Quick Response Logistics

Quick response is becoming a way of life for many companies today. Getting closer to your customer to anticipate what he wants next sounds good but how is it done? Having the products always available for customers seems to call for a very accurate forecast or at least a lot of inventory. Yet companies are competing with quick response and lower inventories. How do they do it? Have the found a way to hold the sales people accountable for the forecast? Do they have sophisticated computer systems?

This presentation will begin with a brief discussion of the most common mistakes being made today to achieve quick response in logistics. Specific approaches to forecasting and inventory management frequently used will be discussed including why these approaches are not effective for quick response performance. Quick response requirements for effective forecasting and inventory management will be discussed including how Focus Forecasting and Distribution Resource Planning meet these requirements. Specific performance measures that encourage quick response will be described. Lastly, the new relationships between supplier and customer through effective use of Electronic Data Interchange (EDI) will be described.

The three common mistake areas have to do with: Order Processing, Forecasting and Inventory Management.

Quick Response, to many people, means doing everything quickly to ship the customer's order. Quite often people begin with improvements to order processing, believing customer orders must be processed quickly for them to be shipped quickly. It is very common for order processing to be automated using Electronic Data Interchange (EDI). Often companies upgrade their order processing system to improve quick response performance. Unfortunately, the effort to automate the current process has minimum benefit toward reaching the goal of quick response. What operations needs is advance notice of what the customer is about to order so that it can be made available when he orders it. A quicker transfer of a customer order or a new order entry system still leaves operations with the need fill the order from an inventory or from a very flexible manufacturing operation. Inventory built in anticipation of future orders relies on the accuracy of the forecast. Because there is no such thing as an accurate forecast, failure in achieving quick response is almost guaranteed. Another approach often taken is to make manufacturing more flexible using the latest quick setup or change over techniques. Until operations is flexible enough to meet any. customer demand, there needs to be an alternative strategy. The best alternative strategy companies have found is to replan frequently making small changes often as customer demand becomes known.

To be Continued

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