The Time-to-Action Dilemma in Your Supply Chain

August 3, 2015 Leave a comment



dreamstime_m_26639042If you can’t answer these 3 sets of questions in less than 10 minutes (and I suspect that you can’t), then your supply chain is not the lever it could be to drive more revenue with better margin and less working capital:
1) What are inventory turns by product category (e.g. finished goods, WIP, raw materials, ABC category, etc.)?  How are they trending?  Why?
2) What is the inventory coverage?  How many days of future demand can you satisfy with the inventory you have on-hand right now?
3) Which sales orders are at risk and why?  How is this trending?  And, do you understand the drivers?

Global competition and the transition to a digital economy are collapsing your slack time between planning and execution at an accelerating rate.

 

You need to answer the questions that your traditional ERP and APS can’t from an intelligent source where data is always on and always current so your supply chain becomes a powerful lever for making your business more valuable.

 

You need to know the “What?” and the “Why?“ so you can determine what to do before it’s too late.  

 

Since supply chain decisions are all about managing interrelated goals and trade-offs, data may need to come from various ERP systems, OMS, APS, WMS, MES, and more, so unless you can consolidate and blend data from end-to-end at every level of granularity and along all dimensions, you will always be reinventing the wheel when it comes to finding and collecting the data for decision support.  It will always take too long.  It will always be too late.

 

You need diagnostic insights so that you can know not just what, but why.  And, once you know what is happening and why, you need to know what to do — your next best action, or, at least, viable options and their risks . . . and you need that information in context and “in the moment”.

 

In short, you need to detect opportunities and challenges in your execution and decision-making, diagnose the causes, and direct the next best action in a way that brings execution and decision-making together.

 

Some, and maybe even much, of detection, diagnosis and directing the next best action can be automated with algorithms and rules.  Where it can be, it should be.  But, you will need to monitor the set of opportunities that can be automated because they may change over time.

 

If you can’t detect, diagnose and direct in a way that covers your end-to-end value network in the time that you need it, then you need to explore how you can get there because this is at the heart of a digital supply chain.

As we approach the weekend, I’ll leave you with this thought to ponder:
“Leadership comes from a commitment to something greater than yourself that motivates maximum contribution from yourself and those around you, whether that is leading, following, or just getting out of the way.”
Have a wonderful weekend!

Filed under Analytics, Decision-making, Digital Supply Chain, Information Technology, Inventory Management, Order-to-Cash, Value Network Decisions Tagged with , , , , ,

Optimizing Pick Waves in Your Warehouse

February 4, 2012 Leave a comment

If you ship a wide variety of products, either directly to consumers or in less than pallet quantities to business customers, then the challenge of delivering your goods in the most timely and efficient fashion can be particularly perplexing.  Once you have the order, the first and most critical step is releasing orders to the warehouse. 

Your greatest delay and cost likely occurs in the picking process, driven by travel time, both horizontally and vertically. Releasing orders to the warehouse in a FIFO fashion will probably leave you with troublesome inefficiencies, even if you have wireless, automatically directed picking with task interleaving.  However, releasing orders in a wave that maximizes picking efficiency can create other bottlenecks in packing and shipping.  Other schemes for creating pick waves include batching orders and releasing them by pick zone, by destination zip code, by carrier pickup time, or by some combination of these or other attributes of either the items or the customers.  Of course, batching orders means one must decide how large the batch should be.  Wave planning decisions should not be taken lightly.  Nor should they be approached intuitively because the implications for both service and cost are quite real. 

Fortunately, rigorous, quantitative analysis can be achieved through discrete event simulation.  As a manager of process improvement for a high volume, direct-to-consumer, multi-billion dollar enterprise, I had the opportunity to simulate various wave planning strategies and evaluate the impact on service, cost and workflow.  I have only heard of one other instance of this analysis, but I hope that I am simply ignorant of a growing use of simulation to periodically analyze and select the best wave planning approach. 

If you run a large, multi-zone fulfillment center that ships relatively small orders and you aren’t simulating to find the pick waves that will help you meet your objectives, you are missing a great opportunity.  That’s the bad news.  But the good news is that the service and cost savings are there for the taking if are willing to do the analysis (or get someone to do it for you).

Thanks for stopping by Supply Chain Action, once again.  I trust that you will remember that since we aren’t promised tomorrow, we must live today well.

Have a wonderful weekend!

Filed under Order-to-Cash, WMS Tagged with , ,