LINKING PROCESSES, PEOPLE, AND PRIORITIES IN THE SUPPLY CHAIN







SIOP Metrics: 5 Key Baseline Measurements

October 23rd, 2014
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analysis and metrics

Of all the overlapping metrics available to executives the best ones enhance SIOP and offer the most vital information for running a business.

Which metrics are most crucial for SIOP (sometimes referred to as S&OP or sales and operations planning)?  The simple answer is that it is those metrics most vital to running your business.

SIOP aligns not only demand with supply but it also aligns the various business units and functional areas on one plan.  Therefore, there are standard metrics which are key to SIOP including:

1. Sales revenues – certainly one of the key elements of SIOP is to forecast demand.

2. Inventory turns – how quickly you are turning your inventory will have a direct impact on cash flow

3. Service levels – this metric will measure how well you satisfy your customers from on-time delivery, complete orders, etc. This is sometimes measured by the “perfect order”.

4. Lead time – the shorter your lead times vs. competition, the more likely you’ll be able to grow sales, assuming all else is equal.

5. Margins – how well you have aligned demand with supply and optimized your supply chain inclusive of operations, planning, purchasing, distribution etc. will correlate directly to efficiencies and margins.

In addition to these baseline metrics, it is important to also consider other metrics which can be important to your particular business or to your bottom line results.  These can include key customer performance, key customer sales vs. forecast, bookings, master schedule adherence, etc.

Start thinking about SIOP as a strategic priority, and dramatic results will follow.

Did you like this article? Continue reading on becoming a Systems Pragmatist: 

So You Need Systems for a Successful SIOP Rollout?

What Are the Benefits of SIOP?

 

© 2014 LMA Consulting Group



Why Upgrade Your ERP System Software?

October 21st, 2014
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ERP

With improvements in the economy and increasing customer expectations this may be the right time to upgrade your ERP system software.

I’ve been talking with an increasing number of manufacturers and distributors who are beginning to think about upgrading technology and specifically their ERP (Enterprise Resource Planning) system. There are many ERP softwares to choose from and staying current is essential.

Selecting and implementing a new ERP system is no small endeavor; however, it can yield vast results in the right situation. A few reasons to consider an upgrade include:

1. Service: Your customers are more comfortable with your ability to service them. For example, one of my clients has a key customer who requires an ERP system to assure them that this start-up company will have the proper business processes and systems in place to succeed.

2. Platform for sales growth: How do you grow your business successfully and at a quick pace with already overloaded resources? Leverage systems and look for an ERP solution.

3. Customer need: In order to satisfy your customer’s needs without ballooning in size and increasing error rates, technology is required. For example, in today’s environment, e-commerce must be an assumption. Does your system handle it well?

4. Cash flow: Typically upgrading your ERP software will provide enhanced tools for inventory management. By implementing this best practice functionality, you have the opportunity to decrease inventory levels while maintaining/improving service levels.

5. Margins: ERP systems allow for numerous opportunities to improve efficiency. Additionally, there are robust reporting capabilities to slice and dice key data for management decision-making. Wouldn’t it be helpful to know which customer is most profitable or which item is least profitable?

Did you like this article? Continue reading on becoming a Systems Pragmatist:

Leverage Your ERP System for Bottom Line Business Results  

7 Hot ERP Trends

 

© 2014 LMA Consulting Group



APICS 2014: New Orleans State of Mind

October 20th, 2014
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supply chain

I arrived in New Orleans to speak at APICS 2014 on empowering and engaging employees, and so I’m in the New Orleans state of mind. Certainly, as my bio confirms, one of my favorite spots anywhere is Cafe du Monde. Where else do you have so little selection yet it is jam packed almost anytime of the day? I consider it a “must”! They have created an iconic brand that no traveler can do without.

