Last week I presented the Reveal April 2017 online seminar with the same title as this blog. It followed the theme from my previous blog “Surviving Supply Chain Optimization – Intelligent Demand Segmentation is a key dynamic”. I say that because both subjects aim to drive home the point of effective supply chain integration in terms of essential efforts to manage both process performance and inventory levels. The diagram below provides insight into Reveal’s optimization methodology that has been so successful in supporting clients effectively drive value in their supply chain optimization initiatives1. Key to this success is balancing Service Levels, Inventory, and Operational Cost.
Using MRP effectively and ensuring that human behavior stays aligned with the business rules correctly and accurately set in the master data is a key to success. This is because:
MRP Adds Value to the Business Because …
The task of MRP is to plan and arrange for (guarantee) material availability. It focuses us to procure or produce required quantities on time for internal use or customer SALES and as a result enables business value in terms of:
The process involves requires the monitoring of stocks, demand, and supply of that stock such that the system can effectively calculate:
In the future, there will be enhanced MRP capabilities as part of S4 Hana that will include:
The accuracy of data, correct MRP rules and aligned behavior in terms of execution all become even more important for the future otherwise we will simply get into trouble faster than we do today.
Dependencies to realize true MRP value …
So, in looking to increase service levels, lower inventory and execute optimal processes that will align with company strategic goals attention must be given to:
Managing Data in the Integrated Supply Chain
Managing data in the integrated supply chain requires a shift from Siloed functions to one that understands and embraces functional and process alignment. Towards achieving this it is essential that:
A lot of attention must be given to becoming an exception minded organization that lives by process alignment and integrated outcomes. The reality in our companies is that data is constantly moving from one functional hand to another and this is a movement of data is influenced by the planning, scheduling, and realization of the sellable product in the supply chain. The challenge is to always transition the data from one function to the next in an effective and timely fashion to avoid breakdown.
Results from polling during the online seminar
Four polling questions were asked of the 85 people that attended the online seminar. The results are as follows:
Agreed the above poll is from a small sample attending an online seminar there is enough evidence to suggest improved focus in this key area of supply chain management.
1My colleague Jim Cameron shared a 2-part blog series entitled “Drive Value in Your Supply Chain Optimization with a Smart Use of KPIs” which adds further dimensions for change in your supply chain to meet your business goals.
2PAT – Process Aligned Teams. This is a critical organizational arrangement to drive behavior change using the data as the catalyst
Tags: EDI, Exceptions Management, Inventory Optimization, key performance indicators, KPI, Master Data, MRP, Reveal, SAP, Supply chain, supply chain management, Supply Chain Optimization