BEST PRACTICES/CURRENT TRENDS
Organizations are focusing on supply chain strategies that will directly impact the bottom line and customer satisfaction. Supply chain performance impacts over 85 percent of customer and supplier experiences, reflected in responsiveness, ease of doing business, reliability, satisfaction, and quality. Because of this, enhanced supply chain management applications allow an organization to
• Determine accurate promise dates real time, based
on available inventory and capacity
• Select the best distribution point and method
• Reduce lead times and cycle times to create more re
• Determine relative probability of a customer order
• Support the virtual inventory concept.
or supply alternative
Additional activities that enable more effective cus
tomer-driven planning include (see Figure 4)
• Tours of customers' facilities
• Joint product design meetings
Recent trends that leverage technologies to support customer-driven strategies include
• Driving the supplier's MPS system directly from the
customer's system via integration
• Demand-driven planning and supply, such as point
of sale reporting
• Reviewing and optimizing organizational infrastructure
• Dependency on extranets and e-business models
• Increasing dependence on data warehouses
• Accelerated information flow across geographical,
technical, and organizational boundaries to drive
• Manufacturers selling directly to consumers, taking
on role of wholesalers and distributors
• Future marketing focused on shopping experience
rather than product
• Bolt-on applications becoming routine additions to
• Moving from mass marketing to micromarketing to
reaching segments of one
• Trading exchanges providing noncompetitive plat
forms among industries.
BASIC SUPPLY CHAIN ACTIVITIES
For those organizations not ready for state-of-the-art integration techniques, there are several practical methods of integrating customer information into the master planning process that can be used effectively.
If we are going to produce what the market needs, we must know what the market needs. Understanding the needs and expectations of the customer requires getting to know
them. Open communication about expectations, limitations, and abilities is a first step towards becoming customer-driven. The goal—knowing exactly what customers are producing, and what they need to produce it. The ability to forecast customer requirements has long been a thorn in the side of many organizations. Linking customer and supplier production schedules is an effective way of integrating demand management with customer satisfaction, as product is managed as one inventory. Schedule sharing provides a way to assist the customer in accurately forecasting future demands, while at the same time increasing the supplier's visibility and
adaptability in the future.
The customer's schedule becomes the supplier's schedule, causing the supplier to simply be an extension of the customer's facility. Suppliers receive regular communications with customers' current inventory levels, desired minimum and maximum quantities, and production schedules. Communication channels can be EDI, fax, or simply sending copies of MRP outputs through the mail. Ultimately, integration would provide this information directly into the supplier's MPS calculations.
Kanbans are the utilization of cards or other signals to authorize production. The signal, or kanban, is a standard container or lot size in which the quantity is based on the amount of time needed to fill the container once the kanban is received. The process resembles the method once used by the milkman. Empty containers on the porch authorized him to leave full bottles. No bottles, no milk. If the kanban authorization is present, action is taken. If there is no kanban, no action is taken.
This same method can easily be applied throughout the supply chain. Contractual agreements are established between the sales and purchasing departments, providing forecasts and future demand requirements. Shipments are only scheduled upon receipts of signals by the supplier, so that a kanban for finished goods reflects an actual customer demand, not simply a date on the schedule. Communication channels can be established with something as simple as a fax machine. Kanbans can be sent directly between production lines, reducing additional ordering times. In this way, a real customer order causes the shipping location to empty which in turn releases a kanban for replenishment, authorizing the shipment without paperwork or intervention.
Kanbans can stand alone, or can be combined with techniques such as MPS/MRP or schedule sharing. Schedule requirements are given to suppliers, or production, communicating what to make medium and long term. These are converted to specific production and supplier shipments via kanbans. In this way, future visibility is provided for planning materials and capacity down the supply chain, yet actual inventory is not produced or moved until required.
To Be Continued