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21st Century Supply Chain

1,170 posts
by Iman Niroomand

Reverse logisticsReverse logistics is defined as the process of moving goods beyond their typical final destination for things like re-use, capturing value, or proper disposal.

 

In supply chain networks, materials flow from suppliers through to end customers. Supply chain executives measure the effectiveness of that flow using the on-time delivery (OTD) metric. It’s a common supply chain measurement, focused on ensuring delivery to the end customer is fast and efficient from the time the customer puts his or her order in place. However, the mission of your supply chain doesn’t necessarily end when the product reaches the end customer. There are many reasons customers return products, including:

 

  • The customer bought the wrong product
  • The product was damaged upon arrival
  • The product did not match its description
  • The customer no longer wants the product

In those cases, you would then have to organize shipping of the returned product and send it through various processes such as testing, dismantling, repairing, recycling or disposing of it. All these processes require the product travel in reverse through your supply chain network.

 

There are many advantages to implementing reverse logistics, and the benefits extend to not only customers, but manufacturers, as well. For products at the end of their life cycles, reverse logistics extends their use through repairing, reshaping or recycling. It can act as a sort of asset recovery for manufacturers so they can extract as much value from the product as possible, providing a second return of investment. Reverse logistics also has an environmental benefit for companies, who would gain tax credits and positive public attention for doing their part to ensure discarded products don’t end up in the landfill. Perhaps the most important reason for reverse logistics is the profit increase companies can see by decreasing material costs.

 

Reverse logistics has become even more important with the arrival of the e-commerce era. In recent years, physical retailers have been replaced with online ones, whose sales are estimated to reach $414 million by 2018. In online retailing, at least 30% of all products ordered are returned, compared to only 8.89% bought in brick-and-mortar shops. This rapid growth in the volume of returns causes huge uncertainties around reverse logistics, and puts pressure on supply chains to manage and implement product returns successfully. For that reason, you should plan and develop your reverse logistics carefully.

 

There are metrics you can use to monitor reverse flow in your supply chain. They include:

 

  1. volume of returns
  2. type/condition of returned product
  3. dollar value
  4. percent of sales

In-depth analysis of these metrics can help you identify problem areas and convert the threat of returns to opportunity for improving your business.

 

The benefits of employing a reverse logistics strategy far outweighs the cost of implementing it. Is your supply chain ready to move in reverse?

 

The post The importance of reverse logistics in your supply chain network appeared first on The 21st Century Supply Chain.

 

Rise of the smart machines: How concurrent planning and AI can help you win big in supply chain planning

 

Originally posted by Iman Niroomand at https://blog.kinaxis.com/2017/09/importance-reverse-logistics-supply-chain-network/

by Bill DuBois

What are your supply chain thoughts when you see this picture?

As pictures start to emerge showing the damage caused by the recent string of hurricanes like Harvey and Irma, immediate thoughts go to the safety of the people caught in the path of these storms. Thoughts and hopefully many donations are going to all those involved in disaster recovery efforts.

 

The image below is an aerial photo taken and released by the Dutch Department of Defense showing the damage of hurricane Irma wrought on a shipping yard in the Dutch Caribbean island of St. Maarten.

 

Hurrican Irma - Supply chain impact

 

If you happen to be involved in any way in supply chain, whether it’s supply chain planning, manufacturing or distribution, your next thought after hoping people are okay is likely, “holy crap!”. Once the initial shock has worn off, your supply chain instincts will kick in as you assess the damage from a supply chain perspective.

 

You’re probably asking the question, “What’s the impact on supply?”. As you look at this picture, it’s natural to think about the amount and value of supply that is damaged or stuck on route. That immediately leads to worrying about the impact on the customer:

 

  • What demands will be left unsatisfied by the supply disruptions?
  • What orders should be filled with the limited supply available?
  • Are there other capacity disruptions?
  • How long will it take to recover?

If your supply chain happens to support the disaster recovery in any way, thoughts to a spike in demand is something else to manage. Bottled water, generators, batteries, building supplies, food supplies, the list could go on.

 

Delivery, especially in support of relief from the destruction and customer satisfaction are obvious immediate concerns, but then cost and margin questions soon follow: What’s the impact on the supply chain when prices jump due to limited supply? What’s the impact on margin with a likely hike in fuel costs? What’s the financial hit on using more expensive alternate materials, suppliers and shipping routes?

 

You could think of all these questions as “after thoughts.” At risk of beating our supply chain chest, practitioners have certainly learned their lessons from past experiences like Hurricane Matthew. Supply chain thought leaders began thinking about Irma long before the pictures surfaced.

