Where Cost Cutting meets Company ExpansionAug 27 '01 Write an essay on this topic.
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The Bottom Line The world is no longer one-size-fits all building and shipping. Do you have a solution which is right for you?
It used to be that to build and get a product out on a market, you employed a whole team of employees with checklists to keep track of shipments and trusted them to get everthing built, boxed, and on the truck. If an employee messed up the scheduling then, oh well, sorry just order the truck sooner or wait for it if you have to. Sure, you lost efficiency, but there really wasnt much way around it. More and more money got thrown into this large black hole dubbed "supply chain" than was oft spent building or marketing the product itself. Now, with the advent of computers and thier widespread implementation with various manufactured peripherals, companies have more power and flexibility to build a complete supply chain solution than ever before. Before I start on my epinion, I need to cover a few things. First I work for a company that makes this software called Manugistics Group, Inc. (Nasdaq symbol MANU). Though I work for them and we do make all this software, I will not fill this piece with shameless plugs, it is against my own ethics to do so. I will say this only: during the course of this epinion I will most likely refer to features of some Manu software to illustrate a point that I will make. If you or your company are interested in further information into Supply Chain Management products and services, I urge you to check our website at http://www.manu.com/ What is supply chain management? To be absolutely honest, before I came to work for Manugistics, I had no idea that software even existed for this, let alone what it did or what the features of it were. Supply chain management is using a suite of applications combined with various technological breakthroughs in order to distribute information among departments in both suppliers and distributers to get raw materials manufactured, packaged, and delievered to market. Supply chain management is not an Out-of-the-box, open and install sort of product. In order for your solution to properly fit your company and situation, you need to have the company come out and look at your corporation, your individual situation. Your corporation should already have an idea of: 1) How much money your corporation is ready to front for a suppy chain management solution. 2) What sort of computing/monetary resources they are willing to devote on an ongoing basis in keeping the system up to date and capable of handling the company's data/traffic. 3) What the exact goal of the system is (e.g. We want something for our employees to access to look at delivery productivity and to record shipping performance we also want something to build the optimum shipping/packing configuration in our trucks and crates and containers). As I said in the beginning, I am going to use Manugistics software as an example because it is the best example that I know of right now. Manugistics was one of the first companies to focus particularly on this sector of corporate software and remains one of the best, working with some of the largest companies in the world to make building and shipping more efficient. A Supply Chain Management suite focuses a specific product for each stage of the development and implementation of products and supply chains. THere is a product which is developed to make each step more efficient and to concentrate on each task from designing to implementation and optimization. These products work to cut through the barriers of information that each department throws up in order to pursue thier own goals as they see them. While this may help the individual department work more efficiently, it hurts the progression of the company as a whole since no department can access needed data of any other department. By breaking down these walls using information tools, a company can use supply chain management software to shake loose blocks of funds from small chunks to huge blocks where inefficiencies exist due to poor data reliability and worse communication. Here at Manugistics, we call that "Collaborative Services", that is, we provide software and or ongoing services to your company in order to help your company be able to function and communicate data to each other at the most efficient level. The first step to being able to implement more area specific solutions is to make sure that the differnt departments can exchange information with each other. To this end, we offer a couple of tools. The first is something called NetWorks Collaborate. Collaborate focuses primarily on web-based collaboration and realtime information provision among business departments and partnerships in order to allow for partnered growth, creation of joint business plans, the reduction of competitive barriers, and the ability to have a real time view of critical trading decisions and the trading network of your business in general. Once a level of communication has been established, you are able to focus on exactly what in the company needs optimization focus. The first thing that a company needs to be able to do once they have established a firm communications setup within the company is be able to guage demand so they do not end up with extraneous inventory or with not enough product to go around. For that reason Demand programs are built to assess customer buying plans, build determinations of product demand, quantify demand drivers to aid in marketing, and predict future demand in order to avoid inventory overflows or undercuts. Many companies actually produce a hard good which must be assembled and shipped to some other distribution point. In order to build a product, you need to ensure that you can get your hands on the components and parts that you need and take advantage of the vendor pricing plans and shipment rules. Procurement applications within the software suite (in the Manugistics example, this would be Networks Procurement) should handle these problems. They cut purchasing costs by optimizing procurement decisions to minimize storing time while still providing the parts you need to build your product all while keeping virtual inventories of supplier committed materials for future procurement to aid in forcasting future procurement moves. During the manufacturing process, there are several opportunities to ensure that your business will run smoothly but you must plan for it. The example in point is our Networks Supply software which focuses on several key areas. Can you ensure that you use the components that your company purchases in tbe best product mix to help your bottom line? Supply works with time phased material availibility, dynamic subsitution, and minimization of work in progress inventories to help cut component shortage costs of your company. Once the product has been built, you need to assess where the product will be shipped and be able to access that information in order to create time-phased inventory plans to meet your demand while still keeping inventory down and boosting profits at the same time. In addition, Fulfilment software components will be able to help you ensure that you have your inventory on hand in the right places in order to take advantage of market changes. By using a Fulfilment solution, you can ensure product availibility while making sure that you do not build overstocked inventories which cut into profit margins and eat manpower. The last step in getting your product to market is a transporation solution which will aid you in getting the product that has been planned and built and is ready for a specific demand to your distribution points. Manugistics Networks Transport allows businesses to create a way to be able to have real time internal tracking of every shipment, order, and product item to be located. In addition, the transportation segment of the applciation suite should allow you to plan future transporation needs for multi leg shipments, shipment automation, and resource pooling. The best applications will also include features to allow this sort of information provision and collaboration with each of a companies vendors. A full supply chain management application should be not one specific program but a whole range of them which are customized and implemented for your specific business. Rather than pay for all of the components that such a package would contain, your company should only buy those that it needs to optimize product manufacture and shipping. For example, there is no reason for a software company that does web downloading to have transportation programs in thier optimization suite though thwy have need of the collaboration and demand planning instruments. No single-program solution will be able to best serve your company. Profit optimization is no longer a one size fits all proposition. Instead, it requires custom planning on a company by company basis where each situation is considered with the optimization benefits versus cost carefully considered. With proper selection and implementation of the right tools, a business could stand to optimize cash flow in percentages they could only dream of. The company must take the first step and begin planning for the optimization.  |
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