Collaboration effectiveness and accurate real time information are keys to 3PL success. This kind of collaboration is easy to talk about but challenging to accomplish. This type of intimacy is challenging to achieve because it is predicated on information and trust. Benefits from this kind of close collaboration and intimacy are real, including synchronization of supply and demand, better asset utilization, reduced cycle times, lower transportation cost, improved on time delivery, actual response to changing demand and opportunities, and fast exception resolution. This kind of close collaboration requires access and analysis of fragmented data locked in silos throughout the supply chain, including portals, spreadsheets, legacy systems, emails, faxes, an ERP systems.
It has long been suggested that a service oriented architecture (SOA) could tie disparate supply chain systems together and provide real time XML enabled communications with partners using a common protocol. However, multiple layers of changes to complex XML and web based technologies, formats and standards have added to the complexity and difficulty of orchestrating successful integrated systems. In spite of these complexities both small and large companies are desperately looking to collaborate with trading partners in an efficient and affordable manner, unfortunately the XML approach does not address pushing and pulling data from an excel workbook, e-mail, PDF, project files, and/or CAD drawings and even if it did every situation would require a customized application.
Some organizations believe they have found a viable solution; Instaknow-ACE (Active Collaboration Engine) automates certain critical business processes. According to Instaknow President Paul Khandekar there is no expensive drawn out XML modifications to existing applications. A friendly graphical interface guides the user in creating complex automation that emulates the current manual steps, decision process, and alerting. Smart visual wizards are designed to allow quick conversion of any business intent into business process automation steps. Each was wizard accomplishes the work equivalent to thousands of line conventional code. The solution is built focusing on business logic rather than on technical aspects which the wizard handles automatically.
After analyzing data from various sources and the actions that will yield the desired business objectives (integrated visibility from silos of fragmented data, rapid decisions, actions and presentation) the supply chain solution developer pulls wizards down from the toolbar and arranges them to emulate a customized process. According to Khandekar the wizards can read and write data from virtually any digital architecture including XML web servers, the HTML web sites, and legacy systems, spreadsheets, emails, faxes, relational databases, ERP systems, EDI transactions, and GUI applications, including Excel, Word and PDF formats.
Importantly, the learned intelligence is then automated and applied the to similar business cases from that point on, automatically entering a transactional specific, real Time Data into any HTML Internet slashed intranet green screen or client server application and automatically checking the correct links just as a person would. This solution is sustainable from the perspective that it learns how to optimize the processing of data and applies the same process every time it sees similar circumstances.
If your company is considering the considering collaboration tools , I would suggest you contact Supply Chain Experts, they can help you with present and future needs analysis, writing request for proposal, software design and/or selection, and an implementation program that will optimize operational performance and satisfy the requirements of your customers.
Dr. Edward F. Knab
Productivity Constructs, Inc.
800 660 8718 office
949 413 7333 mobile
ed@edwardknab.com
www.productivityconstructs.com
More Supply Chain Experts Blogs
Dr. Knab is an academic practitioner and seasoned Global Supply Chain expert whose company, Productivity Constructs, is focused on driving cost and inefficiency out of the Global Supply Chain. Dr. Knab can be contacted for speaking engagements, coaching, or consultation at efk@productivityconstructs.com, ed@ewardknab.com or www.edwardknab.com.
Tags: control, distribution, efficiency, management, system, warehouse, WMS
Monday, August 31, 2009
Tuesday, August 25, 2009
The Real Importance of Selecting the Right Facility
As Supply Chain experts we often get calls from potential clients stating that they just leased or purchased new distribution and/or manufacturing space and need our assistance in designing their new operation. This is very disappointing as the building is part of the tool and is just as important in driving efficiency and reducing costs as process, equipment, and staff. Building size and shape, dock size and placement, column spacing, and ceiling heights not only will have a major impact on the quality of and cost of running an operation, but are permanent and cannot be changed like a process or piece of equipment. The correct sequence is to design the new operation first, even if only on a high level and in the context of planned growth, and then look for the facility that best supports the operation.
Facility Size – the proper size can only be known once system and equipment requirements have been determined and a layout has been created.
If the facility taken is too small, outside space will be required or aisles and docks may be blocked.
If the facility is too large money will be wasted on unneeded space and most companies will find a way to fill the space which will result in added inefficiency and increased labor and equipment costs as well as the cost of the space.Facility Configuration – buildings are typically rectangular, square, or L shaped.