 

For example, Florida power companies began staging vehicles and equipment in strategic locations well in advance of the arrival of Irma. This was a strong example to help convince customers and residents they should prepare, as well. On top of this, AT&T, Verizon Wireless, Sprint and T-Mobile sent crews to cell sites across Florida to top off fuel generators, test back up batteries and protect facilities from Hurricane Irma’s anticipated storm surge and associated flooding.

 

Many companies like Home Depot and Target were working with warehouses and distribution centers to ensure stores were well stocked. These companies are preparing their supply chains and stepping up 24/7 efforts to restock as merchandise starts to fly off the shelves as the cleanup continues. This can mean pre-staging supplies from distribution centers to stores in areas at risk.

 

For supply chain leaders who took a preemptive strike against the forces of Irma, they’re thinking, “I am glad we prepared” when they see these pictures. Today, companies can easily simulate any number of scenarios to understand impact, and then determine preparation and response plans that will minimize the impact of the destruction. For example, supply chains can simulate a supplier being down for a day or a week, simulate a spike in demand and the ability of the supply chain to satisfy the increase in time to deliver goods to affected regions, and simulate an alternate source or more expensive supplier.

 

Today, planners can have answers to these questions minutes after the National Hurricane Center issues its first press release on the next hurricane. The final thought we should all be thinking when we see these pictures from a supply chain perspective is “what other questions should I ask before the next hurricane or weather event?”. Let us know what you would add to the list.

 

The post Supply chain impact before, during, and after Hurricane Irma appeared first on The 21st Century Supply Chain.

 

Originally posted by Bill DuBois at https://blog.kinaxis.com/2017/09/supply-chain-impact-hurricane-irma/

by Alexa Cheater

6 speed bumps on the road to automotive supply chain success

Automotive supply chainA trending move from regional to global supply chain processes is adding complexity to the automotive supply chain at an unprecedented level, driving a growing need for automation and collaboration. That’s revving up interest in realignment, consolidation and optimization of supply chain activities. The problem is, limited investment in top tier suppliers is causing constraints, and the rise in connect devices (including cars) means requirements for further innovation must extend beyond environmental footprint and safety.

 

Emerging markets like Brazil, Russia, India and China are further changing the automotive landscape, as automakers look to streamline distribution and better serve these areas, who combined represent 40% of the world’s population and have gross domestic product (GDP) growth far exceeding that of more fully developed countries.

 

Staying competitive has become harder than ever. Here are just a few of the other challenges facing the automotive industry.

 

Automotive supply chain pain points

 

Multiple ERPs

Various point-based solutions, multiple enterprise resource planning systems (ERPs) and legacy systems located around the globe mean disparate, disconnected data. That results in poor end-to-end supply chain visibility, latency in critical decision-making and overall inefficiency in supply chain operations.

 

Solution: Incorporate all supply and demand data through a closed-loop process that writes back to execution systems based on decisions made throughout the planning cycle. Integrating data into a single system of record builds confidence in the accuracy of data and the global capacity management system. One data set means one version of the truth and one location where anyone involved can see updates to those numbers.

 

Large-scale data requirements

The computing power required to model global, multi-tier supply chains and explode demand and supply across integrated supply chains is enormous. But the ability to scale is a critical capability to supply chain success.

 

Solution: Make sure you’re using the best technologies available to support scalability and performance requirements for this data-intensive industry.

 

Global complexity

Automotive manufacturers must contend with a global supply chain footprint spanning multiple time zones and dozens of countries.

 

Solution: Work toward end-to-end supply chain visibility with insight to planned and current demand, inventory, capacity, constraints and supply at any desired level of the product hierarchy.

 

Complex products

Vehicles and their various parts and accessories are complex. They often have large, deep and varied bills of material (BOMs) and typically have multiple models, trims, options and packages available. Each has intricate and cascading rules to determine required components in an order-specific BOM. Each market offers configurations with different launch dates.

 

Solution: Using a supply chain management solution with an in-memory planning engine will allow for real-time response to demand-supply based configuration changes. Make sure BOMs hold product structure for manufactured products, including draw quantities (quantity per assembly), start and stop effectivity dates, production yields and mix factors. Be sure you have the necessary capabilities within your technology to manage different configuration granularity across the time horizon in the same model.

 

Inelastic and constrained global supply

Volume ramp up brings with it significant challenges. While demand is picking up, and companies are responding by increasing their production, suppliers are still cautious after the recession of 2008. Accurate demand forecasting for products and associated parts is a struggle.

