From
manufacturers to retailers, users are searching for ways to keep
inventory levels down and production levels up. Supply planning and
optimization software can help achieve those goals.
"[Supply-chain optimization] is about finding the bottlenecks in
your operations and eliminating them," says Joshua Greenbaum, an
analyst at Hurwitz Group, Inc. in Framingham, Mass. "It's no
different from a functional standpoint than the way network
management systems work."
The software was designed to give users a bird's-eye view of the
operation while squeezing the maximum efficiency out of it. Many
users are concentrating on execution systems to help manage
warehouses and inventory for a competitive edge.
Barry Wilderman, an analyst at Meta Group, Inc. in Stamford,
Conn., says advanced planning systems address the following areas of
the supply chain: demand, supply, manufacturing, transportation and
distribution.
Companies use supply chain management applications differently,
based on the nature of their business, Wilderman says. For example,
a consumer packaged goods maker could optimize every area of its
business, but a trucking company must focus on distribution and
transportation.
Once those issues are determined, users can decide how to
optimize the supply-chain flow in each of those areas. They also
need to concentrate on a handful of technology issues.
"[Users] need to understand the number of SKUs they have,"
Wilderman says. "They need to decide whether they are going to do
the planning in memory processing or are they going to do it in the
database. They need to check the application programming interfaces
and how they interface with their [enterprise resource management]
packages."
They also need to know that software is only half the battle. It
takes a lot of human coordination and communication to make the
systems work.
"You have to be in touch with your counterparts at other plants
internally and make sure there is a human understanding of what is
in the constraint model you are building," Hurwitz says.
Analysts say technology will improve when planning systems and
messaging technology merge. That will keep people along the supply
chain on the same page.
Use of the software is expected to expand beyond internal
operations and eventually allow users to open up their planning
systems to suppliers and customers over extranets.
ON SITE
By Randy Weston
When Mobil Oil Corp. wanted to run its supply chain like a
well-oiled machine, it turned to optimization software, not 10W-40,
for help.
Mobil's U.S. lubricants division in Fairfax, Va., uses
Manugistics, Inc.'s supply-chain management and planning software to
control the inventory flow among six sites.
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"We've made about a 12% improvement in fulfiling
customer orders on time."
—Jim Sheahan, supply chain manager for Mobil
lubricants |
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The company chose the software
after a customer survey showed clients weren't happy with Mobil's
ability to deliver orders on time and at the proper location.
The investment has helped the lubricants division move close to
filling "perfect orders—that is, having the right inventory at the
right place at the right time to meet customers' needs," says Jim
Sheahan, supply chain manager for Mobil lubricants.
"We've made about a 12% improvement in fulfilling customer orders
on time compared to when we were without Manugistics, and we've had
significant levels of reduction in inventory," he says. That's what
Mobil had hoped to accomplish when it decided to invest $400,000 to
$600,000 in the project. The system now pulls data from legacy
mainframe systems and eventually will be linked to Mobil Oil's SAP
AG R/3 enterprise resource planning system.
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Related
terms
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Flow manufacturing
A manufacturing technique that keeps the
assembly line on one track so a product moves
efficiently through the plant from beginning to end. It
stops companies from stockpiling parts of the
manufactured product while waiting for an
order. |
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Just-in-time purchasing
Buying supplies and materials for production as
needed rather than stockpiling for use when orders come
in. |
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Logistics management
The control and management of operations such as
distribution, transportation, plant scheduling and order
management. |
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Materials management
The control and management of supplies and
inventory. |
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Quick response
The ability to quickly change business
operations to meet changes in
demand. | |
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