A supply chain is a straightforward concept. Orders are placed, product is shipped and then components and materials are ordered to satisfy future production.
In fact, supply chain is one of the most complex value chains that a manufacturer has; and managing this difficult concept requires a convergence of people, processes and technologies operating together. Omitting any one of these critical aspects will result in higher operating costs and decreased customer satisfaction – or an easy way for a competitor to obtain market share quickly.
Added to the mix is application overgrowth, isolated operating units, siloed systems of record, varying data formats, availability and communication types – and the challenges of operating an efficient, flexible supply chain compound exponentially.
For example, if a company has a back-order issue where should it start in order to immediately impact the problem? Are orders being processed properly and with enough time for fulfillment and logistics? Is the integrated business planning process being executed correctly? Is fulfillment taking too long and missing cut-off times or not receiving product fast enough to stock and ship outbound product? Is this relegated to a single facility or if there is a problem, does it occur across multiple facilities? Is the sales team providing accurate notification of new customers and projected sales targets?
The answer to these questions is usually held as “tribal knowledge” inside of the minds of a multitude of different operations professionals around the globe – but not in a shareable, actionable format.
Visibility is key and the good news is that optimized, intelligent value chains are within easy reach.
In an Industry Week webinar, “See your Supply Chain like Never Before,” we go to some lengths to explain how to solve these issues. In one example, a large multinational manufacturing conglomerate was facing ten years of stagnant growth and had created incredibly complex and numerous supply chain models. There simply wasn’t any uniformity or clear understanding as to how each model worked, or didn’t. It had a difficult time understanding how to steer its giant ship, and was slow to respond to customer demands. Its competitors were faster and nimbler and were obtaining market share because the conglomerate simply couldn’t respond fast enough.
It had a complex IT structure and there were technology and cultural issues. The solution? The company formed a centralized supply chain center-of-excellence group to focus on customer services, operational excellence and enable growth. Working with Software AG, the supply chain was streamlined, finger-pointing was replaced with actionable data and the root cause and magnitude of issues was understood and segmented for resolution.
The company realized a 25% increase in profits, a 25% decrease in inventory and a more than 95% On Time in Full (OTIF). All while transforming itself from manufacturing consumer products to healthcare products. Impressive, yes? The company can now see further into its complete, end-to-end supply chain, and responds faster to identified issues.
See the webinar for more examples from me, and also from my colleague Erick Argueta, Vice President of Global Enterprise Solutions at Visual Enterprise Architecture. Erick discusses how manufacturers can see more deeply into their supply chains.