 

Solution: Flexibility in modeling units and/or time-based constraints is key. When supply or capacity is constrained, causing the demand for finished vehicles to not be satisfied, use a system allowing for order prioritization based on any criteria specified – channel, vehicle type, geography, margin, fair share, etc. Scenario planning capabilities will allow you to evaluate multiple options in case of demand-supply imbalance.

 

Increased expediting and premium shipping charges

Failing to have the right parts available in the right place at the right time has resulted in increased expediting and premium shipping charges. That typically means higher inventory levels, tying up scarce capital and leading to higher obsolescence charges.

 

Solution: By connecting all data, processes and people, inventory planning and management happens concurrently with other functional planning processes. You’ll instantly understand the impact on inventory targets when changes to demand, supply and/or capacity plans happen. Using always-on analytics assess the impact of unexpected changes as soon as they’re recorded. Use notifications to alert planners if thresholds are broken.

 

These are just a few of the specific automotive supply chain pain points. Are there other challenges you’re facing in your supply chain? Let us know in the comments section below.

 

And don’t forget to check out the other industries featured in this blog series:

 

The post Supply chain pain points: Automotive appeared first on The 21st Century Supply Chain.

 

Originally posted by Alexa Cheater at https://blog.kinaxis.com/2017/09/supply-chain-pain-points-automotive/

by Joe Cannata

What rapid adoption of virtual assistants means for CPG supply chains

CPG supply chainI recall watching the original Battlestar Galactica series in the late 1970s, and there was an episode where Commander Adama was dictating his log. Before him was a computer screen recognizing his voice, taking his spoken words and translating them to perfect text for all to see. The capitalization and punctuation were perfect. Who knew back in 1978, when a home computer was slightly more than an expensive toy, and large computers were mainframes that ate punch cards and spewed paper and hole-punched tape, that this stunning scene would be a reality in my lifetime?

 

Now let’s move on to December of 1983, when a small company owned by Exxon Enterprises, named Verbex, interviewed me for a Systems Analyst position. Verbex had nothing to do with oil. They were one of the early pioneers of voice recognition technology, and produced a device about the size of a small paperback book, that had an active vocabulary from 300 to 10,000 words. It was being used at the time for everything from bridge painting to package sorting. I didn’t get the job, but I was made quite aware that the “future” shown in a 1978 TV show was five years closer to becoming a reality.

 

Now if we fast-forward to present day, we have the likes of Siri, Alexa, Cortana and Bixby, all on personal devices. I have spoken into my phone to Google to get directions on numerous occasions. People dictate text messages. And now, using technologies like Amazon Echo, people can order whatever they want, any time, from any place. This fundamental shift in the shopping paradigm is posing unique challenges for supply chains. Already, supply chains have had to adapt to online shopping, and crazy fulfillment demands. After reading a recent article in SCM World by Kevin O’Marah, I learned that CPG companies have felt extreme upstream pressure, as he puts it. Wider assortments, multiple versions of packaging and a completely different kind of customer relationship are required. There is a move from the traditional shopping method of going to the store, whose inventory is based on customers buying pre-packaged items on shelves. The demand was set by either advertising, seasonal cycles or spikes due to new “hot items”. Just as retailers and suppliers have made adjustments, a different kind of disruption has been taking place, and picking up momentum. This means a shift from retail store-based supply chains to a more dynamic personalized one, based on the consumers.

 

Being able to place voice orders, from any place, any time, means more shopping can and does take place. You don’t have to go to a store, you don’t have to be home in front of your computer. You could be out at the movies, and order anything from a tube of toothpaste to a set of furniture, 24/7. Non-traditional online items are now being bought. Orders come in any time, without a predictable cadence. I saw in O’Marah’s article that major retailer Walmart has teamed with Google to be part of Google Express. Google Express is a service that includes stores like Costco, Walgreens, Pier 1, PetSmart and a host of others. You download the app and can start shopping. Walmart brings extreme fulfillment expertise to the table, and Google has the technologies for language processing, artificial intelligence (AI) and analytics. This brings a new player to compete with Amazon and the Alexa system. It also signals a change in retail as a whole.

