e-forum debate part 3: supply chain

Nine manufacturers, eight software vendors and four analysts and consultants gathered round the debating table at MCS’ latest e-business forum, at Brands Hatch in June, to air their views on supply chain technology. The event was run in association with the DTI and CBI, and was sponsored by vendors Rockwell, Oracle and e-know.net. Subjects covered ranged from manufacturing agility to supply chain fulfillment and execution and mass customisation. The goal was to understand and uncover the real issues in supply chain applications, discover what makes sense to the manufacturing world, what’s behind the vendor (and analyst!) acronyms, and to get some idea of the kind of people that should be involved, investment required, and how far manufacturing companies are prepared to go with the technologies. First then, manufacturing agility. Do manufacturers actually need faster planning and scheduling software? And have companies got to be more agile? The response was mixed. On the positive side, Sarah Cobb, business systems director for injection moulding manufacturer Moss Plastic Parts, said that faster planning and scheduling would help. “50% of our business is on the basis of you take an order today and ship it today. We have a mixture of made-to-stock and made-to-order business, and it’s an area I think, from an IT perspective, we’ve failed to address to date.” And on the process manufacturing side, Steve Melton, director of logistics at Scottish Courage, was equally enthusiastic. “We’re an established traditional industry. A typical execution time bucket for us is about one week. Our issue is about compressing cycle times, and you can only compress the time it takes to pump through a pint of beer so much. But you can certainly compress the packaging time, distribution and so on.” Others were less impressed. Mike Askew, general manager at aerospace manufacturer Westland Transmissions commented: “We’re typically, on a transmission system, anywhere between a nine and 18-month cycle time. And that means it’s difficult for us to see that we’d need faster planning and scheduling. We want more stable schedules, we don’t want to run systems that keep changing our schedules and our supply base that often.” So clearly it’s ‘horses for courses’ here, depending on whether you’re a mass producer, a batch manufacturer or whatever. Enterprise software firm Stratabridge’s president Andy Coldrick said: “If you have a business where you’re introducing lots of new products or market variants then you need agility. I don’t believe that MRPII [manufacturing resource planning] in many industries can cope with today’s agility that users require. Levels of operational effectiveness are mandatory, but they’re insufficient, and MRPII is simply not fast enough.” Oracle’s David Tudor suggested it’s about having visibility down the supply chain, getting messages and alerts out quickly to suppliers. The speed he said “comes with how quickly you communicate. Sharing information and collaboration are more important than having the best gismo or the fastest scheduling tool.” Exactly. Available to promise John Tripp of the Goldratt Institute challenged why manufacturers need IT at all: “We should look at the management problems first and then look at technology as individual pieces of Lego to build the castle. There’s a feeling at the moment that technology exists and therefore we should all do it. You can put a system in, but unless you change the behaviours that exist before the system was put in, then it will do nothing.” The real issues at stake here are about re-thinking your business processes, then finding the right IT to match the new model. The consensus was that you have to think about compressing time in the supply chain, not just driving down costs. And as is so often said, it’s really about management issues rather than IT. So on to ATP (available to promise). This is really about businesses having information about stock levels, work-in-progress, lead times, etc at their fingertips. Analyst Simon Bragg of ARC explained: “If your particular component is on a six week delivery, and all your other components are on a one week delivery, but at this moment in time you can deliver it in a week, then having an ATP engine would give you an advantage in the market that you’re able to deliver sometimes quicker than you predictably promise.” But surely this just requires good communication? Sarah Cobb of Moss Plastics: “When we set out on our ERP implementation three years ago, we were convinced we had to have available to promise, to match the demands of our make-to-stock business with the make-to-order business. So if one of our make-to-order customers came on, we could tell exactly what slot we could give them in the production schedule. That was three years ago and we still haven’t implemented it. I don’t need a huge complicated ATP engine because we have availability of information to be able to say ‘yes, we can now meet that in one week’ ... It really goes back to communication again. We actually threw away the need for technology just by communication at a very basic level.” Sage Enterprise md Steve Bailey, had other views: “In a small organisation maybe you do look out from the office and see if you’ve got stock. But if you’re a large complex