock buffer levels, constraints, shop floor events, etc.

Priorities – adapting to demand and communicating changes across the supply chain.

Pulling it all together

If the products you manufacture are heavily reliant on outsourced components or services, you may not have the luxury of waiting long before you roll out your demand-driven manufacturing approach to the rest of your supply chain. This was the case with a microchip manufacturer we recently worked with.

A growing part of this manufacturer’s business was to receive parts from OEMs and supply them to contract manufacturers. Both the OEMs and the contract manufacturers gave the manufacturer forecasts, but the formats were different, and like all forecasts, not always reliable. As a result, they were constantly in reactive mode, manually standardizing data from multiple sources in spreadsheets while juggling variances in supply and demand. We worked with them to consolidate the data into a single screen view that showed real-time, aggregated replenishment, inventory, and order status information. We also created a platform that allowed them to provide similar views to their OEM and contract manufacturing partners.

Related resource: White paper: E2E Supply Chain Visibility Technology is Here

November 20, 2017
The Magic Bullet for Real-Time Supply Chain Collaboration? Cloud Visibility.
Jessica Twentyman reported in the Financial Times, that for many manufacturers, supply chain collaboration is stuck in the dark ages. When it comes to ordering materials and components, managing inventory levels, or organizing the delivery of finished goods to customers, companies are forced continually to chase business partners – mostly suppliers, logistics companies, and retailers – via a messy stream of emails, phone calls, and even faxes. Worse still, much of the data that could give manufacturers a complete, end-to-end view of their supply chain already resides within the systems of these partners; as much as 80 percent of it, according to some industry estimates.

Supply Chain Market reported the closest any manufacturer can get to the magic bullet of efficiency (collaboration) is through greater supply chain visibility. Supply chain visibility means all partners get access to – and share data – in real-time. Visibility to all orders allows suppliers to proactively respond to demand signals. Poor visibility often results in parts shortages. Frustrated manufacturers report having no idea they were down to the last box of parts. The result is expensive; using faster shipping methods to get the part back on the shop floor. A real-time view of parts on hand allows a supply chain manager to take action before there is a stock out, eliminating expedited fees.

A single – visible – version of the truth

Modern Demand-Driven Manufacturers are leveraging real-time Cloud-based visualization and collaboration systems to view data from multiple, disparate sources while keeping the data in its original, host environment. The value of these visualization systems is in their inherent flexibility. Once the data connections are made, they can be accessed and used (with appropriate permissions) at any point along the end-to-end supply chain spectrum. There is no limit to the data sources that can be connected or how the data can be sliced and diced and made visual to accommodate the different layers and levels of the manufacturing enterprise.

The result is a single – visible – version of the truth that enables a more compliant, consistent, Lean, and waste free supply chain. Visualizations can be created or configured by and for the individual user, work center, plant or multi-plant/enterprise, supplier, or customer level. Order, replenishment status, inventory levels, machine maintenance, system alerts, KPIs, logistics tracking, and more can be made accessible to the appropriate parties anytime, anywhere, providing a single source for real-time information.

Data on Demand: Examples of value across supply chain layers
- Customers gain visibility into order receipt, status, and delivery data. In ETO environments, visibility tools can provide further collaboration capabilities on product specifications and requirements.
- Suppliers receive real-time demand signals with the ability to exchange purchase order and projected delivery information online. Supply Chain Managers can collectively visualize and track the performance of all suppliers against their service level agreements (SLAs).
- Individual users have easy access to information they can act on to analyze issues and improve performance. Customer Service representatives can follow the status of their customer’s order and confirm delivery details; Operators have a clear view of priorities and an understanding of what to work on next; Quality Analysts are immediately alerted to issues and can quickly trace the source of the problem.
- Work Centers can monitor all the machines in their area through a single screen to collectively determine overall equipment effectiveness (OEE) and gain insight for preventative or prescriptive maintenance.
- Individual Plants can visualize real-time end-to-end production flow and the status of safety, compliance, and key performance indicators (KPI) at any level in the facility.
- Regional Plant Networks can connect to Warehouse/Distribution Centers to better manage excess inventory and monitor status from Third Party Logistics (3PL) providers.
- Multi-National Enterprises can connect to global data sources – including Supplier networks and Contract Manufacturers – to assess individual plant performance and collectively view and track logistics flow throughout their enterprise.
Newer Cloud technologies are more intuitive with drag-and-drop functions and natural language queries. IT is no longer saddled with pulling data and generating reports. Through self-service tools, even non-techies can perform their own analyses and create their own dashboards and visualizations.

