Document Text Contents
Page 2
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Page 38
Supply Chain For Dummies, JDA Software Special Edition _______30
These materials are © 2015 John Wiley & Sons, Inc. Any dissemination, distribution, or unauthorized use is strictly prohibited.
As you can imagine, this complexity makes it very difficult for
manufacturers to respond quickly to changes or disruptions.
In fact, the same report mentioned earlier discovered that 90
percent of companies rank “lack of speed and agility” as one
of their topmost supply chain concerns.
Although volatility and disruptions are hard enough to
manage, most organizations are also dealing with internal
misalignment. Sales, marketing, engineering, operations, and
finance departments all pursue separate goals that are, at
times, at odds with one another. For example, a sales leader’s
needs don’t always align to production schedules or inven-
tory best practices. So it’s difficult to get all parties to agree
and act on what’s best for the business as a whole. This, of
course, has very real and negative consequences. According
to a study from IBM, three out of four companies say “lack of
internal alignment” is a barrier to serving their customers.
This barrier isn’t just limited to internal stakeholders; lack
of alignment with external trading partners can also create
problems.
When manufacturers can’t get stakeholders to quickly agree
and act on the right path forward, and when supply network
complexity makes it difficult to make changes on-the-fly,
it simply takes too long to respond to changing consumer
demands. Because demand is only growing more volatile and
consumers have so many competitive options, this can really
hurt sales. Even small missteps can negatively impact an
organization’s margins.
That’s why leading manufacturers are taking a different
approach to managing their supply chain. This chapter shows
you the path to their success.
Establishing a Manufacturing
Planning Process
Before a manufacturer can embark on its supply chain jour-
ney, it must first have a plan. The most successful manufac-
turers have adopted an integrated manufacturing planning
process. This process includes the following:
Page 39
������� Chapter 5: The Key to Achieving Supply Chain Excellence 31
These materials are © 2015 John Wiley & Sons, Inc. Any dissemination, distribution, or unauthorized use is strictly prohibited.
✓ Developing forecasts for the products, product varia-
tions, and quantities that need to be produced. While
this may seem simple, it can actually be a highly compli-
cated process, depending on how many sales channels
manufacturers have and the variability of their product
offerings and customer base.
✓ Developing a supply plan involves determining how
products are going to be made in order to meet demand
on time. Of course, to do this, companies need to under-
stand what needs to be produced and when, as well as
have visibility into existing inventory, their suppliers’ abil-
ity to provide materials, parts, components, or subassem-
blies (and the associated costs), and the availability (and
costs) of assets like trained labor, factories, equipment,
and energy. A supply plan can be very complex depending
on the number of products produced, the number of
production facilities, the availability of materials, the
number of suppliers and distribution, and so forth.
✓ Developing detailed production plans that determine
how facilities, equipment, labor, and materials can come
together to produce products at the lowest cost in the
least amount of time. This process can be very compli-
cated because many products require hundreds of steps.
A delay at any one step may hold up production and
delivery. Factors like equipment maintenance, working
with perishable goods, and labor regulations can add
further complications.
✓ Monitoring plans and responding to change. Often,
plans are made 18 to 24 months in advance of when
goods are needed. Many complications can arise during
this time frame such as fluctuations in demand, availabil-
ity of assets, changes in financial position, and changes
with suppliers. One way to limit the ramifications of
these changes is to reconcile demand plans and supply
plans on an ongoing basis. This is commonly called sales
and operations planning (S&OP).
The S&OP process reviews current and anticipated
states in supply and demand to ensure that the supply
produced is still targeted to fulfill the expected demand.
However, changes are inevitable, so manufacturers need
to have a good understanding of the options they can
employ, as well as how those options will impact their
customer service levels and profitability.
Page 75
These materials are © 2015 John Wiley & Sons, Inc. Any dissemination, distribution, or unauthorized use is strictly prohibited.
