Formerly predictable resources such as labor, transportation capacity and many types of raw materials have become far more dynamic over the past few years. Analysts are cautioning supply chain operators not to expect a return to stability any time soon.
Chances are, all this volatility has impacted your supply planning. When your supply capacity, production planning, and scheduling strategies are no longer working, it’s harder to successfully hit KPIs that may have come fairly easily in the past. Things like high on time/in full rates or production efficiency measures become harder to achieve.
You’re not alone. Here are some of the most common supply problems we’re hearing about—and how your peers are overcoming these challenges by adopting the right mindset, the right processes as well as the right technology.
The Challenge: Meeting customer orders expectations, such as on time/in full
In today's global supply chains, meeting customer orders expectations can be a major challenge. For one large electronics manufacturer, the ability to meet customer demand had become seriously hampered by the constraints and long lead times their suppliers were experiencing in procuring raw materials. Unpredictable material flows not only impact finished goods production and fulfillment, but also costs, efficiency, machine and labor utilization, margins, and other key metrics.
To elevate its supply planning chops, the electronics brand began applying more advanced supply planning capabilities to its suppliers’ procurement. With a more sophisticated supply application in place, suppliers can now procure materials in the right quantities and at the right time to support the manufacturer’s production plans, and multi-source where needed to ensure supply. With reliable raw materials flowing to their suppliers, the electronics manufacturer is now creating reliable production plans that achieve higher on time/in full rates.
The Challenge: Ensuring sufficient resources to meet plans
Materials shortages have a ripple effect across your entire supply chain—and perishable ingredients make it even more tricky. Ensuring the right materials are in the right quantities and at the right times is critical to avoid both shortfalls and spoilage.
One baked goods manufacturer tackled this challenge by turning its attention to creating better near- and long-term raw materials procurement with more advanced supply planning capabilities. By looking at timelines as far as 18 months out, collaborating with suppliers, and integrating purchasing with production planning, the manufacturer is now making smarter purchase decisions that help reduce schedule changes due to material shortages as well as minimize waste and optimize production.
The Challenge: Arriving at the most profit-efficient production plan
Maximizing the profitability of the production process relies on predictability. But that’s often in short supply. For lumber manufacturers, for example, forecasting production output of hardwoods is highly challenging, because they don’t know until they cut into the material which grades of lumber a single log may produce.
One global lumber manufacturer leveraged the advanced skills they developed by using a sophisticated supply application to overcome this limitation. They were able to design a reverse bill-of-materials process which reveals what “come-along” products they can expect, in addition to the primary grade material produced from a given log. Now they can take a profitable to promise approach, maximizing margins of the remaining raw materials after covering known demand.
Continuously Enhance Your Supply Planning
Those results just scratch the surface of what these organizations are now doing thanks to their ability to continually mature their supply planning skills. Organizations that invest in improving their supply planning processes gain a key competitive advantage and can reap significant benefits including increased agility, reduced costs, and improved customer satisfaction. Additionally, by having a robust supply planning system in place, companies can quickly adapt to changes in the market and ensure that they continue to meet customer demand.
Continually maturing these skills is not a walk in the park, but it becomes an easy task when you adopt an end-to-end supply chain planning solution like John Galt Solutions’ Atlas Planning Platform, with a supply application that empowers organizations like yours to start from wherever you are today, get a solid planning foundation in place to shore up those KPIs, and then keep leveling up your supply capacity and production planning maturity.
Whether you’re planning for your own production facilities, making choices about outsourcing production, or planning on behalf of your manufacturing partners, maturing your supply planning capabilities is essential to address today’s outsized supply chain challenges. Check out this link to learn more.