The technology is available and the impact of such can be far-reaching. The investment quite often produces an immediate or near-term return just in avoiding costs associated with downtime, waste and expediting.

Standardizing data formats – the key to universal, real-time accessibility.

With the multitude of data sources feeding the supply chain, the visibility value is in the ability to “mash up” or bring together data from these disparate sources to tell a complete story. The strategy for doing such is standardizing – or normalizing – data. And while this is not a new concept, today there is a more efficient and cost-effective approach. Through the Cloud, data is accessed from its host environment and aggregated, analyzed, and shared by standardizing the data and making it accessible in real-time through technology tool sets like SignalR. These lighter weight, highly flexible and scalable web-enabled technologies are rapidly replacing costly hardware devices traditionally used for data standardization.

Ultimately, visibility technologies should be measured by their ability to provide the right data to the right people at the right time. The true value proposition is in having the right information to take immediate action – the decision-driving data that will make a difference in how your supply chain is performing today.

More information on this topic:

White paper: End-to-End Supply Chain Visibility Technology is Here

Video case study: How Orbital ATK is Leveraging the IIoT and Visual Factory Technology to Drive Continuous Improvements

Video: SyncView Real-time Manufacturing Visualization System – 4 minute overview
June 19, 2017
Demand-Driven Supply Chain Transformation

End-to-end Visibility for Real-time Coordination, Communication, and Commitment

By applying demand-driven methods and synchronizing processes, manufacturers are reaching new levels of communication, profitability, and customer responsiveness.

Demand-Driven Manufacturing incorporates the best of Lean manufacturing, Theory of Constraints (TOC), and Lean Six Sigma principles. In demand-driven environments, production is based on actual customer demand, with everything synchronized (people, processes, materials, machines, and information) to drive flow. The process is accelerated by software that automatically collects, analyzes, and communicates data in real-time; connecting every function within the manufacturing organization and throughout the extended supply chain.

Demand-Driven Manufacturers focus less on unit-costing measures and more on global effectiveness, taking a more holistic view of the entire production system and extended supply chain. While data silos are still frequently found among discrete manufacturers, those with synchronized systems and processes have more comprehensive, actionable knowledge about their production cycles – and a single version of the truth. This heightened visibility ensures that managing customer orders, expenses, and investments across the enterprise is both accurate and profitable.

Supply chain transformation

Disruptions large and small confront today’s supply chains on a daily basis, and organizational survival depends on the ability to anticipate, adapt, and transform supply chains to deliver greater reliability and performance. In modern Demand-Driven Manufacturing environments, the traditional supply chain is transforming into more of a virtual value chain – connecting customers, suppliers, service providers, and contract manufacturers in real-time using Cloud-based technologies that enable end-to-end supply chain visibility. These manufacturers can instantly adapt to demand fluctuations, by sending real-time signals across their supplier network. Beyond the major strategic advantages, these connected supply chains can respond with greater agility to traditional short-term challenges such as shorter lead and replenishment timelines, cost reduction/avoidance strategies, inventory optimization, logistical issues, and more.

A demand-driven supply chain with end-to-end visibility provides real-time information on current demand and inventory levels to all supply chain participants so that they can react quickly and effectively—by revising forecasts given to their own suppliers, or by altering production or distribution plans—when unexpected changes occur. This allows manufacturers to optimize planning, procurement, production, inventory replenishment, and order delivery for better service, higher sales, and lower overall costs.

