Category Archives: Manufacturing

Seven Things Manufacturers Should Be Able To Do With S&OP Data

A recent article in Industry Week summarized “five things manufacturers should be able to do with S&OP data” that were quite good. So good, in fact, that this post is going to summarize them before adding two more things that manufacturers should be able to do with S&OP data.

  • Minimize SurprisesAn effective S&OP process that focuses on collecting and understanding demand data from internal stakeholders and trade partners is essential if you want to minimize surprises such as a delayed shipment, insufficient supply, or raw material shortage.
  • Optimally Manage InventoriesHaving the right amount of product, at the right time, in the right place is key to increasing margins, cash to order cycles, and customer satisfaction, among other benefits.
  • Improve MarginsImproving margins is often an area that’s under-emphasized in an S&OP process, and yet [it] is ultimately the most important factor in the health of a company. Making sure the relevant S&OP data, such as average product unit cost, inventory levels, logistics costs, anticipated margins, customer satisfaction rates, etc. is shared across marketing, finance, supply chain and the executive suite is critical because input and shared data amongst all functional groups is what drives margin improvements.
  • Improve Customer Satisfaction RatesImproved customer satisfaction gives you the ability to build stickiness with customers, which leads to profitable relationships. Knowing what your customers need, when they need it, and delivering on that need in a timely fashion is key to increased customer satisfaction — and good visibility will allow you to do just that.
  • Better Resource UtilizationEach part of the S&OP process should leverage the data as fuel for the decision making process as this allows for fact-based resource allocation which enables significantly greater resource utilization.

These are great starting points, but don’t stop there when you can also use S&OP data to:

  • Decrease CostsOnce you have an effective handle on demand across all product lines, you can use that knowledge to negotiate the best prices on parts against true volume levels. No more lowball estimates to be safe or missed rebates due to overly aggressive estimates.
  • Effectively Prioritize NPDOnce you have an effective handle on sales across product lines, you can determine which types of products sell the best, and which products in the pipeline are the most likely to be successful. Focussing on these products should allow the company to most effectively utilize its resources.

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Optimization is Supply Chain’s Simulation

A recent article over on Industry Week pointed out how Simulation is “Empowering Product Engineers to Save Time, Money (and the Planet Too)”.

According to the article, simulation helped:

  • NatureWorks design a new biodegrade chip bag for SunChips,
  • Balzer Pacific Equipment Co. design and manufacture a new barge to carry 6,000 tons for a client that required less steel and saved $20,000 in steel costs, and
  • Unverferth Manufacturing Co to create a new strip-till subsoiler in only 3 months that was ten times stronger than its predecessor, required less parts and cost thousands less to make.

Optimization offers similar benefits to your supply chain. It:

  • allows you to redesign your supply chain network to be more efficient,
  • allows you to source the optimal amount of product at the optimal cost, which saves you a ton of money,
  • and allows you to complete sourcing projects in weeks that used to take months.

So stop waiting and just do it.

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If Mark Anderson is Right, it’s a Long Road to Recovery

According to a recent article in Strategy+Business on a return, not to normal, but to reality, Mark Anderson believes that three critical measures need to be put in place before serious recovery can begin:

  1. Better Protection of Intellectual Property

    Considering that most protection seems to revolve around patents that are abused by software patent pirates, not much progress has been made here.

  2. Reforms to Prevent Jackals and Vampires from Dominating the Market

    Specifically, reforms to prevent short sellers (jackals) and sophisticated investors who take profits without contributing either market balance or information (vampires) from dominating the markets. No progress has been made on this front either.

  3. Rebuilding of the Manufacturing Base of the Industrialized World

    Considering the outsourcing craze is still in full gear, especially now that even China is outsourcing to Africa, it could be a while before the manufacturing base in the developing world can even dream of being close to capacity again. Despite the fact that they haven’t learned the lessons of their peers who have found that they needed their expertise in-house and that the offshoring machine didn’t work very well.

Plus, thanks to the glut of hot money in the global liquidity pool, when the damaged parts of the split economies begin to come back, this liquidity will likely create a whiplash effect, throwing countries into hyperinflation before they can respond effectively. It seems inevitable.

And with the unemployment rate predicted to stay at 10% overall, it’s looking like a very long road to recovery.

So make sure to get your supply chain in order … you’re going to need the competitive advantage!

Why ERP Is Not Enough for Project Based Manufacturing

A recent article over on Industry Week on “5 Critical Issues for ERP in Project-based Manufacturing” outlined why ERP systems alone are not enough for project based manufacturing (and manufacturing in general).

The issues outlined in the article were:

  1. Bidding and Quoting
  2. Project Visibility
  3. Managing Change
  4. Financial Performance Tracking
  5. Rapid Time to Value

A carefully evaluation of many of the ERP tools on the market will reveal that:

  1. They don’t truly support modern e-Negotiation, and the company will also need a modern e-Sourcing tool (which may have to be integrated).
  2. As far as these systems are concerned, user-defined push alerts, flexible automatic notifications, and real-time reporting is still a pipe dream. A real time data analysis tool will be required.
  3. Flexibility is limited. At a a minimum, good processes will be required. A change management add-on may be required as well.
  4. Lots of data is tracked and stored, but financial analysis capabilities are limited. A real time data analysis tool will be required here as well.
  5. Implementation is rarely quick, and payback typically longer than expected. That’s why supplementary Sourcing and Procurement systems are generally required.

In other words, a good ERP system can provide a great foundation, but it will rarely meet all of an organization’s need.

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It’s Not Lean If You Haven’t Engaged the Maintenance Department

Industry Week recently ran a great article on how “Culture Counts” and how maintenance is deeply involved in any true lean initiative. Fundamentally, lean is about finding and removing waste — and who knows more about waste than anyone else in the organization? The people who watch it go down the drain. The people who watch it get hauled away. The people who shovel it into the incinerator. In essence, the maintenance department.

A true lean initiative never reduces headcount in the maintenance department. (In fact, it might actually increase headcount in maintenance.) A true lean initiative involves maintenance from day one and gets their insight on where the most waste is produced and what methods could be used to reduce or recycle it. In true lean initiatives, the maintenance department is a strategic player who not only finds a way to reduce waste, and associated costs, but to profit off of it. Just like food waste can often be recycled into animal feed, industrial waste can often be recycled into raw materials usable in another product or industry. (And if maintenance can identify a unique recycling process that can produce secondary products that can be resold, the size of the maintenance department might actually increase as you add people to support a profitable waste recovery and recycling initiative.) And that’s why it’s not lean if you don’t engage maintenance, as you could miss the strategic opportunities without their help.

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