Rectangular buildings typically support manufacturing operations well as materials can move continually from receipt to raw material storage to manufacturing to finished product storage to staging or shipping in the long direction. Distribution operations typically require shorter travel distances and a long building could add to travel time and related costs.
A square shape in a manufacturing operation could force material to have to double back and forth because there is not enough length to support continuous travel. Distribution operations when laid out properly in a square building will result in shorter travel distances for the round trip from dock to storage to dock.
If you encounter an L shaped building it is even more important to determine if it can support or it will restrain operations.
Docks – We find that most companies tend to underestimate dock requirements when looking for a new facility because docks are not used for storage or production and they often “look empty.
Proper receiving and shipping growth projections often are not considered in dock requirement planning. Dock placement will have a serious impact on operational efficiency and facility throughput subject to the type of operation.If dock size is underestimated whether for receiving or shipping, it is only a matter of time before product will be blocking storage aisles.
If dock size is overestimated money will be spent for space that is not needed. If docks are situated on opposite sides of the building a manufacturing process can begin on one side and flow continuously with product being shipped from the other side of the building without doubling back to dock doors on one side of a building only. If docks are situated on one side of the building fastest moving product can be stored closest to the dock and slowest moving product furthest so the most frequent round trips are the shortest ones for a distribution operation.
If docks are situated on opposite sides of the building all product will have to travel the length of the building from receiving to storage to shipping no matter how frequently a given product is shipped increasing costs.Column Spacing – Subject to the layout, column spacing can be a major problem.
If one requires a narrow or very narrow aisle rack configuration, and the column spacing does not support the requirement, aisles may have to be widened unnecessarily so columns do not block the aisles which results in reduced storage capacity. We’ve encountered situations where columns block conveyor paths and extra expense was required and delays encountered to bypass the column and/or the layout had to be changed. It is essential to know favorable and unfavorable column spacing is before searching for a building.Ceiling Heights – This is an area where subtle differences can have large implications.
Slightly too short could result in losing a storage level and therefore requiring more space or creating different height storage openings and having to remove a layer of cartons to replenish a pick location. It could mean not being able to mezzanine above a short height operational area and running out of space sooner than necessary.
Taller buildings may have a cost premium and if you don’t need extra height based on operational requirements, why pay the premium? A taller building however could provide future growth by going higher later and therefore allowing the acquisition of less square feet and lower costs.I want to know my pallet heights and desired number of storage levels and any other key metrics beforehand and then select the correct building to support the operation and layout. Of course there are possible exceptions to the general rules stated above which is even more reason that a proper study should be performed before beginning the search for a new facility.
If you really want a good fit, it is important that you contact a Supply Chain expert prior to the facility selection in order that we can optimize your efficiency over the length of the lease. Recently, I spoke to a client who complained about excessive transportation cost, I asked him if his company was growing according to forecast and he agreed that it was, however, he now had 3 buildings approximately 15 miles from each other and was constantly transporting inventory to have it in the proper place at the proper time. There is a good chance this could be avoided if we had been contacted in the beginning prior to the site selection.
If your company is considering a new facility; I would suggest you contact Supply Chain Experts, they can help you with your future needs analysis, writing request for proposal, software design and/or selection, and an implementation program that will optimize operational performance and satisfy the requirements of your customers.
Dr. Edward F. Knab
Productivity Constructs, Inc.
800 660 8718 office
949 413 7333 mobile
ed@edwardknab.com
www.productivityconstructs.com
More Supply Chain Experts Blogs
Dr. Knab is an academic practitioner and seasoned Global Supply Chain expert whose company, Productivity Constructs, is focused on driving cost and inefficiency out of the Global Supply Chain. Dr. Knab can be contacted for speaking engagements, coaching, or consultation at efk@productivityconstructs.com, ed@ewardknab.com or www.edwardknab.com.
Facility Size – the proper size can only be known once system and equipment requirements have been determined and a layout has been created.
If the facility taken is too small, outside space will be required or aisles and docks may be blocked.
If the facility is too large money will be wasted on unneeded space and most companies will find a way to fill the space which will result in added inefficiency and increased labor and equipment costs as well as the cost of the space.Facility Configuration – buildings are typically rectangular, square, or L shaped.
