8 Crucial Requirements for Supply Chain Optimization

8 Crucial Requirements for Supply Chain Optimization

Introduction In today s world, businesses expect their trading partners to have full insight and control of their from end to end. For manufacturers and distributors to meet the ever increasing expectations of customers, centralization of data and connected systems is no longer optional. Through the natural evolution of technology, most manufacturers and distributors have a spider s web of systems and information exchange cobbled together with near real-time interfaces. Legacy systems and add-ons that are developed in-house cannot keep up with th demands to deliver instant information on all aspects of business operations. 8 Crucial Requirements for Supply Chain Optimization 1. Profitable growth requires unified information 2. To compete effectively, you must be able to pivot quickly 3. Order fulfillment must be fast and accurate 4. Data must be seen to be used Companies don t compete, supply chains do Just like every other industry, manufacturers and wholesale distributors have to adapt to the new way of doing business via the web. Dealing with a broader range of channels and being responsive to changing conditions presents a new set of opportunities and challenges. Companies don t compete, supply chains do. 5. Vendors and customers should be directly connected 6. Consumer preferences will continue to evolve - be ready 7. Customer service must be responsive 8. Compliance processes should be automated Next steps In this ebook, we ll examine the key components of the new way of doing business. Each requirement includes an example to illustrate the relevance to the industry. We hope the topics will help stimulate conversations in your organization that can take your management to the next level. To compete with confidence. Page 1

1. Profitable growth requires unified information The pace of business today demands that the people making decisions have the information they need at every step in the from materials on order to shipment status within easy reach. If you are working with systems that don t share data, the blind spots that missing data cause can lead to disaster. A building supplies manufacturer had grown significantly through several acquisitions. Each location was using a separate ERP system, making month end financial reporting a nightmare for the manufacturer s CFO. Through implementation of an ERP solution that supports multi-company consolidations, the CFO now closes the books within three days after month end. As an additional benefit, benchmarks (now based on consistent measures) identify high performing teams to build on best practices across the company. Fully integrated financial and management systems provide better decision support and operational control. Whether your company grows organically or through acquisitions, you need to build efficiencies in your business processes. To remain competitive, your business management systems should support: Multi-company and multicurrency functionality to accelerate month end reporting and simplify acquisition assimilation. Business intelligence tools that will support analysis and proactive decision making. Integration with line-of-business applications to meet industry specific requirements. One system, that simplifies employee interaction with information. As your enterprise grows, you need to maintain the holistic view to keep pace with change. Does inbound or outbound activity have a larger impact on the number of distribution centers and the location? Page 2

2. To compete effectively, you must be able to pivot quickly Natural disasters, consumer preferences and interruptions are real business risks that you face every day. Reacting to those changes quickly can make the difference between thriving and surviving. For employees to react, they need real-time information to monitor the business processes that they control. When a disease destroyed all of the grapevines in a region of specialty vineyards, a beverage distributor had to react fast. The interruption would leave the distributor without a very popular line of wines, so the company had to find alternatives. Through analysis of data from their ERP system, they were able to identify similar products and assemble a detailed forecast of the items and quantities that they needed to replace. The distributor was able to make firm commitments with alternate vendors and begin promotions for the replacement wines. You ve hired managers who know their business and want to make the right decisions. When they have the ability to analyze data rather than just read reports those managers can spot trends and head off missteps. Your business management systems should provide integrated data and support the business processes to: Offer and push out pricing and promotions that will motivate your customers to purchase. Meet changing consumer preferences with innovative products. Respond quickly to changing conditions and interruptions. Build profits and avoid interruptions in your supply chain with data that flows across the company through a fully integrated business management system. Where is the epicenter for UPS and FedEx shipments to minimize service days and costs to US population? Page 3