After beignets at Cafe du Monde, we walked by a parade with great music – at first we thought it was a funeral as they are quite the affair here; however, it turned out to be a wedding. The entire bridal party & guests looked like they were having a great time. Perhaps we should all take a page from the New Orleans handbook and make icons and fun out of everyday events and experiences.

One tip to implement this week: Take a step back from your everyday work life and “smell the flowers”. Take a day’s vacation or set aside time to reflect. It’s hard to have ideas when you are dealing with 1000’s of incoming messages every moment of the day.  Instead, think about how to create excitement with your business and/or teams as you reflect with a New Orleans state of mind.

What can you do that would be different and refreshing that might create a buzz about your company, you and/ or your products?  In essence, how might you stand out from the crowd? Ask your colleagues for ideas. Consider going to a new environment for the afternoon for brainstorming. Sometimes it takes shaking things up to stimulate new thinking. Give it a try and you’ll likely be surprised and pleased with the results.

Looking for more ideas to keep your supply chain talent? Access more tips and resources on my blog. And keep connected by subscribing to my newsletter and email feed of “I’ve Been Thinking…”

 

© 2014 LMA Consulting Group



Master Scheduling Strategies to Add Value

October 16th, 2014
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master scheduling, production planning

A master schedule is an integral part of your production plan and communications to your team to centralize focus.

 

I have yet to work with a client who couldn’t use improvement in their master planning process. Whether a company is squarely on the lean journey, traditional MRP or a combination of both, master scheduling can add value. In essence, a master schedule is a long-term plan which allows you to plan capacity, staffing, etc. Thus, I thought a few strategies for success can be a good idea:

• Think Long-term: to be effective, you need a long-term view.Thus, look out at the long-term. If you do not have sales orders in your system for 12-24 months, you should look at putting together a demand plan for your repetitive items.  Don’t worry about sporadic items except for saving x% of capacity.

• Inventory strategy: Build inventory strategy into your plan. Are there customer commitments for inventory? Do you have a sales & operations plan driving your inventory goals? Do you plan to increase or decrease inventory?

• Apply level loading techniques: Since you have a long-term view of requirements, it provides an opportunity to smooth out production. Take advantage of it!

• Consider lot sizes: Incorporate lot sizing logic for anything noteworthy.Think about economic order quantities.

• Coordinate: A master schedule is useless if not communicated and coordinated with manufacturing, scheduling, purchasing, customer service, etc.

Read more on how you can become the Strongest Link: 

Cycle Counting: The 5 Keys to Inventory Accuracy

Speed is King: How Do We Leverage for Project Management?

 

© 2014 LMA Consulting Group



A Planning Mindset Is Invaluable to the Supply Chain

October 14th, 2014
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planning mindset

Planning is essential for business management, but by really embracing it and getting into a planning mindset you can figure out innovative, improved strategies across all segments of your company.

Developing a planning mindset can be invaluable to not only planners but also to any supply chain management employee/leader. When I refer to planning, I mean planning from multiple perspectives:  production planning, raw material planning, project planning, SIOP (sales, inventory, and operations planning), financial planning, and budgeting, etc.

I find that developing a plan is more than half the battle. If you are part of a team, it provides a way for everyone to be on the same page. Who should do what and when? What sequence should we follow? Are there dependencies?

It also allows for the optimizing of several variables. For example, a production plan should minimize inventory levels, maximize service levels, and provide the best opportunity for increased efficiencies and reduced cost. Most plans optimize resources, costs, and risks.

Even if you are developing a plan for only you to follow, it can be vital to success. It requires putting thought in upfront.  Do not overanalyze; however, put in appropriate thought for the criticality of the topic. Have you thought through potential roadblocks that could arise?

Have you heard of the PDCA model? (Plan, do, check, act) The most successful put time in upfront – it yields significant results. 

Read more on how you can become the Strongest Link: 

The Million Dollar Planner

Speed is King: How Do We Leverage for Project Management?

 

© 2014 LMA Consulting Group



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