Rectangular buildings typically support manufacturing operations well as materials can move continually from receipt to raw material storage to manufacturing to finished product storage to staging or shipping in the long direction. Distribution operations typically require shorter travel distances and a long building could add to travel time and related costs.
A square shape in a manufacturing operation could force material to have to double back and forth because there is not enough length to support continuous travel. Distribution operations when laid out properly in a square building will result in shorter travel distances for the round trip from dock to storage to dock.
If you encounter an L shaped building it is even more important to determine if it can support or it will restrain operations.
Docks – We find that most companies tend to underestimate dock requirements when looking for a new facility because docks are not used for storage or production and they often “look empty.
Proper receiving and shipping growth projections often are not considered in dock requirement planning. Dock placement will have a serious impact on operational efficiency and facility throughput subject to the type of operation.If dock size is underestimated whether for receiving or shipping, it is only a matter of time before product will be blocking storage aisles.
If dock size is overestimated money will be spent for space that is not needed. If docks are situated on opposite sides of the building a manufacturing process can begin on one side and flow continuously with product being shipped from the other side of the building without doubling back to dock doors on one side of a building only. If docks are situated on one side of the building fastest moving product can be stored closest to the dock and slowest moving product furthest so the most frequent round trips are the shortest ones for a distribution operation.
If docks are situated on opposite sides of the building all product will have to travel the length of the building from receiving to storage to shipping no matter how frequently a given product is shipped increasing costs.Column Spacing – Subject to the layout, column spacing can be a major problem.
If one requires a narrow or very narrow aisle rack configuration, and the column spacing does not support the requirement, aisles may have to be widened unnecessarily so columns do not block the aisles which results in reduced storage capacity. We’ve encountered situations where columns block conveyor paths and extra expense was required and delays encountered to bypass the column and/or the layout had to be changed. It is essential to know favorable and unfavorable column spacing is before searching for a building.Ceiling Heights – This is an area where subtle differences can have large implications.
Slightly too short could result in losing a storage level and therefore requiring more space or creating different height storage openings and having to remove a layer of cartons to replenish a pick location. It could mean not being able to mezzanine above a short height operational area and running out of space sooner than necessary.
Taller buildings may have a cost premium and if you don’t need extra height based on operational requirements, why pay the premium? A taller building however could provide future growth by going higher later and therefore allowing the acquisition of less square feet and lower costs.I want to know my pallet heights and desired number of storage levels and any other key metrics beforehand and then select the correct building to support the operation and layout. Of course there are possible exceptions to the general rules stated above which is even more reason that a proper study should be performed before beginning the search for a new facility.
If you really want a good fit, it is important that you contact a Supply Chain expert prior to the facility selection in order that we can optimize your efficiency over the length of the lease. Recently, I spoke to a client who complained about excessive transportation cost, I asked him if his company was growing according to forecast and he agreed that it was, however, he now had 3 buildings approximately 15 miles from each other and was constantly transporting inventory to have it in the proper place at the proper time. There is a good chance this could be avoided if we had been contacted in the beginning prior to the site selection.
If your company is considering a new facility; I would suggest you contact Supply Chain Experts, they can help you with your future needs analysis, writing request for proposal, software design and/or selection, and an implementation program that will optimize operational performance and satisfy the requirements of your customers.
Dr. Edward F. Knab
Productivity Constructs, Inc.
800 660 8718 office
949 413 7333 mobile
ed@edwardknab.com
www.productivityconstructs.com
More Supply Chain Experts Blogs
Dr. Knab is an academic practitioner and seasoned Global Supply Chain expert whose company, Productivity Constructs, is focused on driving cost and inefficiency out of the Global Supply Chain. Dr. Knab can be contacted for speaking engagements, coaching, or consultation at efk@productivityconstructs.com, ed@ewardknab.com or www.edwardknab.com.
Sunday, August 23, 2009
Anyone who has explored the option of installing a Warehouse Management System (WMS) in their operation has probably had a similar experience. You called in representatives from the vendors to present your requirements. At this stage, you have spent years optimizing your operation and have reached the point where further improvements require the substantial investment that a WMS entails.
The meeting begins and it soon becomes apparent that understanding the requirements of your operation are not on the vendor representatives’ agenda. They want to tell you what their WMS does. As they do this, you notice that a specific issue is not addressed. When you enquire how their WMS handles this issue, you are told that that issue will be addressed later in the presentation. If you persist, eventually their bottom line will emerge: stop running the operation the way you are and do it their way.