3. Order fulfillment must be fast and accurate To remain competitive in today s economy, you need to have inventory in the right place at the right time. You need enough to meet customer demand, but overstock and your profits suffer. In addition, customer expectations on delivery times just continue to accelerate. Finding the balance to optimize quantity and location requires informed decisions based on the most complete information you can get. The business processes of a sports equipment manufacturer had become so complex over time that most employees just worked around them. Each department had their own systems and data was being re-entered in each one. Rush orders had to be walked through the system by an expediter to make sure they were shipped on time. To change the situation, the company completed a full analysis of their business processes from materials receiving through accounts receivable collections. The newly defined processes will accelerate the planned ERP Implementation. The old ways of managing a just don t cut it anymore. Customer expectations, both consumer and business, have been permanently reset by Amazon.com. Customers want to know where their order is, every step of the way. They want delivery yesterday and they want it to meet their specifications exactly. Your business processes and management systems need to support: The ability to track and report the status of an order at every step from order entry to delivery. Optimize inventory levels to minimize backorders and expedite order fulfillment. Manage warehouse stocking, picking and shipping to decrease processing times. Companies don t compete, s do. Streamline your operations with the systems and business processes that optimize the. You cannot manage what you do not measure. Page 4

4. Data must be seen to be used Every business is collecting more data than ever before. But too much data is just as bad as too little. Information overload can keep employees from focusing on what s really important so that they miss critical trends or indicators of a problem. While dashboards may simplify data display, determining the most important performance indicators to follow and how to surface them from the underlying system is a daunting challenge. Before the full impact of the housing collapse was understood, a lumber and construction supplies distributor noted a trending drop in orders. While the trend was subtle, company management compared the data with previous years, recognized the risk and chose to act quickly. By lowering inventory on hand and open purchase orders for materials, the company averted disaster. Lower carrying costs and related inventory expense allowed the company to weather the recession. A fully integrated financial management system designed specifically for manufacturers and distributors will ensure that your employees have consistent, accurate information. As you evaluate options, consider how your employees interact with data each day. They need: Role relevant information to keep them from getting distracted by activities that they can t control. End-to-end information that provides insight into the full process, not just a piece of it. To be able to analyze the data from any angle to identify the relationships and trends that could provide competitive advantage. With fully integrated information across the supply chain, you give your employees the information they need to give you an advantage. Do inbound and outbound freight costs increase or decrease with additional facilities? Page 5

5. Vendors and customers should be directly connected To take full advantage and reduce the risks of expanding through new channels, manufacturers and distributors should have visibility up and down their. Knowing when materials will arrive allows manufacturing operations to run more smoothly. Giving customers insight into inventory promotes a partnership approach to end-consumer promotions. A motorcycle manufacturer wanted to share real-time parts inventory, order tracking and history with their dealers and field sales team. Using a customer portal, the ERP inventory catalogs and customer data were surfaced to securely provide access. In addition, the manufacturer provided an interactive product configurator accessed through the portal. Sales people and dealers were able to show customers product options, with immediate price quotes and estimated delivery times. Give your salespeople, managers and trading partners access to information across the supply chain to build relationships and profitability. Whether your channels include big box stores or restaurants, knowing how your products are doing will help you adjust through promotions or pricing. Vendor and customer portals should support: Faster reaction times in a three tier distribution model. Transparency to allow customers and vendors to build on pricing opportunities. Visibility into the step above and below in your to avoid backorders and overstocks. With closer ties to your vendors and customers, you can react to customer trends more quickly and build profits together. Using standard UPS/FedEx ground service, what % of US population can be serviced by 1 facility in 1, 2, and 3 days? Page 6

6. Consumer preferences will continue to evolve be ready The information revolution has changed the nature of relationships with customers. Customers can research all of their options and compare products without leaving their desks. To remain competitive, you need to apply your of the business to stay one step ahead of your customers. While analyzing product trends, a consumer health care products distributor noted an increase in sales of a product that was about to be discontinued. Digging deeper into the data, they found that most of the of orders were being placed by retirement communities. While the product was too expensive for most individuals to purchase, retirement communities could rent it out. A new market, and subsequent promotions turned the almost discontinued item a big profit builder. Every manufacturer and distributor needs to make the change from reactive to proactive for their product and pricing strategy then develop a that allows them to make that strategy successful. To monitor and stay ahead of consumer preferences, you have to collect and manage data that will give you insight early enough for you to respond. Data to drive business decisions that: Identify evolving trends. Monitor competitive landscape. Deliver services customers need to support your products. Customers expect your employees to have one version of the truth. Differentiate your business from competitors by adapting your system to meet the rapidly evolving market environment. Page 7

