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Managing a Supply Chain
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Best of Gaw Lean Management Articles

Customer demand is constantly changing. This is especially true since a large variety of companies have adopted a Just-in-Time (JIT) stance, meaning that they are lean and agile with minimum levels of inven­tory. The entire supply chain, therefore, must be adept at responding to these changes as rapidly as possible. In order to facilitate this respon­sive approach, a great deal of flexibility must be built into the supply chain system.

The balance of this paper will discuss ways to cope with erratic changes and provide some methods for building flexibility into com­puter systems. The bottom line is that methods for improving commu­nications must be developed. Competitive advantage is now based on time and flexibility parameters.

SUPPLY CHAIN OBSERVATIONS

To quote Bill Gates, "A combination of personal computers and com­munications technologies has laid the basis for supply chain initiatives in retailing and manufacturing. As a result, the supply chain will be a lot more efficient. It will not have to invent its own technologies."

Jerome Swartz, chairman of Symbol Technologies, indicated that logistics and transportation will afford the greatest opportunity for sup­ply chain cycle-time reduction.

Bernard LaLonde, professor emeritus, Ohio State University, fur­ther stated that "companies need to hook together inbound supply with manufacturing and distribution and with third parties. The goal is to enhance customer value." He further stated that "the challenge facing logistics managers would be to manage not a single supply chain, but multiple systems." To do that, he believes they will have to focus on synchronizing those systems to reduce inventory and cut transporta­tion costs.

IMPROVED DIRECTION

Per Joseph Phelan, i2 Technologies, published in ERP, Jan/Feb, 1997, a new paradigm will indicate that a new dimension that must be con­sidered is that of demand, which will be equal to material and capacity. As Phelan indicates, "Any change in one will afreet the others and must be reflected immediately. In order to resolve this situation, the competitive planning process of the future will concurrently plan all variables together in one pass." Also, according to Phelan, "This helps solve a number of problems; exception messages are not generated in a vacuum at each functional step, planning iterations are greatly reduced or eliminated, and the delays are eliminated."

SYSTEMS SUPPORT

In the writer's opinion, the greater degree of systems integration, the greater the degree of supply chain flexibility. Fragmentation, in my opinion, de­stroys the capability of one to react quickly to demand chains. Remember, in the supply chain, we are defining the customer demand change, and not only its impact on the manufacturer, but its effects on the distribution chan­nel, as well as the supplier. Integration is quite different that interface. Interfacing means the building of bridges and, in some cases, the reenter-ing of data. This, of course, slows down the process and reduces flexibil­ity. I am reading more and more about combining various software in order to have a tailored solution for a given company's ERP solution. How does this make sense when many companies are still struggling to imple­ment an ERP solution from one software supplier?

What this all boils down to is that ERP, MRP II, etc., software can integrate the internal needs of most companies and certainly satisfies the important aspects of addressing flexibility internally. The problem with this effort is that it does not address the entire supply chain. Exter­nally, we have our suppliers' systems, our logistics systems, and our customers' systems. For the supply chain to support the demand changes in concert, all the various systems must have connectivity. Therein lies the challenge. This creates an entirely new systems complexity that we have only begun to address. The challenge is, how can we get ERP and the supply chain to mesh?

To Be Continued


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