This demand is made by people who often have never worked in a warehouse and almost certainly have never run one. In spite of that, WMS vendors claim that they can “generate optimal distribution center designs.” Unfortunately, their definition of “optimal” is not the same as yours. They mean optimal for their software, not optimal for your efficiency, productivity, accuracy, and the other goals you have spent years developing.
What did you do when this happened? If it happens in the future, what should you do?
If your company is considering the implementation of a WMS system, I would suggest you contact Supply Chain Experts, they can help you with present and future needs analysis, writing request for proposal, software design and/or selection, and an implementation program that will optimize operational performance and satisfy the requirements of your customers.
Dr. Edward F. Knab
Productivity Constructs, Inc.
800 660 8718 office
949 413 7333 mobile
ed@edwardknab.com
www.productivityconstructs.com
More Supply Chain Experts Blogs
Dr. Knab is an academic practitioner and seasoned Global Supply Chain expert whose company, Productivity Constructs, is focused on driving cost and inefficiency out of the Global Supply Chain. Dr. Knab can be contacted for speaking engagements, coaching, or consultation at efk@productivityconstructs.com, ed@ewardknab.com or www.edwardknab.com.
Friday, August 14, 2009
Are There Hidden Risks in your Supply Chain?
Many organizations have spent years streamlining operations, reengineering processes, integrating with partners, implementing enterprise systems, and moving production to low-cost, offshore locations. They have done all of this in an attempt to improve the service they provide to customers at a more competitive cost. However, creating a global supply chain has brought new risks that you may not have encountered before.
More recent events such as terrorism, strikes, piracy, political instability in Third World countries, and last year's shutdown of West Coast shipping docks—have awakened managers as never before to supply chain risks, some of which had been introduced or heightened by the very actions companies had taken to drive costs out of their supply chains. Currently there are a number of significant well-documented challenges facing international and domestic transportation markets such as rising freight rates, infrastructure disrepair, and the new cost of security in both time and money.
The simple fact is that in today's longer, more global supply chains, product moves over greater distances and across more borders than in the more localized supply chains of the past. The coordination and execution required for international shipments has always been a challenge, but now we find that market conditions, security considerations, and regulatory pressures are converging in such a way that increase risk significantly. But "Many risk factors have developed from a universal pressure to enhance productivity, eliminate waste, remove supply chain redundancies, and drive for cost improvement," says , of Productivity Constructs of Palm Springs, California.
Today an inverse relationship between risk and efficiency supply chains has been established; supply chain managers can no longer focus solely on cost reduction—any calculation of a supply chain's return on investment must also take customer satisfaction into account. "We're trying to make sure we operate the supply chain more efficiently and decrease costs as we increase service levels to customers," says Roy Strauss of Strauss Consulting. Risks exist across the entire length of supply chains, and are as diverse as political instability, exchange rates, carriage capacity, shelf life, and customer demand. The risks will be the subject of future Supply Chain Experts blogs but include:
Terrorism
Piracy
Currency Fluctuation
Government Instability
Strikes
Quality Considerations
Energy Cost
Transportation Problems
Natural Disasters
Rework Costs
Supply Chain Complexity
Global Interdependence
Balancing these competing priorities means that it's impossible to eliminate risk entirely. But there are steps you can take to mitigate risk while keeping your supply chain costs as low as possible. First, however, a little background on the nature of risk and how companies seek to deal with it. It may be time for you to rethink your global supply chain strategy in a manner that mitigates some of these risks and optimizes your ability to consistently deliver product to your customer at the lowest possible cost.
So, what can you do to mitigate these risks while insuring low cost leadership? You can call Supply Chain Experts who will help you assess the risks in your supply chain;
they will help you think strategically about risk versus cost,
they will help you broaden the cooperation with the trading partners in your supply chain,
help your organization understand the trade-offs and make better decisions that will insure your ability to take care of your customers,
and help your organization understand that you cannot ignore risk solely because it is difficult to quantify.
Your organization should be concerned about supply chain risks and Supply Chain Experts can help your organization design an effective system that creates a balanced cost/risk relationship that will protect your organization and your customers today and into the future.
Dr. Edward F. Knab BLOG
Productivity Constructs, Inc.
