As global economies continue to be sluggish, customers are demanding even greater agility and flexibility from their suppliers. The pressure to reduce delivery lead times is more intense than ever as businesses try to reduce their inventories while maintaining high levels of customer satisfaction.
As a producer, one way to address these concurrent objectives is to implement Reliability Excellence (Rx) as a firm foundation for lean manufacturing and/or operational excellence (OpEx). Rx, lean and OpEx are extremely powerful tools for increasing productivity and reducing total cost of ownership (TCO). While these initiatives all extend beyond the plant walls to corporate entities, equipment and spare part suppliers, contractors, etc., for the most part, they “start at the plant, and end at the plant.”
Work management, materials management, reliability engineering and operator care processes and best practices are all primarily designed to increase throughput, increase production capability, minimize cost, and optimize the effectiveness and efficiency of plant labor and other resources. But this is not a single-point challenge. As you reach out to engage other entities to help you improve your own internal operations, the same influences are being exerted upon you from your own customers. How can these bi-directional forces be managed in parallel without simply “squeezing the balloon” and passing the problem downstream? One solution is to reach out beyond the factory in both directions of the overall supply chain at the same time and ensure that the entire end-to-end process is managed from a larger perspective.
So, what does managing the supply chain involve that these other initiatives don’t? One major difference – the Customer (with a capital C)! Supply chain management “starts with the Customer and ends with the Customer.” After all, manufacturers are in business solely because of their Customers. No rational business plan is founded on the principle that “we will make as much as we can make, regardless of whether anyone wants to buy it.” You can have the leanest, most reliable, lowest-cost manufacturing process in the world, but without Customers, you’ll still go out of business – fast!
Here are just a few examples of things that you could (and should) consider doing under the umbrella of supply chain management, at the very least FOR – and preferably WITH – your Customers:
Material Requirements Planning (MRP)
Not surprisingly, many of these are the same things that we find perfectly acceptable to ask or even demand of our suppliers, and we get frustrated when they don’t comply. Ironically though, when our Customers place the same expectations on us, we find them unreasonable! The key to effective supply chain management is to ensure that everyone is treated equitably, with a set of common goals and shared expectations, and in a spirit of partnerships (rather than Customer-Supplier relationships) so that when one link in the chain is successful, the others will be successful as well.
In addition to these externally focused aspects that deal more directly with the Customer, there are other integral elements of supply chain management that can often be managed effectively within the plant itself, for example:
While these are managed internally, involving the Customer at both ends of the supply chain will help to ensure the loyalty and continued business that every manufacturing operation needs to remain viable. And make no mistake – this is not a one-time activity. It is a continuous process that truly “starts at the Customer and ends at the Customer.” In fact, some might even argue that the supply chain is not truly a chain at all, but rather a closed loop.
About the author:
Doug Wallace is a materials management subject matter expert for Life Cycle Engineering (LCE), a consultancy based in Charleston, S.C. Doug has more than 20 years of practical supply chain management experience in the semiconductor industry, including positions in production control, shipping/receiving, incoming inspection, finished goods and spare part warehouse management, material planning, customer service, global capacity planning, and global production planning. For the past eight years, Doug has provided materials management education, training and consulting services to clients in a variety of different industries. Doug can be reached at dwallace@LCE.com. For additional information, visit www.LCE.com or call 843-744-7110.