Problems And Solutions For Planning Demand And Supply In An Outsourced Manufacturing Environment

Posted on February 6, 2008 - Filed Under Business

The biggest threat to your business is a lack of timely and accurate information. Without all the facts, you’re pressured to make critical business decisions and assess risks and opportunities based on guesswork. Such decisions may result in significant financial losses or missed revenue opportunities for your business. Electronics manufacturers face a number of problems when trying to forecast demand and supply. Web-based solutions are now available to address this complex problem and allow business to model the multi-tier supply chain network and share demand and supply data. Collaborative supply chain processes align business and suppliers operations to reduce inventories, have the right product at the right time, and reduce inefficiencies.

DEMAND

Problem:

It is very difficult to forecast demand.

a. Volatile environment – competitors, pricing, alternative technologies, rapid changes

b. Many customers, complex and overlapping distribution channels, direct sales, indirect sales.

c. Long sales cycles, design wins, interdependencies of software, hardware, design activities and systems integration.

Solution:

Collaborate online with customers, distributors, sales force, and retail POS. This is where the best knowledge about true customer demand lies. Collaborating means an ongoing dialogue, not just aggregating demand forecasts from various sources.

SUPPLY

Problem:

It is very difficult to answer the question, “Can my suppliers supply enough to meet this demand forecast?”

Solution:

Collaborate online with all of your key suppliers by sharing your demand forecasts, seeing their supply forecasts, and quickly identifying and resolving constraints.

a. Concentrate on key suppliers of critical components (A & B).

b. Ignore suppliers of C parts.

c. Drill down through multiple tiers of the supply chain to pinpoint constraints or exceptions.

KEYS TO SUCCESSFUL COLLABORATION:

Bring value to your suppliers and customers as well as to you. This insures their enthusiastic and accurate participation.

a. Make forecasts reliable by not allowing exaggeration or discounting.

b. Let suppliers publish their true capabilities by letting them signal their capacity upside by putting Service Level Agreements and Soft Capacity into the system.

c. Keep the supply chain model simple and let suppliers maintain their own capabilities online, rather than creating a fixed, complex, hard coded supply chain model. This insures that the suppliers’ capabilities are accurate and up to date. As suppliers add lines or plants or move production, they can change their piece of the supply chain model with simple point and click tools.

d. Make access to the system easy and intuitive and make it easy to connect to other enterprise systems.

i. Use a web application so there is no client software and you can access from anywhere

ii. Data can be input in multiple ways: manual entry via web browser, EDI transfer, XML transfer, and Excel file exchange.

iii. Make viewing and accessing the data easy: on-screen via web browser, export to Excel, export via EDI or XML.

e. Make it easy to send and receive alerts when critical data changes

i. Via email, pager, cell phone.

ii. You configure alert events or exceptions.

iii. Via dash-board type application to push changes and alerts

f. Implement supply chain performance metrics

i. Standardize performance metric definition and allow different performance algorithm or measurement at each supply chain tiers.

ii. Report and monitor daily performance and corrective actions.

THE STRATEGIC VIEW

Beyond the tactical benefits of reduced inventories throughout the supply chain and therefore lower costs to the OEM, and a more responsive supply chain leading to fewer lost sales due to products not being available when they are needed, Collaborative Demand Planning and Collaborative Supply Planning bring substantial strategic benefits to the user. With outsourced manufacturing, ultimately the competitive battle is won by companies that can engineer and operate a supply chain of greater efficiency and greater responsiveness. The strategic imperative is not only to select a lower cost contract manufacturer (a tactical consideration today), but to make sure that you can create a lower cost, more responsive supply chain on a continuous basis out into the future.

Wan Chang, from Aion Technology L.L.C, leads Aion supply chain product development and go-to-market strategy. Aion provides a supply chain performance tool to solve critical business problems. This solution allows businesses in all industries to focus on key metrics and identify improvement actions.
Wan is an experienced professional with over 12+ years of broad-based experience in business application management, supply chain management and business process innovation. In this capacity, she has successfully assisted Future 500 companies in reducing cost, improving customer loyalty and strengthening strategic supplier relationship.

Source: Supply Chain Performance Intelligent, Aion Technology L.L.C, http://www.aion-technology.com

Tags: alternative technologies, business electronics, demand forecast, demand forecasts, electronics manufacturers, forecast demand, indirect sales, integration solution, sales cycles, suppliers, supply chain network, supply chain processes, supply web, true customer, volatile environment, web based solutions

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