 

What does this mean for supply chains? The rapid adoption of virtual personal assistants changes shopping habits, just as Uber changed transportation. Traditional calendar-based sales and operations planning (S&OP) is blown out of the water, as there will always be the requirement to adapt to what consumers want. The reasonable forecast and predictability of consumer shopping habits is not straightforward any longer. This reality exists today, and is only accelerating. A new kind of supply chain needs to be developed to run in what used to be non-traditional patterns. An agile way of dealing with flexible fulfillment, shipping and return options is required. Advanced data analytics will need to be more heavily relied upon than before, so adjustments to planning, forecasting and deployment can be made. Real-time inventory is a necessity. The customer relationship – knowing how and what they purchase, and what their buying habits are – becomes a crucial factor in how a strategy is defined. Stores are now becoming distribution points. I recently went to my local Sprouts Farmers Market store (a national chain) and was surprised to see a sign for Amazon Flex. They had special arrows on the floor, directing shoppers to the area where they could pick up their Amazon orders. So besides being a grocer, they were also an Amazon distribution center. Retail stores now need to be considered part of the supply chain, as opposed to just being an end point.

 

Omni-channel, one of the most overused marketing terms in Gartner’s 2016 list, cannot be denied. In order for any retailer to adequately evolve their supply chain to meet the consumer’s needs, they must be able to see the consumer’s experience across the entire enterprise. The bottom line is supply chains in 2017 and beyond have to be strong in analytics, demand planning, order fulfillment, S&OP and a host of other applications. It’s time to evolve traditional supply chains into ones that meet the current and future requirements.

 

The post Does your supply chain hear the change coming? appeared first on The 21st Century Supply Chain.

 

Originally posted by Joe Cannata at https://blog.kinaxis.com/2017/09/supply-chain-hear-change-coming/

by Teresa Chiykowski

Supply chain conferenceIt’s hard to believe that Kinexions ‘17 is only a few weeks away. Time flies – just like astronaut Chris Hadfield, who will be joining us as our keynote speaker on the Kinexions mainstage in Orlando this year.

 

For those of you who missed my last blog post, Kinexions is the premier annual event for our RapidResponse® user community, including customers and prospects. The supply chain conference offers two full days of networking, inspiring keynotes, informative general sessions and a variety of breakouts delivered by customers, product experts and partners.

 

Last post, I touched on the top five reasons to attend the conference:

 

  1. Supply chain stories that inspire
  2. Out-of-this-world keynote speakers
  3. Network. Network.
  4. Fun, exercise and a touch of Supertramp
  5. More opportunities for RapidResponse learning

Today, I’d like to dig a little deeper into reason #1: supply chain stories that inspire.

 

This year, we’re delighted to welcome some special customer speakers to our Kinexions ’17 mainstage to share their RapidResponse stories. Here’s a sneak peek at a few of those customers and what they’ll be talking about.

 

Honeywell: Extending value since becoming customer #1

 

Honeywell has been utilizing RapidResponse in most sites for over 10 years with some that started more than 20 years ago – the day RapidResponse was introduced. In the beginning, RapidResponse was the “fast MRP engine” for the Aerospace division. As users discovered the flexibility of the data model and software, Honeywell found many additional uses, even outside MRP and supply chain. In this session, attendees will see examples of incremental applications such as a labor force management tool.

 

Schneider Electric explores artificial intelligence and machine learning

 

What’s the next step for artificial intelligence and machine learning (AI/ML) in the supply chain? Both show great promise for enhancing supply chain decision-making – especially for big multi-nationals with large product portfolios such as Schneider Electric. In this session, go on a voyage of discovery to learn how Schneider Electric is exploring AI/ML, as well as some practical use cases.

 

Lippert Components: 5 phases to transform demand planning

 

Over the past three years, Lippert Components has begun to revolutionize the way it plans both demand and supply throughout the organization. Previously, each business unit planned in its silo, with myriad processes at various maturity levels. The lack of consistency and transparency not only reduced efficiency and productivity, but also created poor inventory health. In this session, speakers will cover how RapidResponse has helped orchestrate the way supply chain planning is managed by connecting Lippert Component’s data, process, and people, which has enabled teams to work together in a single environment.

 

And that’s just a glimpse of some of the sessions on day 1! To check out the full conference agenda, including breakouts, networking opportunities and post-conference product training, visit the Kinexions ’17 website.

 

Stay tuned for further event updates!

 

The post Countdown to Kinexions ’17: Supply chain stories that inspire appeared first on The 21st Century Supply Chain.

 

Originally posted by Teresa Chiykowski at https://blog.kinaxis.com/2017/09/countdown-to-kinexions-17-supply-chain-stories-that-inspire/

by Alexa Cheater

Supply chain dataWhen it comes to cyber safety, your supply chain could be your biggest weakness. Approximately 80% of data breaches originate from within the supply chain, and the financial impact of a breach could do more than destroy your bottom line. It could ruin your credibility with your customers.

