Microsoft Dynamics News that Matters
Nothing affects a company’s ability to compete more than the agility of its supply chain, but supply chain agility is dependent on visibility. Supply chain visibility is something that everybody talks about, but they seldom give you concrete information on how to achieve it.
Follow these six actionable steps to increase visibility in your supply chain and you’ll see major improvements in your key metrics.
1. Bring customers and suppliers into the forecast process
It’s not enough to base your forecast on history, or even to bring your sales force in to provide input. Sales people often have grandiose plans for sales that the customer knows nothing about. Make sure your customers are actively involved in forecasting right along with you. While you’re at it, involve your most important suppliers as well. If your sales forecast is accurate but you can’t get material, you’re not going to execute well. The forecasting process should include members of the entire upstream and downstream supply chain, or at least those participants who play a key role.
2. Adopt EDI or another rapid communication method
Don’t rely on phone calls or snail mail or late night batch uploads. Embrace EDI or another method of communicating with customers and make sure your important suppliers adopt it too. EDI is no better than a phone call if it’s not directly integrated to your ERP system, so don’t stop when you’re half way home. Make sure EDI file imports go directly to your ERP system so that you get a head start on responding to demand fluctuations. Your ERP system needs to readily support your EDI efforts.
3. Open a portal
Not all information is time-critical, but most information still needs to move quickly. Performance feedback needs to get to suppliers as soon as possible so they can take corrective action or make process improvements at their own facility. Set up a supplier portal where you can post performance metrics for each supplier, along with policy information and changes, or even use it as a drop box for communication and collaboration.
4. Treat outsourced operations like in-house work centers
If you outsource parts of your production process, you need to treat your outsourcing supplier like a member of your own production team. Otherwise, outsourced work orders fall into a black hole and you have no information on their progress. Your ERP system should include the ability to track material at outside operations, and ideally it should update both the purchase order and the shop order with a single receipt transaction when the material is received. By using a single transaction to update both order types, you eliminate non-value added steps and help ensure that the work order and the PO stay in sync.
5. Eliminate middlemen and non-value add processes
Streamline your supply chain as much as possible by pruning your supplier base. If you work through distributors, see if you can get the same deal directly from the manufacturer or ask the distributor to provide services that you find valuable such as holding safety stock inventory for you or making frequent small deliveries. Set up VMI and consignment inventories wherever possible, and use blanket orders to cover your needs. Eliminate steps such as incoming inspection by embarking on a quality improvement program with your suppliers, and adopt efficient supply chain best practices such as those in the MMOG/LE automotive industry standard.
6. Foster a relationship of open partnership
The most important step you can take to improve supply chain visibility is to have open and honest relationships with customers and suppliers. Don’t needlessly make suppliers jump through hoops to get material in a day or two early “just in case,” and don’t punish them for telling you the truth if they can’t. Use their expertise to learn how to improve your product and to understand the services they can offer to improve your responsiveness. Do the same with your customers.
The old saying that a chain is only as strong as its weakest link holds true for supply chains as well as physical chains. If everybody works together to improve the supply chain, every member comes out a winner.
Other Microsoft Sites
I'm a Customer
I'm a Partner
Follow Microsoft Dynamics