16 June 2010
Co-ordinated effort reaps rewards
From the humble spreadsheet to fully integrated supply chain software, manufacturers across the globe are tapping into technology to support lean manufacturing, as Malcolm Wheatley reports
Buy a new computer, mobile phone or BlackBerry, and the odds are good that it will contain labels or other hi-tech product identification technology from East Kilbride-based manufacturer Worldmark.
Constructed from polycarbonate, laminated polyduralyn and other high-performance materials, Worldmark's labels and mobile phone lenses must meet high standards of ruggedness, durability and adhesion - as well as be difficult to counterfeit, and capable of having serial numbers and 3D barcodes printed on them.
Worldmark's supply chain, too, must operate to exacting standards, with orders received at East Kilbride from companies such as Hewlett-Packard, Nokia and BlackBerry manufacturer Research In Motion being processed centrally before being distributed to the company's global network of eight manufacturing plants.
The screen-printed BlackBerry lenses, for example, are shipped directly to Canadian-headquartered Research In Motion's contract electronics manufacturer in China, from one of Worldmark's own Chinese plants - with the information flow going from Waterloo, Canada, to East Kilbride, Scotland, and then to the Chinese plants in Suzhou and Tianjin.
And it falls to the company's IFS ERP system to orchestrate the process, explains Worldmark business process manager Allistair Murray. Emailed customer forecasts and order call-offs are entered into IFS demand planner and IFS master scheduling, he explains, with in-built IFS functionality automatically transmitting the production and shipping schedules to the appropriate plant.
Worldmark's own suppliers are kept in the loop by email, usually in the form of emailed PDF versions of IFS MRP schedules. "Master production scheduling and MRP are run daily," he says. "And although we don't normally update suppliers every day, we could and would do so if we needed to."
In short, the flow of data is both a vital part of the process, as well as quite separate from the flow of physical product.
Welcome to the brave new world of supply chain synchronisation, where the timely and cost-effective flow of information is just as important - and potentially complex - as the matching flow of physical goods. Especially when, as at Worldmark, the supply chain crosses national boundaries, continents and time zones.
And the challenge is a significant one. To achieve full supply chain synchronisation, every component of the order-to-payment process - from entering orders, confirming schedules, tracking shipments, communicating status information, invoicing, collecting payments, processing returns and resolving disputes - needs to be mutually supportive and seamlessly linked.
Yet the reality for most manufacturers is depressingly different, with supply chain links often running just two or three deep at best. So how, then, can manufacturers mend the fractures in their supply chain networks? And can today's new generation of supply chain systems - which include a hefty dose of web technology - help to create real connectivity?
"Synchronisation is critical," says Patrick Lemoine, senior industry principal for industry business solutions at enterprise software giant SAP. "The more leanly that businesses run their supply chains, removing lead time buffers and inventories, the more critical it is that their supply chains are synchronised."
But the challenge, he notes, is unevenly framed. The business world's largest manufacturers, he points out, have either yet to migrate away from traditional electronic data interchange (EDI) systems, or have been able to supplement or even replace them with web-based supplier portals where suppliers - invariably smaller companies - must log on to download data such as forecasts, orders and inventory positions.
It is smaller and medium-sized manufacturers, in short, who are posed with supply chain synchronisation's biggest conundrum: achieving synchronisation without the clout of a Ford, Wal-Mart or Boeing that is in a position to simply mandate it.
And nor are the issues wholly technical or IT-based in nature. While IT is an important part of the jigsaw puzzle, there are cultural problems to address, too, notes Graham Hackwell, technical director at supply chain optimisation vendor Preactor International.
By providing real-time indications of lead times and capacities, he says, suppliers can put themselves at an competitive disadvantage. "The problem is that it can signal how busy you are - which can then be used to apply pricing pressure," he warns.
Even so, in the short term it's the technical challenges of synchronisation that most focuses minds. And one thing is clear: the internet has made a huge difference, rewriting the rule book of the possible.
Where supply chain synchronisation once meant the enforced adoption of expensive and cumbersome traditional 'closed network' EDI systems, in short, much simpler solutions are now possible - embracing not just order transmission, but invoice and payment capabilities as well. As Star Trek's Dr McCoy might observe: "It's EDI, Jim - but not as we know it."
"EDI has been around for over 30 years, but it's really the internet that has driven widespread adoption, by enabling 'many-to-many' connectivity and encouraging the adoption of web-based formats such as XML (Extensible Markup Language)," notes Parimal Goel, programme director at IT consultants MindTree Consulting. "One supply chain partner's system can automatically send a request for data to another partner's system - and receive the data back in XML format."
But even though XML functionality is built into most modern ERP systems, such as the IFS system managing the supply chain process at Worldmark, the 10-year old XML standard itself doesn't actually define how that data should be structured.
