4 keys to a successful supply chain

A successful supply chain is vital in a world that is becoming faster and more demanding

10/29/2013


At the 2013 Association for Manufacturing Excellence Conference in Toronto in October, Michael Rackley, head of supply chain solutions for Ryder Systems, talked about the increasing demands by manufacturers and consumers on the supply chain. Rackley identified nine major trends affecting the supply chain today:

  1. Increasingly shorter lead time (“Speed is worth more than cash these days,” he said.)
  2. Impact of online and mobile information access
  3. Acceleration of social media
  4. Heightened susceptibility to natural disasters
  5. Political and currency turmoil
  6. Shorter product lifecycles (He noted that Apple has had seven new iPhone models since 2007.)
  7. Faster delivery
  8. More, lower cost competitors
  9. Demanding shareholders 

“We have to perform even more efficiently than ever before. What does that do to the supply chain? Our 12- to 14-week lead times have to get a lot smaller,” Rackley said. “Speed is driving the supply chain. Customers are defining the mark we have to hit and the speed we have to hit.”

The key to hitting these new marks, Rackley said, is collaboration. “We have to create a new network, a multi-tiered network of people working together, rather than individuals creating plans for the supply chain,” he said.

The demand-driven supply chain, said Rackley, “has got to be around customer and consumer. We’ve got to listen to that customer. We now have to manage supply at the pull of the customer.”

It also, he noted, changes the relationship between sales and manufacturing. “Manufacturing, distribution, and sales all have to be working together,” he said. “Everyone has to have visibility to actual consumer demand. They need to know, what are consumers actually buying?

The dynamic of such a system changes from a linear process to a wheel-and-spoke system. “In a multi-tiered network, the consumer is actually in the middle, with factories, OEMS, distributors, Tier 1 and Tier 2 manufacturers around them,” he said. “Visibility is the key. The most difficult part is building the network, but you’ve got to build the multi-tiered network, and then get that visibility.” Where that system has occurred, Rackley said, companies have seen increased sales, a 5% to 10% reduction in operating expense, and between 20% and 30% reduction in inventory costs.

He cited four main ingredients in a successful system:

Product/package design 

Rackley cited the example of two different grilles for a vehicle front—one with a V6 logo and one without. By making that logo a clip-on rather than a molded change, they were able to produce one grille and reduce inventory.

Network 

“You need to look at best-cost areas vs. simply the low-cost areas,” he said. By localizing the finished goods and spares, delivery times can be reduced, which can offset any piece price differences from a lower cost supplier with higher transportation costs or longer lead times to delivery.

Visibility and collaboration 

Rackley noted the manufacturer who re-examined his logistical system for inbound supplies. The manufacturer created a material flow center strategically located to support the assembly plant, with material flow center sequencing parts to each assembly line. “It’s getting the parts to the right place at the right time,” Rackley said. “Sequencing is very important. It’s getting visibility to all that inbound material.”

Lean execution 

That would include not just working internally, but with all parts of the supplier base. “You’ve got to take it out from the four walls (of the plant) and move it across the entire supply chain,” Rackley said.



No comments
The Engineers' Choice Awards highlight some of the best new control, instrumentation and automation products as chosen by...
Each year, a panel of Control Engineering editors and industry expert judges select the System Integrator of the Year Award winners.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
Learn how to increase device reliability in harsh environments and decrease unplanned system downtime.
This eGuide contains a series of articles and videos that considers theoretical and practical; immediate needs and a look into the future.
Learn how to create value with re-use; gain productivity with lean automation and connectivity, and optimize panel design and construction.
Go deep: Automation tackles offshore oil challenges; Ethernet advice; Wireless robotics; Product exclusives; Digital edition exclusives
Lost in the gray scale? How to get effective HMIs; Best practices: Integrate old and new wireless systems; Smart software, networks; Service provider certifications
Fixing PID: Part 2: Tweaking controller strategy; Machine safety networks; Salary survey and career advice; Smart I/O architecture; Product exclusives
The Ask Control Engineering blog covers all aspects of automation, including motors, drives, sensors, motion control, machine control, and embedded systems.
Look at the basics of industrial wireless technologies, wireless concepts, wireless standards, and wireless best practices with Daniel E. Capano of Diversified Technical Services Inc.
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
This is a blog from the trenches – written by engineers who are implementing and upgrading control systems every day across every industry.
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.

Find and connect with the most suitable service provider for your unique application. Start searching the Global System Integrator Database Now!

Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Control Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.