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Editorial: Forecast to Plan: Collaborative Supply Chain Planning is it a Myth? - Supply chain Article
The article entitled: "Editorial: Forecast to Plan: Collaborative Supply Chain Planning is it a Myth?" is in the Supply chain Articles section of Operations Management Papers area...
ARTICLE DESCRIPTION: Surprisingly few organisations have developed a vision of a seamless, integrated, collaborative supply chain (the easy part) and have overcome the internal and external barriers (the difficult part) in order to make it work. And it does work.
MORE INFO: Editorial: Forecast to Plan: Collaborative Supply Chain Planning is it a Myth? Surprisingly few organisations have developed a vision of a seamless, integrated, collaborative supply chain (the easy part) and have overcome the internal and external barriers (the difficult part) in order to make it work. And it does work. A virtual collaborative supply chain has been proven to save millions of euros in inventory and transportation costs, improve the accuracy of order promising, and enable organisations in the chain to react much more quickly to changes in the market place, both positive and negative. The Intersil case study is living proof of this (not included). With all this in mind, let's have a look at a couple of the principal barriers that the typical company faces, and at some enterprising companies that have managed to overcome them. The primary problem is a lack of integration. Most planning processes are actually a collection of multiple disconnected processes. It starts with forecasting. Marketing, Sales, Manufacturing, and Finance usually all have their own version of what the 'forecast' is, and all of them are usually different from the customer's estimate of what demand will be. One of these competing versions of the forecast needs to be integrated, often by manual retyping, to a supply planning process, which is also typically a series of processes. Normally, a series of plans is generated, for example, production plans, master production schedules, material requirements plans, capacity plans. These plans are eventually communicated to suppliers via purchase orders, at which point the immediate suppliers go through the same set of processes before communicating with the next tier, also by purchase orders. The entire planning process has little collaboration, requires multiple sequential steps, and takes an incredibly long time. This means a highly fragmented supply chain characterised by high levels of inventory, long cycle times, and poor delivery performance to customers. These problems were well known to Indian Manufacturing Company - Tube Investments (TI). It had grown up with a set of legacy systems and manual processes, which meant that it was not possible to provide an overall view of the business at any time. This made accurate planning and inventory control a difficult task. For a modern manufacturer like TI, demand-driven production requires far more sophisticated planning systems than those provided for traditional Material Resource Planning (MRP). Order promising techniques need to go well beyond simple checks of in-stock availability, to more complex analysis of availability of components and resources needed to produce the products. To deliver world class service, even this must be extended outside the manufacturer's firewall to check suppliers' abilities to deliver parts. Having made the decision to invest in an integrated application backbone for its business, TI decided to adopt a 'comprehensive' approach. TI went live in October 2001, and now it's reaping the benefits of an Internet-enabled system that provides everything from a reduction in planning time to advanced pricing algorithms for dealer networks. What we were missing was a holistic integrated view of all four of our business divisions: Cycles, Chains, Rolled Forms, and Metal Sections. An advance Supply Chain Planning System fixed that business problem which would allow us to dramatically reduce our supply chain planning cycles while improving the level of collaboration within our company and with our trading partners, said Mr V. A. Raghu Managing Director of Tube Investments. Lack of collaboration is another notoriously thorny problem, especially when it comes to forecasting. The typical forecasting process is inaccurate due to limited collaboration between the Manufacturing, Sales and Marketing departments. It is also disconnected from the customer's forecasting process.
PUBLISHER: Institute of Operations Management
Page number: 4 Word count: 605
Vol 29 - No 01 - February 2003
The article can be downloaded in full from the publisher's site i.e. the Institute of Operations Management.
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