Instead, it falls to other emerging standards and formats to provide that definition. In particular, the use of open standards such as WebEDI and B2MML (Business to Manufacturing Markup Language) - which provide a common data definition for manufacturers - can greatly simplify integration.
"The ubiquity of the internet has rewritten the rule book," says Andrew Spence, business development director of supply chain at enterprise software giant Oracle. "These days, most systems have inbuilt XML connectivity, and taking advantage of those capabilities is much cheaper than using traditional EDI. There's absolutely no need to retain emails and spreadsheets as a way of supply chain communication - which build in time delays, potential errors, and 'silos' of information."
The trouble is, emails and spreadsheets have their own distinct advantages. Cheap, user-friendly and just as ubiquitous as the internet, they also have the advantage of being immediately 'human readable', unlike formats such as XML and B2MML.
It's thus possible for humans to cast a quick eye over incoming supply chain information, on the lookout for errors, sudden increases (or decreases) in demand, and any other anomalous information that might require human judgment and action.
For otherwise, the dangers are clear. With customer orders going directly into an MRP system and on to the factory floor, it could be days or even weeks before management spot the impact of unexpected changes in demand on inventory levels, production schedules, or raw material requirements.
At Cambridge-based electronics design and manufacturing business Plextek, for instance, emails and spreadsheets provide the supply chain connectivity and synchronisation in respect of an in-car telematics vehicle tracking and telematics product sold to a customer in America, and sourced from a supplier's manufacturing plant in Malaysia.
"We're in the middle, between the customer in the US and the supplier in Malaysia," says Terry Warwick, Plextek's supply chain manager. "The whole chain should work together and all three of us need to be synchronised." Supplemented by up to three telephone conversations a week, he says, emailed spreadsheets keep customer, supplier and Plextek itself all on the same page.
That said, it is possible for EDI-type systems to alert management to anomalous data flowing through the network. Indeed, as traditional proprietary EDI standards and data hubs have given way to web-based XML and allied formats, it's the ability to impose 'business rules' on data flows that now serves as an important part of the marketing message and benefit proposition of such services.
Coventry-based Wesupply, for instance, provides a managed service that connects companies to their business partners across an intelligent B2B network, regardless of electronic standards and protocols, and serving manufacturers as diverse as Aqualisa, Cummins Generator Technologies, Diageo and Lear Corporation.
The benefit is twofold, explains managing director David Grosvenor: faster transmission of vital supply chain information, via EDI-like connectivity, but also the opportunity to apply business rules to the data while in transit.
"When messages flow from one organisation to another, they travel through our database and are validated," he says. "We apply business intelligence to provide alerts: short delivery orders, for instance, or orders due on a holiday date or non-working day. Sending messages from one place to another is one thing: identifying anomalies is quite another." And that kind of intelligence, he argues, adds more value than might at first be expected, by taking out some of the element of surprise that leads to manufacturers 'padding' lead times and building-in buffer stock.
Indeed, he adds, this was exactly the case at Wesupply customer Alstom, a manufacturer of railway locomotives, carriages and turnkey light rail systems. With manufacturing distributed across more than 20 individual sites worldwide, inter-plant supply chains were dogged by a lack of trust in the accuracy demand forecasts and call-offs. "As the quality of the expressed requirements was poor, sites tended to stabilise their production for long periods of time," explains Alstom supply chain director Annie Saillard. "On the other hand, each plant was adding extra days to its expected lead times, due to a low level of confidence in supplier delivery performances."
Not any longer. Explicitly tasking Wesupply with improving its supply chain synchronisation, Alstom has seen improved confidence and trust in inter-site supply chain relationships, with safety stocks and lead times being reduced as confidence has grown. Better still, inter-site service levels have risen from 70% to 90% in just 16 months.
Yet even so, the humble spreadsheet is fighting back. Recognising that true supply collaboration is strengthened through the provision of 'one version of the truth', a number of cutting-edge businesses, it turns out, are moving to the enterprise version of Google Docs - the cloud-based Google Apps Premier Edition service.
Available at a cost of just £33 per user per year, the result is cheap and offers easy online access to shared spreadsheets and other documents, coupled to enterprise-strength security and back-up capabilities.
One company, 1,300-employee, £50 million-turnover York-based fulfilment and logistics business Deeset, for instance - which serves retailers such as Asda and Morrisons - made the move in March 2009.
"As a fast growing company, we've always had problems with version control, and having everyone use the right templates. Now we simply have one version of the truth, hosted safely in the cloud and available to our staff by simply accessing a web browser," says Deeset's IT manager Gavin Jones.
"Now our teams can collaborate with each other on the same document at the same time, eliminating the problem of version control as well."
The way of the future? Time will tell. For all the much-hyped advantages of EDI, XML and similar advances, the humble spreadsheet has proved remarkably resilient. And by making it even more collaborative, Google would seem to have extended its life as a supply chain synchronisation tool even longer.
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