800 660 8718 office
949 413 7333 mobile
ed@edwardknab.com
www.productivityconstructs.com
More Supply Chain Experts Blogs
Dr. Knab is an academic practitioner and seasoned Global Supply Chain expert whose company, Productivity Constructs, is focused on driving cost and inefficiency out of the Global Supply Chain. Dr. Knab can be contacted for speaking engagements, coaching, or consultation at efk@productivityconstructs.com, ed@ewardknab.com.
Monday, August 3, 2009
Labor Cost Controls Utilizing Reward Incentives
Rewards programs are not just for frequent flyers and good little boys and girls anymore. Today’s workforce demands recognition and added rewards for performance above minimum expectations. Our society and the workplace are now part of the culture of immediate gratification and material rewards.
A generation fostered and reared by those of us who fit the Baby Boomer mold now dominates the workforce. This generation - “X”, “Y”, “Z”, or whatever – has taken the concept of recognition, and many other things, to a different level. Boomers have rewarded everything from good report cards to soccer goals to gymnastics stunts with significant, tangible rewards. One of the most asked questions during the childhood of today’s workers was, “What are you gonna give me if I do?” Boomers have responded in great ways with great giveaways and financial rewards. For our purposes the important point is that we recognize that for most of their lifetime today’s workforce has received something extra every time they performed above the accepted minimum.
The most powerful bonus reward is cash compensation. Periodic payment of cash (paycheck) bonus based on fair, equitable, and accurate measures provides the most possible motivation for the workforce. “What are you gonna give me?” effectively works in both interests with this type of bonus reward. Workers are able to increase their earnings based on performance over and above the expectation of the employer. The employer pays additional wages in exchange for exceptional performance. Employers are saying, “Give me productivity above expectations and you will receive wages above expectations.” The present workforce expects to gain from extra effort – as they have been conditioned to expect since early childhood. Some of your workers are not American and did not come of age with the comparably plush standard of living enjoyed in the United States. The power of rewards, particularly financial rewards, may however be even greater with these workers. The reasons for the motivation and the expected timing of the rewards may differ, but, those who are striving to improve their standard of living will respond to increased earnings potential with great fervor.
LABOR MANAGEMENT MEASURES
Fair and accurate measures must be established prior to the execution of cash bonus rewards. Those measures should be established through an Industrial Engineering process resulting in engineered productivity standards. Engineered standards provide equitable measures for all direct labor type jobs in the distribution center. Standards also account for the ease or difficulty of certain shipments, orders, or batches of work by incorporating multiple volume indicators into each measure of performance. In summary:
Productivity Standards must be established using an Industrial Engineering Process.
The standards must provide equitable measures for all direct labor jobs.
The Standards should account for the ease or difficulty of shipments, orders, or batches of work.
Supply Chain Experts can help your organization design an effective labor management system that creates a balanced cost/benefit relationship that will benefit your organization today and into the future.
Dr. Edward F. Knab BLOG
Productivity Constructs, Inc.
800 660 8718 office
949 413 7333 mobile
ed@edwardknab.com
www.productivityconstructs.com
More Supply Chain Experts Blogs
Dr. Knab is an academic practitioner and seasoned Global Supply Chain expert whose company, Productivity Constructs, is focused on driving cost and inefficiency out of the Global Supply Chain. Dr. Knab can be contacted for speaking engagements, coaching, or consultation at efk@productivityconstructs.com, ed@ewardknab.com or www.edwardknab.com.
A generation fostered and reared by those of us who fit the Baby Boomer mold now dominates the workforce. This generation - “X”, “Y”, “Z”, or whatever – has taken the concept of recognition, and many other things, to a different level. Boomers have rewarded everything from good report cards to soccer goals to gymnastics stunts with significant, tangible rewards. One of the most asked questions during the childhood of today’s workers was, “What are you gonna give me if I do?” Boomers have responded in great ways with great giveaways and financial rewards. For our purposes the important point is that we recognize that for most of their lifetime today’s workforce has received something extra every time they performed above the accepted minimum.
