Supply Chain Planning Newsletter

June, 2015

Lead Article:

Brain before Muscle!


Imagine a robot which has very strong legs and arms, can run fast and can lift almost anything and can memorize numbers and has a photographic memory, however has little or no thinking brain! It can move things very fast, it knows where everything is and it is very efficient in going from A to B and can recall the location of all items. However does not know what to store, in which location to take them to, how many might be needed and where in the world, has no idea how many can be made and when the suppliers can deliver or what the clients might need. The latter scenarios describe the brains of the operation or commonly referred to as the Supply Chain Planning activity. The former, describes the Supply Chain Execution space. The core issue here is what is the point of efficiently moving and storing and delivering (optimal routes and storage automation), if we are making the wrong stuff and delivering the wrong SKUs to the wrong locations?


It is surprising that many companies, big or small, spend hundreds of thousands of dollars on automation of their execution systems without having an automated system that can guide the execution. Software Advice research team just published an article that analyzed 200 prospective supply chain management (SCM) software buyers and found small businesses are willing to spend an average of $30,000 on new SCM software compared to $170,000 by mid to large size businesses.  However they continue to use a simple spreadsheet for the "brains" of their operation needed to plan and coordinate millions of dollars of their assets in their operations. This practice generally leads to excess inventory or shortages, higher cost of operations, undesirable delivery performance and loss of customers and market share for not responding fast enough. To this end, automation of execution systems, by itself, will not save companies much money unless the planning is done correctly, so that making and storing the wrong stuff is avoided and more importantly the users have visibility into what can be made and delivered in real-time. In order to be able to do real-time Available-To-Promise, there needs to be a centralized and integrated planning system connecting demand information to operations to suppliers--A process commonly referred to as Sales & Operation Planning. Through the automation of this process, one can generate plans which are consistent with the demand and send the right signals, in a timely manner, to the suppliers as well as adjust the inventory levels at every level of the supply chain. The result would be a lower cost of operation, much improved delivery performance and visibility into every aspect of the supply chain. As you can see Supply Chain plans can be generated only if the system has modeling capability. In other words building models of the real world in terms of capacity, supplier/subcontractor capability, BOM and routing data as well as delivery lead-times and operator and equipment capability. With such complex models systems can predict what can be made and when; and more importantly what mix of products to be made so that the demand is met at the lowest cost of operations and inventory levels. Execution systems, such as ERP, WMS, TL, MES etc do not have modeling capability and are only transaction oriented.


So, before automating all the "execution" processes, consider the brain of the operations. It can tell you what data should be collected and how often, whether the data is correct or not, and it will make sure that the different arms of the execution are working in sync with one another (i.e. delivery, production, storage, transportation). In our experience, many users who start a supply chain planning project, do not have good or complete data in order to make adequate planning decisions. Systems can help you to define what is needed and frequency of data collection, the details of data that is needed so that there is a purpose for every piece of data that is collected. They also reinforce the discipline of ensuring every piece of data is correct and consistent as the operations change. Examples of the latter are new product introduction, and supplier, equipment or sub-contractor changes. The planning systems can and will detect any missing or incorrect data such as BOM or routings, equipment availability, supplier lead-times and so on. But more importantly, save money in cost of operations with a much higher delivery performance.

Upcoming Adexa Webinettes


Adexa will be hosting a pair of educational videos on Performance Management starting August, 2015:


Session 1:  Performance Management

The 5 Most Critical Measures of How a Supply Chain is Performing
Setting up a basic Supply Chain Performance Management system is easy to do if you know the key things to measure and how to establish the measurement.  It does not take a lot of data to determine if your supply chain is doing well.  This webinette will discuss the basics of Performance Management and key measures for monitoring Demand Management performance, Inventory levels, and Supply Performance.  After watching this session, you will understand the basics measures that you should have for your supply chain.

Session 2: Performance Management - From Budget Planning down to Shop Floor Compliance

This session will discuss a sound business process for monitoring a yearly budget plan, along with a monthly S&OP plan, down to shop floor schedule.  A process and system of performance measures are explained to insure that the budget plan for the year is followed all the way down to the shop floor.  The process and set of measures to do this are outlined in this seminar.


Please click on link to "Supply Chain Planning Channel" to become a subscriber so you will be not miss out on any of the upcoming webinettes.   

Supply Chain Performance Management

"It is not just about analyzing, it is about taking action".

There are many supply chain analytics software packages out in the market that provide information on how the supply chain is performing.  The key is to put one in place that not only provides a comprehensive look at the past, but also one that will help you look into the future and manage the actions that need to take place in order to proactively manage your supply chain.  Most companies start the year with a yearly fiscal plan for sales and operations and then drive to meet or beat that plan on a quarterly basis.  Each month, each week, and each day the supply chain needs to be measured and monitored in order to make sure that the supply chain has purchasing, operations, logistics, and sales in line to make the plan.  Any deviations to the plan need to be identified, and then the actions required to correct the problem need to be managed in order to get the enterprise back on track.  Traditional Sales and Operations Planning (S&OP) systems are built to create plans and coordinate Sales and Operations, but they do not have depth when it comes to Key Performance Indicators (KPI's), and the ability to analyze past trends or compare plans with actuals in the sales, manufacturing, and purchasing areas.  They also do not have in place the workflow management and task management in order to manage the completion of actions.  Adexa's Performance Management Module brings together the capability of traditional S&OP, with additional capability to measure over 300 KPI's that give visibility to how well the company has done in the past, and a look to how it is expected to perform into the future.  It combines workflow, task management, dashboards, alerting, and connectivity to personal data management tools like Microsoft Excel so that every area of the supply chain understands what they need to do to stay on track. If you want to learn more about our Performance Management module, give us a call, or click here to learn more.  


For more information contact us at any time:

Ron Wilson

Marketing Director

888-300-7692 (Ext. 122)