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by Hallie Forcinio, Contributing Editor Posted on Friday, November 03, 2006 3:10:08 PM   | Abstract: | The cornerstone of an agile supply chain is accurate and timely information -- and an infrastructure that can act on it. |
In today's manufacturing environment, supply chain practitioners are managing more items through more complex supply chains with fewer people, shorter lead times, and lower inventory levels. At the same time, transportation costs are rising and cycle times are increasing as manufacturers move production offshore to focus on core competencies in product development and marketing. With longer supply chains and a smaller protective buffer due to condensed lead times and lower inventory levels, today's version of supply chain agility involves managing by exception and proactively responding to changing conditions, both routine and cataclysmic. An agile supply chain provides timely warnings about potential problems and helps control costs without reducing service levels. It also helps manufacturers ratchet up competitiveness. With all the business processes it affects, a supply chain can strongly influence whether the ink on the bottom line is black or red. As this realization sinks in, manufacturers are making optimization a primary goal. In fact, AMR Research's "Supply Chain Management Spending Report, 2005-2006" postulates that supply chain solution purchases increasingly are viewed as an enabler for reengineering of critical business processes rather than a technology investment. In pursuit of this goal, many manufacturers are turning to supply chain execution (SCE) software. Choices include best-of-breed solutions and modules that reside within enterprise resource planning systems. Use of both options is growing. ARC Advisory Group, which classifies warehouse management systems (WMS), transportation management systems, collaborative production management applications, and other real-time supply chain applications as SCE solutions, estimates that the market was $4.2 billion in 2005 and forecasts a 9.2% compounded annual growth rate for the next five years to boost it to $6.6 billion by 2010. Much of the software in this space is relatively mature. This maturity brings with it lower prices and simpler implementation, making deployment particularly attractive for smaller businesses. In fact, an ARC study that focused specifically on the worldwide WMS market indicates that businesses with annual revenues of less than $250 million are the fastest growing segment of WMS purchasers, and finds significant action among companies with yearly sales of less than $100 million. Gleaning Quality Information SCE applications enable supply chain agility through four elements, say Debra Hofman and Lora Cecere, analysts for AMR and authors of the report "Supply Chain Chaos and the Need for Agility": speed of response to changes in demand; ease of response; predictability, or consistency, of response; and quality products and order fulfillment. "An agile supply chain links daily activities to corporate goals and objectives," explains Karin Bursa, vice president of marketing at Logility, Inc. (Atlanta, GA), a provider of supply chain solutions. "It then monitors these goals on a day-to-day or hour-by-hour basis from a global perspective." Finally, it provides alerts to potential disruptions in production, shipments, or demand due to internal factors such as machine downtime or external influences like a competitive threat or weather-related transportation disruption. "It's not just the quality of the information, but also the frequency of it" that is important, Bursa notes. Logility's application suite, for example, includes 100 prepackaged alerts that can be tailored to specific businesses and channels. So, instead of having to browse through 500 items, a demand planner can receive a list flagging those that are at a critical threshold. Page : 1 2 3 ... NEXT |