The most powerful bonus reward is cash compensation. Periodic payment of cash (paycheck) bonus based on fair, equitable, and accurate measures provides the most possible motivation for the workforce. “What are you gonna give me?” effectively works in both interests with this type of bonus reward. Workers are able to increase their earnings based on performance over and above the expectation of the employer. The employer pays additional wages in exchange for exceptional performance. Employers are saying, “Give me productivity above expectations and you will receive wages above expectations.” The present workforce expects to gain from extra effort – as they have been conditioned to expect since early childhood. Some of your workers are not American and did not come of age with the comparably plush standard of living enjoyed in the United States. The power of rewards, particularly financial rewards, may however be even greater with these workers. The reasons for the motivation and the expected timing of the rewards may differ, but, those who are striving to improve their standard of living will respond to increased earnings potential with great fervor.
LABOR MANAGEMENT MEASURES
Fair and accurate measures must be established prior to the execution of cash bonus rewards. Those measures should be established through an Industrial Engineering process resulting in engineered productivity standards. Engineered standards provide equitable measures for all direct labor type jobs in the distribution center. Standards also account for the ease or difficulty of certain shipments, orders, or batches of work by incorporating multiple volume indicators into each measure of performance. In summary:
Productivity Standards must be established using an Industrial Engineering Process.
The standards must provide equitable measures for all direct labor jobs.
The Standards should account for the ease or difficulty of shipments, orders, or batches of work.
Supply Chain Experts can help your organization design an effective labor management system that creates a balanced cost/benefit relationship that will benefit your organization today and into the future.
Dr. Edward F. Knab BLOG
Productivity Constructs, Inc.
800 660 8718 office
949 413 7333 mobile
ed@edwardknab.com
www.productivityconstructs.com
More Supply Chain Experts Blogs
Dr. Knab is an academic practitioner and seasoned Global Supply Chain expert whose company, Productivity Constructs, is focused on driving cost and inefficiency out of the Global Supply Chain. Dr. Knab can be contacted for speaking engagements, coaching, or consultation at efk@productivityconstructs.com, ed@ewardknab.com or www.edwardknab.com.
Sunday, August 2, 2009
It doesn't matter if they call it a recession, depression or something else, the world economies are in the worst slump of the post-WWII era and this downturn is affecting everybody, residential and commercial real estate, construction is at its lowest rate in decades, employment has contracted by 3.2 million jobs and scores of banks and investment firms have failed. Consumer confidence is is now at its lowest level in 50 years. As companies rush to cut cost in these challenging economic times, often without a lot of thought as to its long term implications on their business.
While there is little wrong with prudent cutting costs, the companies who emerge from economic downturns quickest and gain the most market share are those who applied innovation during the downturn to add value to their business and their customers. It is during these challenging times that companies often separate themselves from mediocrity by integrating high degrees of innovation.
Generally, in time of economic uncertainty, the concept of innovation is not even up for discussion, whereas it should be the basis for all ‘going forward’ decisions. Traditional supply chain issues such using innovative means to get products people want to buy to them faster and cheaper is the foundation for improving the value equation we bring to the table. Our focus should be on adding value to the customer rather than cutting costs. All of our focus as innovators should be directed at “added value”; even the act of cutting cost is in reality adding value.
Supply Chain innovators provide value to their customers by improving systems which result in improving profits. The great majority of all improvements are of an incremental nature rather than a single “big bang”, they are a result of constant and never ending improvements (CANI). Companies that can integrate some simple philosophic approaches into the customer relationships can create greater value for their customers and themselves, and will gain competitive advantage in the marketplace, especially as the economy improves.
Listen to your Customers.
Get to really know them, live with them, understand their opportunities and support them. Most companies will tell you they know their customers but it reality they know the statistics of what and when they buy but do not know what their customers’ problems and challenges are. Often, the answer is Supply Chain related, businesses need to be asking their customers; what worked? what didn’t? and what next? and often the result is technology-assisted collaboration which creates a foundation for a new and improved relationship. It starts with demand signals – knowing what quantities and mix of products are selling in each store or region for you, your customer, or your customer’s customer. Supply chain integration and visibility applications can be the conduit making channel collaboration possible.
Reduce Transportation Time and Cost
Fluctuating energy cost are an underlying cause of our current economic turbulence, with supply chains lengthening and fuel costs on a roller coaster ride, transportation costs and risks are areas that must be stabilized first. Some of the strategies that can help in the long term are network design, near-shoring, and local production and distribution. In the short term Transportation Management Systems can help reduce cost and optimize efficiency. The concept of shippers co-operatives are gaining new traction as volumes decrease and in stock inventory is a mandate. Eliminating empty miles through arranging back-hauls and continuous moves, automating yard movements and appointment scheduling, and providing portals for carrier and customer communication can significantly improve efficiency.