Page 76
http://Dummies.com
These materials are © 2015 John Wiley & Sons, Inc. Any dissemination, distribution, or unauthorized use is strictly prohibited.
Page 38
Supply Chain For Dummies, JDA Software Special Edition _______30
These materials are © 2015 John Wiley & Sons, Inc. Any dissemination, distribution, or unauthorized use is strictly prohibited.
As you can imagine, this complexity makes it very difficult for
manufacturers to respond quickly to changes or disruptions.
In fact, the same report mentioned earlier discovered that 90
percent of companies rank “lack of speed and agility” as one
of their topmost supply chain concerns.
Although volatility and disruptions are hard enough to
manage, most organizations are also dealing with internal
misalignment. Sales, marketing, engineering, operations, and
finance departments all pursue separate goals that are, at
times, at odds with one another. For example, a sales leader’s
needs don’t always align to production schedules or inven-
tory best practices. So it’s difficult to get all parties to agree
and act on what’s best for the business as a whole. This, of
course, has very real and negative consequences. According
to a study from IBM, three out of four companies say “lack of
internal alignment” is a barrier to serving their customers.
This barrier isn’t just limited to internal stakeholders; lack
of alignment with external trading partners can also create
problems.
When manufacturers can’t get stakeholders to quickly agree
and act on the right path forward, and when supply network
complexity makes it difficult to make changes on-the-fly,
it simply takes too long to respond to changing consumer
demands. Because demand is only growing more volatile and
consumers have so many competitive options, this can really
hurt sales. Even small missteps can negatively impact an
organization’s margins.
That’s why leading manufacturers are taking a different
approach to managing their supply chain. This chapter shows
you the path to their success.
Establishing a Manufacturing
Planning Process
Before a manufacturer can embark on its supply chain jour-
ney, it must first have a plan. The most successful manufac-
turers have adopted an integrated manufacturing planning
process. This process includes the following:
Page 39
������� Chapter 5: The Key to Achieving Supply Chain Excellence 31
These materials are © 2015 John Wiley & Sons, Inc. Any dissemination, distribution, or unauthorized use is strictly prohibited.
✓ Developing forecasts for the products, product varia-
tions, and quantities that need to be produced. While
this may seem simple, it can actually be a highly compli-
cated process, depending on how many sales channels
manufacturers have and the variability of their product
offerings and customer base.
✓ Developing a supply plan involves determining how
products are going to be made in order to meet demand
on time. Of course, to do this, companies need to under-
stand what needs to be produced and when, as well as
have visibility into existing inventory, their suppliers’ abil-
ity to provide materials, parts, components, or subassem-
blies (and the associated costs), and the availability (and
costs) of assets like trained labor, factories, equipment,
and energy. A supply plan can be very complex depending
on the number of products produced, the number of
production facilities, the availability of materials, the
number of suppliers and distribution, and so forth.
✓ Developing detailed production plans that determine
how facilities, equipment, labor, and materials can come
together to produce products at the lowest cost in the
least amount of time. This process can be very compli-
cated because many products require hundreds of steps.
A delay at any one step may hold up production and
delivery. Factors like equipment maintenance, working
with perishable goods, and labor regulations can add
further complications.
✓ Monitoring plans and responding to change. Often,
plans are made 18 to 24 months in advance of when
goods are needed. Many complications can arise during
this time frame such as fluctuations in demand, availabil-
ity of assets, changes in financial position, and changes
with suppliers. One way to limit the ramifications of
these changes is to reconcile demand plans and supply
plans on an ongoing basis. This is commonly called sales
and operations planning (S&OP).
The S&OP process reviews current and anticipated
states in supply and demand to ensure that the supply
produced is still targeted to fulfill the expected demand.
However, changes are inevitable, so manufacturers need
to have a good understanding of the options they can
employ, as well as how those options will impact their
customer service levels and profitability.
Page 75
These materials are © 2015 John Wiley & Sons, Inc. Any dissemination, distribution, or unauthorized use is strictly prohibited.
Page 76
http://Dummies.com