global organisation with multi-tier supply chains, I would suggest the need for visibility of information, whether it’s stock, net stock, or true ATP.” But is ATP too expensive for the majority of companies? Adrian McNay, md of enterprise vendor Frontstep: “Yes, they can be. But I think that’s the fault of the vendors. We’ve spent the last five years being very proud at showing our toys and showing how the engine works underneath. To the end users it doesn’t matter. It’s what the outputs are that are more important, and by trying to profess our abilities, our intelligence as it were, we’ve actually scared off the user base as a result.” Some very clear messages come through: communication is vital; ATP is perhaps only relevant (and affordable!) to large, multi-tiered businesses; and having as near to 100% data accuracy is crucial. Stratabridge’s Coldrick said: “If you’re receiving thousands of orders a month, to make ATP work fundamentally requires strict adherence to discipline.” Next on the agenda was streamlining supply chain and business processes. This includes supply chain fulfillment and execution via the web, and supply chain alerting, using automated electronic processes rather than the costly paper-based ones (ie EDI or XML). To manufacturers, some of this may sound very grandiose. Moss Plastics’ Sarah Cobb said: “We found the take-up of our e-commerce solution has been customers going into the web to look at the progress of their orders. To get prices, to get stock availability and lead times, rather than actually transact with us. The key thing for me has been on providing information.” Westland’s Askew: “60% of what we make comes from outside, a large supply base that’s global as well. We need to look at the value chain and eliminate waste from it. Last week we started issuing out automatic email reports to suppliers. It goes out on a regular schedule now: it’s the very first step I admit, but a very conscious step towards getting a better coupling with our supply chain.” Streamlining supply chains And that’s the key to streamlining the supply chain: keep it simple, use simple standards, and the whole chain will start to pull together. Gus Desbarats, md of Alloy Total Product Design, explained: “Simple standards are far more powerful than proprietary software. Getting people to fill in forms available on the web, that’s a great first step. What’s happened is, there’s a basic capability that has critical mass across a network, most people can use Internet Explorer for example. The problem that a lot of sophisticated products out there have is that they can’t achieve critical mass in terms of take-up, to be of use.” And this is why many public trading exchanges have failed to date. The powerful OEMs in the market club together without getting buy-in from suppliers, who think the technology’s too complicated and expensive. “But the supply chain is only as good as its weakest link,” echoed around the debating room on many occasions. Bob Summers of medical equipment manufacturer Sims Portex agreed: “We use IBM’s net commerce web storefront. A critical element in our ability to build and design is knowing that whoever we roll it out to will probably require Internet Explorer sitting on their PC. Something as minute as that is a critical part of any strategic move we make. Make it as simple as possible for those people who’ll be using it.” And as for standard formats and messaging over the web, McNay concluded: “To be able to get the supply chain working with each other, not only must you supply your immediate customers with the applications to do this, but also your suppliers. You then get critical mass. We believe the answer is eventually moving to private exchanges with a common format using XML.” And this led on to make-to-order and mass customisation issues. Desbarats defined mass customisation as, “A half-way house between total standardisation and made-to-order. There’s a lot of supply chain understanding involved because you’ve got to create deliverable choices, and it puts a real premium on information flow from the point of purchase back through the chain. It’s really about mass producing for an individual every time. It’s mass production prices with the feeling or impression of enough choice to feel like you’re getting a custom solution.” Consultant Tim Dudley of Rockwell Automation: “This explosion of product variation, shorter runs, changeovers, etc. It has a deep impact on core manufacturing. That generates a huge demand on the manufacturer to respond. It’s then having the capability and the processes in place to run that manufacturing quite often on very short time frames.” But what IT do we need to do this? “IT needs to manage the complexity and the changeovers. Having manufacturing plants that have a high level of automation, trying to integrate manufacturing right into the supply chain,” said Dudley. “Actually taking that ERP supply chain data and using it down at shop floor level.” But the final word goes to ARC’s Bragg: “Most customisation isn’t an IT systems problem. IT systems are capable of doing it, it’s just that there’s a ton of other problems. It’s more about how you design your product, how you design the manufacturing plan, and then how you get a flexible manufacturing system to handle all this.” That’s no mean feat.