Optimize Working Capital and Reduce Cost
The economic challenges should result in a good long look in how we are leveraging out capital and help us identify area where we may improve our utilization. Cost reduction programs that mandate cost cutting percentages across all departments only reward those who ran too fat in the first place. More importantly, they are not geared to adding value to the customer. In fact, the opposite is usually true. The right way to reduce cost is to start with customer demand signals. Follow the demand signal up through the demand chain to manufacturing and suppliers, then down through distribution to the customer or the store shelf. Examine each point along this journey to see what adds value and what doesn’t. Cut everything that does not add value. That is the principle of lean supply chains.
Streamline Processes
Innovation requires improving processes by leveraging best practices and technology to create better flows of product, people and information. Look at order management, manufacturing and procurement, distribution and transportation. There are significant new developments in technology supporting these areas. For example, using a single system to track raw materials and purchased components, sequence them into and through production, and then tracking the combined output through distribution improves manufacturing and distribution efficiency, and has huge traceability benefits in case of recall.
Make Good Decisions based on Good Data
Often ERP systems have failed to live up to their promise of integrated and assessable supply chain data and management has been hard pressed to make good decisions. Management needs real-time access to accurate, meaningful information which was supposed to be the promise of ERP. However, the batch nature of ERP and its lack of supply chain detail have shown the reality to be less than optimal. What are needed are business intelligence tools that link, sort and analyze data from all the supply chain systems and trading partners to present meaningful, personalized information to executives in real-time. This information is displayed on graphic dashboards that are easy to comprehend and act upon, yet can be used to drill down to get to the root cause of problems. The good news is these business intelligence systems are available today. They give supply chain management the tools they need to respond with agility to the ever-increasing variability of demand and take advantage of new market opportunities before the competition.
After years of down-sizing, right-sizing and lean, most companies are already running full out. Cutting heads may cut costs, but it also cuts customer service while raising overtime expense and blood pressures. Go from survival mode to competitive advantage by empowering your employees through a performance-focused culture. Look to innovate, everywhere! It won’t all work but your organization will learn from it, they will learn that controlled failure is acceptable providing there is a plan with predefined outcomes and a method of coordination. Promote learning to insure your organization is in tune with the latest supply chain innovation in the market. Challenge the organization to get closer to the customer at every touch point; senior management, buyer/seller, AP/AR, SCM/Customer Service and others.
If your company is attempting to cope with turbulence in your supply chain the Supply Chain Experts can help you design a program that satisfies the requirements of your customers while insuring the optimal data flows to accurately control your global supply chain.
Dr. Edward F. Knab
Productivity Constructs, Inc.
800 660 8718 office
949 413 7333 mobile
ed@edwardknab.com
Productivity Constructs, Inc
Dr. Edward Knab Web Page
Dr. Edward F. Knab Blog
Dr. Knab is an academic practitioner and seasoned Global Supply Chain expert whose company, Productivity Constructs, is focused on driving cost and inefficiency out of the Global Supply Chain. Dr. Knab can be contacted for speaking engagements, executive coaching, or consultation at efk@productivityconstructs.com, ed@ewardknab.com or www.edwardknab.com.
Tags: inventory, Supply Chain Management,RFID, SCM, scan, information, inventory, lean, supply chain
While there is little wrong with prudent cutting costs, the companies who emerge from economic downturns quickest and gain the most market share are those who applied innovation during the downturn to add value to their business and their customers. It is during these challenging times that companies often separate themselves from mediocrity by integrating high degrees of innovation.
Generally, in time of economic uncertainty, the concept of innovation is not even up for discussion, whereas it should be the basis for all ‘going forward’ decisions. Traditional supply chain issues such using innovative means to get products people want to buy to them faster and cheaper is the foundation for improving the value equation we bring to the table. Our focus should be on adding value to the customer rather than cutting costs. All of our focus as innovators should be directed at “added value”; even the act of cutting cost is in reality adding value.
Supply Chain innovators provide value to their customers by improving systems which result in improving profits. The great majority of all improvements are of an incremental nature rather than a single “big bang”, they are a result of constant and never ending improvements (CANI). Companies that can integrate some simple philosophic approaches into the customer relationships can create greater value for their customers and themselves, and will gain competitive advantage in the marketplace, especially as the economy improves.