7. Customer service must be responsive From a historic perspective, most manufacturers and distributors believe they are easy to do business with. They have been doing things the same way for years and have lots of satisfied clients to prove it. But times are changing. Your buyers are changing. As younger people enter the workforce, their expectations about how they interact with your business are different. They want immediate answers that they can access without having to place a call. Building on a direct channel opportunity, a specialty food producer went from thirty large volume shipments a week to three hundred shipments, most of them single products. The unexpected success of direct sales caught everyone especially the shipping department by surprise. By implementing a barcoding and RFID solution, the company now ships hundreds of single product orders through a highly automated and cost effective process. Your web presence can no longer be an afterthought. You need to take a strategic approach to how you interact with prospects and customers on line. Fully integrated e-commerce and financial management systems allow you to support the web-based sales and service that a growing number of customers demand. Support responsive customer service with: Full visibility into inventory availability, order status and shipping progress. Customer service reps who access only have to access one system to answer any customer question. Fully automated web-based and email customer support options.. What is the latest time carriers can pick up freight in order to meet their published delivery day service? Amazon has reset the bar in customer expectations. Your systems and have to keep up with the times. Page 8

8. Compliance processes should be automated Keeping up with all of the reporting that you need to maintain compliance at the local and national level is challenging enough. In addition are the requirements of your customers, who need your support for their own compliance. Without automated system that manage the process, the time spent to stay up to date on regulations along with tracking all the elements can significantly impact profits and increase risk. As a vitamin and nutritional supplement company grew, manually managing the compliance reporting to meet widely varying government regulations was stifling their international expansion. Through implementation of an integrated materials management the company was able to automate quality control and lot tracking. Reports could be automatically generated to comply with any combination of requirements. To mitigate the costs of compliance with regulatory requirements or mandates from customers, manufacturers and distributors are automating the processes through integrated business systems. By replacing labor intensive processes with automated processes, you can: Strengthen your ability to comply with regulatory legislation, such as the Sarbanes- Oxley Act or Health Insurance Portability and Accountability Act (HIPAA). Improve security and reduce risk by controlling access to sensitive information. Simplify your auditing processes with automatic transaction recording. A system that provides the flexibility and audit controls that will support compliance with complex regulatory requirements will reduce risk and improve profits. Using standard UPS/FedEx ground service, how many facilities are required to service nearly 100% of US in 1 day? Page 9

Next Steps When you are ready to transform your to compete, we d like to help. Blue Horseshoe has worked with over 500 manufacturers and distributors to analyze business processes, technology and long term goals. We have helped them apply practical and economical tier one solutions that improve profitability and increase efficiency. Backed by two decades of unique business, engineering and experience, Blue Horseshoe consultants provide unparalleled expertise in Strategic Consulting, System Implementation, System Integration, Distribution Design and Implementation Services. Consulting professionals from top to bottom We are committed to being a different kind of consulting organization. We are consulting professionals, not professional consultants. We get to know our clients and we work together to analyze strategic goals, providing on-time and on-budget project completions as promised. Blue Horseshoe is the only consulting company that can do it from top to bottom delivering excellence through hard-earned and personal commitment. Recognition from Microsoft Companies don t compete, supply chains do. Blue Horseshoe is recognized as a leader in logistics solutions. Microsoft recently acquired the warehousing and transportation management software developed by our experts. We have been honored for demonstrating excellence in innovation and implementation, including earning the Microsoft Dynamics Distribution Industry Partner of the Year. Let s talk. Our experts will show you how your can leave the competition in the dust. To schedule a free consultation, call 317-573-2583 or email information@bhsolutions.com 11590 N. Meridian, Ste 520 Carmel, IN 46032 317-573-2583 information@bhsolutions.com www.bhsolutions.com