Efficient supply chain solutions fundamental to success

Many factors affect solutions for manufacturers and their suppliers. These differentiate the way your organisation uses supply chain solutions. The same solution can be configured to enable processes in different ways to suit that industry/company.

Factors to consider:

Relative supply chain position

• A manufacturer sending stock to distributors or a DC.
• A supplier of components or input materials to that manufacturer.
• A retailer supplying end customers/consumers from store/shop shelves or counters.

The industry involved

• Grocery, food/beverage and pharmaceutical: shelf life and traceability are factors.
• Industrial/automotive components: original equipment (air conditioner, engine/motor, etc.) model, year and/or variants exist.
• Fabricated metals (steel sheet/blocks, pipes, etc.): in-warehouse processing such as cut-to-size.
• Fashion and footwear: product ‘structures’ are more complex – consider the style/colour/size matrix, there is one product, but a package of many variants

Scale

Are you Nestle or a ‘mom and pop’ organisation? Both are complicated in different ways.

Dealing with differences

Planning and execution are affected by different IT solutions or a combination of them. The closer your operation is to end consumers (the last sale in the supply chain), the more responsive operations must be to on-shelf availability and changing buyer behaviour. Planning the next few days fed by today’s sales from outlets/shops leads to responsive replenishment solutions, starting with a forecast, but amended rapidly to drive the correct order volumes to correct stores. Elapsed time is critical – this is an execution-focused solution.

If you run large DCs supplying many stores, forecasts can be aggregated to identify what items must be in stock in what volumes at what time. You can use historical point-of-sale (POS) data, including independent variables like weather, disposable income, new car sales (whatever fits) in a demand forecasting solution. Here, the planning horizon is months/quarters (not days) driving the plan for buying supplier goods and sophisticated warehouse (WMS) execution. Collaborative demand drives your enterprise resource planning (ERP) solution to time phase execution and optimises orders to suppliers. The emphasis here is on planning.

Making supply chain solutions efficient

For many organisations, planning and execution can be handled by ERP alone. Efficiency comes from users’/managers’ ownership of their business process/activity, making sure inputs are correct and on time. What does that mean?

• ERP planning: open order accuracy – make sure old purchase and sales orders not fully received or shipped are closed off or the system will think they’re still part of the plan. Ensure planning parameters – order point, order quantity, lead time to supply, product structures (recipe/bill of materials) should reflect reality and be checked regularly (key value items most frequently).
• Inventory accuracy is paramount: right place, right quantity, right time – ensure receipts are checked and captured physically and are on the system at the same time. Regular stock checking of key products ensures that system and bin reflect the same quantity. Set your system to first in, first out (FIFO) or first expired, first out (FEFO) appropriately so dead stock is avoided.
• Space utilisation/warehouse layout: space is always restricted and usually zoned – make sure zones are not over using space. Optimise stock mix so that fast/valuable versus slow/cheap are balanced to effectively use working capital.
• Picking optimisation: optimise batch or wave picks, sort picking routes to minimise movement and time, and include bin stock count en-routes.

For many organisations, an ERP system like SYSPRO ERP covers the whole supply chain: forecasting material/production planning and execution, fair warehouse picking, product recall and inventory management/optimisation. For very large manufacturers/suppliers, ERP plus advanced warehouse management and collaborative demand forecasting may be necessary. For large retailers, solutions will be forecasting and replenishment, ERP plus specialised warehousing and transportation route planning software. Value-add in warehouses includes cutting steel to size, pre-labelling and hanging fashion items.

Efficiency comes from knowing where the opportunities for you are, picking the right IT tools, understanding them and using them properly. Do this to reap service and profit rewards.

Contributed by: Doug Hunter, Manager: Customer and Ecosystem Enablement at Syspro, doug.hunter@syspro.com

Article originally appeared in Logistics News – visit www.logisticsnews.co.za for more local content.