A synchronized supply chain provides high levels of customer satisfaction with small levels of inventory investment. Product delivery is improved; production cost is reduced. Synchronized operations maximize both throughput and profits resulting in high value to shareholders. On the other hand, synchronized operations are counterintuitive because they depend on both excess capacity at every node and an agreement by every trading partner to a operate under a new set of rules. This paper outlines the issues, and the solutions, to transition from an independent, build-to-forecast organization to a dependent, synchronized supply chain community.
APPLYING SYNCHRONIZATION ACROSS THE SUPPLY CHAIN CONTINUUM
In some industries large capital investment results in expensive plant and equipment being operated near full capacity. Downstream final assembly is scheduled to maintain a customer order backlog, and customers experience wide fluctuation in lead times for their orders. This situation is commonly found in aerospace, automotive, electronics, and durable goods industries where fluctuations in the utilization of large capital assets can result in financial investments spoiling. In this kind of environment, synchroni-zation is best applied to the upstream feeder supply chains that converge at final assembly.
In other industries, large inventory investments in product having fixed shelf life result in production, transportation, and distribution being operated with a fixed lead time. Each node in the supply chain operates with excess capacity in order to maintain lead times throughout the system. This situation is commonly found in the grocery industry and the textile/ apparel industry where fluctuation in lead time can result in perishable food spoiling or in seasonal fashions falling out of style. In this kind of environment, synchronization can be used across the entire supply chain. Each node is synchronized to build or process tomorrow the quantity of product ordered today.
STEPS TO SYNCHRONIZE A SUPPLY CHAIN
When a group of independent organizations agree to cooperate as trading partners within a supply chain community, they must go through the following steps to begin a synchronized operation:
• Diagram the supply chain from raw materials to the end customer.
• Prepare a master list of stock-keeping units (SKUs).
• Pareto the SKU list by revenue (or by contribution
• Determine the trading partner node capacity required
for synchronization over the expected range of de
• Identify the trading partner who is the system constraint.
• Establish the days of supply for the constraint buffer
and the shipping buffer.
• Properly thread the demand signal to avoid the
• Use collaborative push planning system to set the
incoming rate of materials.
• Use statistical safety stock on unique materials to
support mix variation.
• Define the operating rules at the push/pull boundary.
• Spend supply chain resources to minimize the larg
est standard deviation among supply uncertainty,
cycle time variation, and transit time variation.
• Maintain operational alignment through global per
• Hold periodic supply chain operations council meet
ings to resolve issues.