Listen to your Customers.
Get to really know them, live with them, understand their opportunities and support them. Most companies will tell you they know their customers but it reality they know the statistics of what and when they buy but do not know what their customers’ problems and challenges are. Often, the answer is Supply Chain related, businesses need to be asking their customers; what worked? what didn’t? and what next? and often the result is technology-assisted collaboration which creates a foundation for a new and improved relationship. It starts with demand signals – knowing what quantities and mix of products are selling in each store or region for you, your customer, or your customer’s customer. Supply chain integration and visibility applications can be the conduit making channel collaboration possible.
Reduce Transportation Time and Cost
Fluctuating energy cost are an underlying cause of our current economic turbulence, with supply chains lengthening and fuel costs on a roller coaster ride, transportation costs and risks are areas that must be stabilized first. Some of the strategies that can help in the long term are network design, near-shoring, and local production and distribution. In the short term Transportation Management Systems can help reduce cost and optimize efficiency. The concept of shippers co-operatives are gaining new traction as volumes decrease and in stock inventory is a mandate. Eliminating empty miles through arranging back-hauls and continuous moves, automating yard movements and appointment scheduling, and providing portals for carrier and customer communication can significantly improve efficiency.
Optimize Working Capital and Reduce Cost
The economic challenges should result in a good long look in how we are leveraging out capital and help us identify area where we may improve our utilization. Cost reduction programs that mandate cost cutting percentages across all departments only reward those who ran too fat in the first place. More importantly, they are not geared to adding value to the customer. In fact, the opposite is usually true. The right way to reduce cost is to start with customer demand signals. Follow the demand signal up through the demand chain to manufacturing and suppliers, then down through distribution to the customer or the store shelf. Examine each point along this journey to see what adds value and what doesn’t. Cut everything that does not add value. That is the principle of lean supply chains.
Streamline Processes
Innovation requires improving processes by leveraging best practices and technology to create better flows of product, people and information. Look at order management, manufacturing and procurement, distribution and transportation. There are significant new developments in technology supporting these areas. For example, using a single system to track raw materials and purchased components, sequence them into and through production, and then tracking the combined output through distribution improves manufacturing and distribution efficiency, and has huge traceability benefits in case of recall.
Make Good Decisions based on Good Data
Often ERP systems have failed to live up to their promise of integrated and assessable supply chain data and management has been hard pressed to make good decisions. Management needs real-time access to accurate, meaningful information which was supposed to be the promise of ERP. However, the batch nature of ERP and its lack of supply chain detail have shown the reality to be less than optimal. What are needed are business intelligence tools that link, sort and analyze data from all the supply chain systems and trading partners to present meaningful, personalized information to executives in real-time. This information is displayed on graphic dashboards that are easy to comprehend and act upon, yet can be used to drill down to get to the root cause of problems. The good news is these business intelligence systems are available today. They give supply chain management the tools they need to respond with agility to the ever-increasing variability of demand and take advantage of new market opportunities before the competition.
After years of down-sizing, right-sizing and lean, most companies are already running full out. Cutting heads may cut costs, but it also cuts customer service while raising overtime expense and blood pressures. Go from survival mode to competitive advantage by empowering your employees through a performance-focused culture. Look to innovate, everywhere! It won’t all work but your organization will learn from it, they will learn that controlled failure is acceptable providing there is a plan with predefined outcomes and a method of coordination. Promote learning to insure your organization is in tune with the latest supply chain innovation in the market. Challenge the organization to get closer to the customer at every touch point; senior management, buyer/seller, AP/AR, SCM/Customer Service and others.
If your company is attempting to cope with turbulence in your supply chain the Supply Chain Experts can help you design a program that satisfies the requirements of your customers while insuring the optimal data flows to accurately control your global supply chain.
Dr. Edward F. Knab
Productivity Constructs, Inc.
800 660 8718 office
949 413 7333 mobile
ed@edwardknab.com
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Dr. Knab is an academic practitioner and seasoned Global Supply Chain expert whose company, Productivity Constructs, is focused on driving cost and inefficiency out of the Global Supply Chain. Dr. Knab can be contacted for speaking engagements, executive coaching, or consultation at efk@productivityconstructs.com, ed@ewardknab.com or www.edwardknab.com.
Tags: inventory, Supply Chain Management,RFID, SCM, scan, information, inventory, lean, supply chain
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