By Owen Eldridge
Solution Provider, 4Ward Solutions Group
This article also appears in The Component Manufacturing Advertiser.
Relying on traditional supply chain execution systems is becoming increasingly more difficult, with a mix of global operating systems, pricing pressures, and ever-increasing customer expectations. There are also recent economic impacts such as COVID-19, supply shortages, the global recession, supplier bases that have shrunk or moved offshore, as well as increased competition from low-cost outsourcers. All of these challenges potentially create waste in your supply chain.
All businesses with a supply chain devote a fair amount of time to making sure it adds value, but there are opportunities for companies in our industry to take advantage of other tools and processes to dig deeper into supply chain data in search of savings and efficiencies. Even so, many of our businesses seem to talk about changing the supply chain dynamic but do little to make that happen. The result is a myriad of feelings including “we have no control over the supply chain” to “I just don’t have time other than to make sure I am getting a fair price.” Buying lumber or buying plates for components is one of the areas we tend to focus a lot on, but what tools are we using to evaluate if we are getting a “good deal” from a vendor? As an example, anyone can negotiate a raw material price, but have you evaluated what you are really getting in value, or when you should buy based on the market?
Effective supply chain management in manufacturing is essential for collaboration and coordination, as well as efficient business practices. A good best practice for achieving this management is by using analytics and integrating information in your systems.
What is Data Analytics?
Data analytics is the science of examining raw data to help draw conclusions about information. It is used in many industries to allow companies and organizations to make better business decisions and in the sciences to verify (or disprove) existing models or theories. In the past few years, we’ve been hearing more and more about the use of data analytics in the supply chain and logistics function, in other words, connecting a company’s information systems (management, accounting, production) and utilizing the data they have.
Many articles and data experts claim that the day for real-time supply chain practices has come — and the technology is on the verge of being more mainstream, thanks to a multitude of cloud data management tools and increased adoption of new supply chain software platforms coming to market. However, there’s also acknowledgement that a necessary foundation for moving efficiently at real-time speed — supply chain analytics — is still very much at the beginning stages of development in many building industry companies and will take time to build out.
In our industry, there definitely is an increased interest in the subject, especially in the areas of improved forecasting and S&OP (Sales and Operations Planning), but upgrades and tool implementation take time and that data has to be both accurate and accessible in order to perform data analytics with its complex algorithms. The scope and quality of data that enterprises collect and access in their supply chains, and how they leverage that data to optimize their supply chains, differs significantly from one enterprise to another.
One reason relates to the quality and timeliness of data in extended global supply chains. Companies with limited access to upstream and downstream partner data find it difficult to justify the addition of an analytics tool in their roadmap. But, quality data are available, although some companies are unsure of their capability to integrate their ERP, data warehouses, and supply chain management systems to the analytics tools.
Managing this “big data” is becoming easier with tools integrating all of the data a company has access to including providing specialized solutions. In the high-tech industry, software solution providers have traditionally leveraged structured data (including partner data) residing in ERP, supply chain systems, and data warehouses to understand trends and share the resulting intelligence with customers and suppliers. Distributors are now leveraging in-memory computing technology and new generation of visualization tools to create value for their business partners.
Best Practices to Leverage Supply Chain Management
1. Integrate existing platforms with vendor, supplier, distribution center, warehouse, yard, and transportation management systems. Better collaboration with vendors through connected systems leads to overall improvements in inventory management. For example, integrating your transportation management system (TMS) with a warehouse management system will enhance the flow of products within a lumber yard, tuning operations toward success.
2. Use data for continuous improvement/refinement of systems. Our customers and suppliers generate a mountain of data, and this information holds great value for effective supply chain management. This “big” data can be used for increased forecasting, but this is only possible through supply chain systems integration. Using consumer and company data helps identify threats and opportunities in the supply chain, so effective risk mitigation increases in both financial and physical supply chains.
3. Use technology to your advantage. Blockchain technology and deploying IoT technology are just a few of the innovations in supply chain management. These innovations offer the promise of end-to-end visibility, decentralized data, distributed information, and the collection of data from across millions of devices, including internal company sensors and connected products in the possession of end-users, to give managers a window into consumer need.
4. Automate data collection, management, and processes. Less physical work for employees and the system has the net effect of lowering operating costs and improving productivity. Automated systems, such as radio-frequency identification, Bluetooth-enabled devices, and robotics, can handle thousands more processes than their human counterparts. As use of automated technology increases, integration will become a common thread in the supply chain.
5. Use integrated systems to connect with employees. The simplest way to understand employee concerns and perspective lies in data, integrating labor management with performance measurement systems. Employees may use systems to access performance records, provide feedback to managers, submit incident reports, and more. This will provide a sense of accountability among employees, and managers can use such information in making decisions while at the same time lowering employee turn-over.
The next technology is around the corner, and it will rest on a strong foundation of integrated systems. If any of us at the 4Ward Solutions Team can be of assistance to you and your business, please let us know. Our team has assisted companies with the use of data and the systems that go with it including software/programming needs. We fundamentally understand the importance of data in your operation.
Owen Eldridge is a Solutions Provider with 4Ward Solutions Group. The company provides solutions including Consulting, Labor, Offsite, Design, Software Programming and Back Office Solutions. When the industry needs an actual expert, they turn to 4Ward team with more than 150 years of experience.4Ward Solutions Group is the leading provider of Management and Manufacturing Solutions to the Structural Component and Lumber Industry. With extensive experience managing within the industry, Owen brings a wealth of knowledge from components, distribution, and LBM companies, and he is Six Sigma Green Belt Certified. You can reach Owen at owen@4WardSolutionsGroup.com or 703.350.3928.
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