What you need to be aware of
Guestpost by Rudolf Burkhard
Staying afloat in today’s market means being fast and agile in reaction to changes and unexpected events. An agile supply chain is the best prerequisite to achieve this for your company. The concepts to get there are common sense and quite simple. Here are 7 key things you need to think about and change1
1. Stop short term forecasting.
Put an agile response concept in place that adjusts dynamically to recent (very recent) demand. Your inventory will always move in the correct direction so that all stock locations can always supply. Ultimately, perfect availability of the desired product is the only thing your customers care about.
2. Make the market your constraint.
If your supply chain is the constraint or contains the constraint, then you cannot be agile. To be agile your supply chain must be able to respond to new sales opportunities with new customers and new demand from existing customers. Make the market your constraint and keep it that way!
3. Stop any and all efficiency measures.
Efficiency measures drive managers who think locally to produce continually, even when there is no real demand. There may be local metrics causing and directing this type of thinking. These local behaviours often consume materials that are then not available for real (urgent) demand. This kills your agility. Often big batches are produced in the name of efficiency – to save set-up “costs”. Big batches block capacities and consume materials for production not yet needed for sales. Big batches also kill your agility.
4. Reduce work in process (WIP).
Many factories have a lot of WIP waiting to be process at the next machine. Waiting is not agile. A lot of WIP waiting at machines is not agile – it forces operators to search for the next job in this pile, losing machine time. Since losing machine time hurts efficiency an operator will often produce something else when he cannot find the right order. From the customers’ point of view not very agile and not very reliable.
5. Use an appropriate efficiency measure at your capacity constraining resource (CCR).
This is the only resource that needs to be efficient – it determines how much can be produced and is the limiting factor. If the CCR is efficient, then your supply chain has the greatest capacity for agility.
6. Use single minute exchange of die (SMED) methods at the CCR, first (rather than somewhere else, simply because it would be easier to implement). SMED impacts agility most when you implement it at your constraining resource (the CCR).
7. Review and change policies, rules, key performance indicators (KPIs) and behaviours. These 4 things to review often contain the seeds that cause an organisation to NOT follow the 6 other guidelines above. Many times, it’s the policies, rules, KPIs and behaviours (the way we do things around here) that block real agility.
If you would like to know more, feel free to contact us for further information: Birgit Vettel, +49 6252 795 307 0.
You may also be interested in a two-day workshop on Supply Chain Management taking place in September (in German).
1: The assumption I make is the company produces to stock. For make to order items I will make a separate but similar list.