Strategic Supply Chain Management - Supply Chain Online

58 Strategic Supply Chain Management
ERP platform and put in place a new advanced planning system (APS).
The APS-enabled demand planning led by sales and supply planning managed
by logistics, manufacturing, and purchasing. Using the new planning
process, the planning group analyzed current sales data and promotion
information each week to decide on adjustments to the supply chain plan.
Although these actions improved overall performance, it became
clear that the company would need to improve the flexibility of its external
suppliers if its delivery performance targets were to be met. Supplier
lead times were long, and the ability to make changes to existing orders
was limited. Greater supplier flexibility was needed to avoid costly inventory
buildup of products that no longer matched market demand. The
company identified the need to integrate business processes with internal
key-component suppliers as a priority. Vendor-managed inventory (VMI)
was implemented, replenishing component inventories at final assembly
factories. High-value items from Asia were replenished weekly by air.
This new collaborative planning process cut supplier lead time by 50 percent
for some key components and greatly increased supply flexibility
(see Figure 2-4).
As this company’s experience shows, putting in place an end-to-end
process is a major undertaking. Defining and deploying new shared objectives
is at the heart of the end-to-end supply chain and can be even more
FIGURE 2–4
Collaborative planning in the extended enterprise.
• On Time Delivery
• Cash-to-Cash Cycle time
• Order Fulfillment Lead Time
• Supply Chain Management Cost
Suppliers
Plan
Purchasing
Manufacturing Logistics Sales
Customers
Plan
Plan
Plan Plan Plan
Plan
Source
Source
Make Deliver Deliver
Source
• Purchase
Price
Variance
• Unit Prod.
Cost
• Utilization
Rate
• Logistics
Costs
• Schedule
Adherence
Internal Integration
• Order
Quality
• Order
Cycle Time