Knowledge Zone - Operations



Effective Supply Chain Management

by R. Michael Donovan *

Part - I

The complexities of getting material ordered, manufactured and delivered overload most supply chain management (SCM) systems. The fact is, most systems are just not up to handling all the variables up and down the supply chain.

For years, it was thought that it was enough for manufacturers to have an MRP or ERP system that could help answer fundamental questions such as: What are we going to make? What do we need to make the products? What do we have now? What materials do we need, and when? What resources/capacity do we need and when?

Manufacturers need to know a lot more today to have a truly effective supply chain. There are a number of fundamental weaknesses in the old system logic. Many planning and scheduling systems in use today assume that lead times are fixed, queues do not change, queues must exist, capacity is infinite and backward scheduling logic will produce valid load profiles and good shop floor schedules. These assumptions are totally illogical, and following them causes many schedule compliance problems. An effective fix is first to streamline operations and then to apply predictive, preventive forms of advanced planning and scheduling.

SCM involves two flows. Information flow signals the need to start the flow of material. In a supply chain, the fast flow of high-quality information and material is inextricably linked and of paramount importance to SCM success. Untimely or low-quality information virtually guarantees poor performance.

Manufacturers need to develop flexible supply chain processes that can adapt to the needs of various customer segments. They must also develop supply chain strategy, processes and supporting systems that conform to current and future requirements.

Generally, an effective SCM approach must focus on:

  • Flexible supply and production processes that can very quickly respond to changing customer demand

  • A short-cycle, demand-driven order-to-delivery process

  • Accurate, relevant information that is available on demand throughout the supply chain

Throughout the supply chain, there are some absolutely critical and predictive questions your system should accurately and quickly answer:

  • When will specific orders really ship?

  • Which orders will be late?

  • Why will these orders be late?

Next

* R. Michael Donovan is a management consultant based in Framingham, Mass.