A real-time connected supplier network offers both tangible and intangible benefits. Tangible benefits include greater market share and increased revenue by maintaining relevance with the supply network through improved product development, cost avoidance, and additional cash freed by reducing inventory and managing shortages or obsolesce.

Intangible benefits are rarely discussed but include engaged employees and suppliers working together, rather than creating barriers from misaligned objectives. A demand-driven supply chain with end-to-end visibility results in better coordination, communication, capacity, and commitment among all participants.

The annual meeting of transformational minds

At this year’s Gartner Supply Chain Executive Conference (May 23 – 25 in Phoenix), Chief Supply Chain Officers and their teams will learn how to recognize the impact of disruptions and create transformational strategies that empower the organization. The ability to identify must-have innovations to support the supply chain of the future will be part of the conversation as well as fostering solutions for next-generation supply chains with best-in-class talent and organizational strategies. If you are attending, stop by the Synchrono booth – we’ll have our new white paper available on end-to-end supply chain visibility technologies.

March 23, 2017
Supply Chain Visibility and Collaboration – How ERP Falls Short

TR Cutler, Inc. Market Research (TMR) just released the results of a survey conducted in the first two weeks of February, 2017. The respondents were all discrete manufacturers and all held VP or C-level titles. The universe of completed surveys totaled 401 and inquired about the highest priorities for manufacturers today. (The sample size ensures statistical significance to a probability of +/- 3%).

Key Findings and Frustrations

Unsurprisingly more than two-thirds (68%) of the participants said streamlining the supply chain is the highest priority for discrete manufacturing companies. Purchased parts are typically 60% or more of the manufacturing expense, driving tremendous pressure on materials and supply chain executives to trim costs, while simultaneously improving on-time delivery.

Interestingly a near identical percentage (67%) said that ERP (enterprise resource planning) solutions fall short of achieving accurate, real-time, visible supply chain data. This frustration is understandable as most medium and large manufacturing companies have already invested significant capital (both fiscal and human resources) in these ERP systems. ERP systems are capable of managing many business processes within the four walls of their operations, but fall short in providing complete supply chain visibility and collaboration capabilities.

Because of the prior investment into ERP, most senior manufacturing engineers, plant managers, VP of operations managers, and top supply chain executives, invariably look to their ERP/MRP vendors with whom they have been working for years, to solve the problem. Despite promises of ERP panaceas, none has an ideal solution for supply chain collaboration, supplier visibility, or the ability to access and aggregate voluminous amounts of real-time data from multiple sources.

ERP systems are great for their intended purpose of managing and processing structured transactions. Manufacturing modules in ERP systems, however, do not have the flexibility to manage the real-time variability inherent in most manufacturing environments or the capabilities to support end-to-end production planning, scheduling and execution and associated visibility needs. Therefore, manufacturers who bought into the promise of holistic ERP solutions are forced to return to planning and scheduling using archaic spreadsheets. To address the market need for end-to-end supply chain visibility and collaboration, manufacturers need a solution that will connect to many data sources, such as logistics, supply chain management, lean production, inventory/warehouses, distribution, and transportation.

Synchrono solutions address these market needs. The company’s demand-driven solutions will work with any ERP system to capture transaction data; allowing manufacturers to maintain their current ERP investment and extend automated, end-to-end solutions to manufacturing operations and the extended supply chain. Synchrono has been facilitating collaboration between manufacturing plants and their global supply base in this way for nearly twenty years.

Synchrono data allows discrete manufacturers to gain visibility of demand and supply, simplify the buying and receiving processes, reduce inventory, eliminate part shortages, and track continuous improvement metrics. The ability to extend the value of the ERP system with secure, real-time supply chain visibility solutions gives both IT and the business, the tools to be successful.

February 28, 2017

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