Achieving Excellence with Supply Chain Cloud Solutions
8/16/2013 7:00:00 AM
There was a lack of actionable business intelligence on supplier and supply chain performance
IEC is a pseudonym for a global, industrial equipment firm that shared their process of best-practices process improvement, but wished to remain anonymous due to the highly competitive market place. IEC realized reductions in working capital in the past through inventory right-sizing and reduced cash conversion cycle improvements. Recently IEC executives shifted the focus of the Operational Excellent (OpEx) team to improving buyer/supplier collaboration, streamlining raw material replenishment processes and improving on-time delivery performance.
IEC is a global enterprise with manufacturing operations in the USA, Europe, and China. The company distributions products through regional distribution centers located on four continents. Manufacturing processes include fabrication, machining, welding, painting, and assembly.
The OpEx initiative has successfully employed lean and six sigma methodologies to drive operational and financial improvements in the business. The program was focused on improving operations within the four walls of the manufacturing plants. Until the focus shifted, the efforts for continued process improvement were in demand management and S&OP areas of the enterprise.
When IEC analyzed the root causes for missed customer shipments, it was clear that non-availability of the right raw material was a big problem. They identified that production schedules changed, but the lag time in communicating these changes did not provide enough time for suppliers to react. Similarly, orders were released, but lack of acknowledgements or ASNs (Advanced Shipping Notices) in a timely manner resulting in late recognition of a potential stock-out. Drop-in orders and consolidated shipping requirements were whiplashing the MRP driven material requirements, resulting in missed shipments, excess inventory, and expediting fees.
The business challenges were driven in large part by sub-optimized supply chain processes and supporting IT systems. There was also a lack of actionable business intelligence on supplier and supply chain performance. The OpEx team identified specific inconsistencies in PO creation, PO change order management, order release, or acknowledgement, and supplier shipping/receiving requiring solution and achieving enterprise-wide process standardization and improved supply chain performance.
The Oracle Factor
Like millions of manufacturers, IEC uses the Oracle e-Business Suite across its corporate headquarters and at two of the five plants. After a four year deployment of Oracle no supply chain processes and systems could interfere with the company commitment to a companywide conversion to Oracle. Solutions had to meet the integration requires for Oracle, not interfere or disrupt the Oracle implementation, and meet or exceed all corporate IT standards for security, up-time, and maintenance.
Few Commercial-off-the-shelf (COTS) software solutions, including the Oracle iSupplier Portal could be meet the requirements. The firm selected Ultriva's Supply Chain Cloud solution, an Oracle Validated Integration solution, which assuaged many concerns.
The Collaborative Supply Chain Portal (CSP) provided a web-based platform to support material planning, replenishment, and receiving. It also contained the ability to support consumption based replenishment and MRP driven orders. Now the web portal transmits forecasts to suppliers and integrates bar code scanners to automate ordering and receiving processes.
With real-time visibility to disruptions in supply, including late acknowledgements and shipments, there is also real-time visibility of material usage for suppliers. Comprehensive supplier metrics support continuous improvement and a standardized method for all transactions has created analytics for measuring the standardized process.
IEC also selected Ultriva's Lean Factory Management (LFM) module to replace internal manual kanban systems. It has all real-time visibility of work orders and requirement as well as work order sequencing based on user defined business rules.
IEC realized many benefits as a direct result of the Supply Chain Cloud solutions deployment. A 29% reduction in raw material for parts on Collaborative Supply Portal was a dramatic bottom-line improvement as well as a 17% improvement in productivity of buyers, receiving, and material handlers.
Increased on-time supplier delivery for all suppliers using the Collaborative Supply Portal as well as improved management of supplier lead times by item through the use of analytics was realized.
Increased end-user and supplier adoption and usage meant faster response times â€“ transaction processing times are measurably faster than Oracle (applies to bar code scanning as well).
Built-in dashboards with key metrics and near real-time analytics for both suppliers and plant users eliminated the need for data warehousing and after-the-fact analysis. IEC transitioned from open-loop to closed-loop supply chain processes using Ultriva's workflow, alerting and business rules engines provide complete visibility to all supply chain processes at every stage of the consumption and replenishment cycle.
The company improved exception handling and decision support â€“ buyers and suppliers are now instantly alerted to a variety of exceptions and actionable responses. There is an ease of resizing internal and external kanban loops â€“ automated material trending analysis and kanban resizing tools dramatically improved IEC inventory and replenishment strategies and buyer productivity.
Conditions for a successful implementation
IEC met or exceeded all goals associated with the supply chain improvement initiative. Key factors that lead to the successful implementation meant the company did the work up front to understand current and future state processes for all the functional requirements. The company ensured key stakeholders were engaged throughout the process and selected a technology partner whose solution met the functional requirements, had the technical expertise in Cloud computing, could provide extensive customer references AND was tightly integrated with Oracle EBS for procurement, supply chain, receiving and inventory management processes.
By ensuring internal resources were committed to thoroughly test the integration minimized any disruptions during the launch.
Thomas R. Cutler is the President & CEO of Fort Lauderdale, Florida-based, TR Cutler, Inc., (www.trcutlerinc.com). Cutler is the founder of the Manufacturing Media Consortium including more than 4000 journalists, editors, and economists writing about trends in manufacturing, industry, material handling, and process improvement. Cutler is a member of the Society of Professional Journalists, Online News Association, American Society of Business Publication Editors, and Committee of Concerned Journalists, as well as author of more than 500 feature articles annually regarding the manufacturing sector. Cutler is the most published freelance industrial journalist worldwide and can be contacted at email@example.com.
Ultriva can be reached at www.ultriva.com.