 

In 2013, Target, one of the largest retailers in the US, fell victim to a massive data breach when a cyber intruder stole credit and debit card information on more than 40 million customers and personal details like addresses, phone numbers and email addresses of 70 million customers. It cost Target more than $88 million in damages. Attacks like these have become the number one threat to many organizations and their associated supply chains, but protecting yourself isn’t enough.

 

Target’s breach was traced back to malware installed on its point-of-sale system. The attack came through one of its vendors, making it even more important that you have end-to-end visibility through all tiers of your suppliers – not just the top few.

 

While cyberattacks aimed at stealing data remain the most visible risk, attacks designed to deny or disrupt service are also gaining in popularity. These types of cyberattacks jeopardize production and delivery schedules, causing delays and negatively affecting customers. Nodes along the entire supply chain can feel the impacts.

 

Whenever, wherever or whoever accesses your supply chain information, it’s vital to make sure your data is safe, secure and only accessible by those who should have access. Good data security in your supply starts with proactivity. Don’t wait for an attack to happen. Evaluate your supply chain by asking these simple questions:

 

✓ Is data restricted to only those who need access to it?
✓ Are corporate password policies secure enough? Are they being enforced?
✓ Is sign in activity being monitored?
✓ Does your staff receive regular security training?
✓ Where does your hardware reside, and who has access?
✓ How is physical access granted and revoked?
✓ Are user actions tracked and audited?
✓ Do you have a comprehensive incident response plan?
✓ How is data backed up?
✓ Do you routinely evaluate your security policies and procedures?

 

Compile you answers and use them as a jumping off point to get the conversation going about how your company handles data security. And if you’re looking for even more details about how you can protect your supply chain from cyberattacks, be sure to check out our eBook Your guide to supply chain data security. Download it now.

 

The post 10 must ask supply chain data security questions appeared first on The 21st Century Supply Chain.

 

Originally posted by Alexa Cheater at https://blog.kinaxis.com/2017/09/10-must-ask-supply-chain-data-security-questions/

by Dr. Madhav Durbha

Supply chain riskCSX, one of the only two railroad operators in the USA that handles nearly all the shipments that move by train east of the Mississippi River has been experiencing serious challenges since the month of May. The reasons behind this were well chronicled in a recent Wall Street Journal article. To sum it up, an activist investor caused a major shakeup in the company earlier this year and a new CEO took over in March. The new CEO embarked on several cost reduction initiatives in conjunction with a number of changes (some may argue too fast and too soon) on how the company operates its freight-trains. This has resulted in significant delays and disruptions in shipment deliveries. An extreme example of this is a ride from Chicago to Colesburg, Tennessee taking 18 days, 13 hours, and 57 minutes!

 

The effects of these delays are being felt by many companies including McDonalds, Kellogg, Kraft-Heinz, and PepsiCo, as the article cites. These companies had to haul expedited shipments by truck so they could keep their production lines running and, in turn, meet the commitments to their customers. This has led to increased costs, not to mention all the inventory stuck in-transit.

 

Needless to say, such major challenges are visible enough and have significant enough disruptive power that considerable energy gets spent on addressing them, including executive engagement. However, did you know there are enough lead time problems lurking in your current supply chain operations that go completely unnoticed? These are the “knowable unknowns” that can hurt your supply chain performance.

 

Over the years, I have partnered with a number of customers across a variety of industries as part of their supply chain planning transformation journey. While implementing a technology solution, a lot of time is spent on cleaning the master data including assumptions around capacities, lead times between nodes, yields and such. However, once the implementation is live, many of these assumptions tend to stay static and are seldom touched. Over time, such assumptions have the potential to drift away from the reality, causing significant downstream execution challenges. For example, let’s say you modeled the lead time from “supplier A” to your manufacturing facility as 7 days. If the supplier performance degrades gradually and on average the supplier is now taking 10 days to deliver, you get into a constant firefighting mode with inventories running low, regardless of how good your planning algorithms are. On the contrary, if the supplier has significantly improved the performance and is able to consistently deliver in 5 days, you may miss out on the opportunity to be leaner.

 

Such gradual degradation of planning assumptions can be performance killers to your supply chain, causing the users to lose faith in the planning system and resort to the all too familiar Excel. Often times, someone in the procurement organization is aware of change in lead times through supplier monitoring/scorecarding, supply chain risk management and such. However, this information in most cases does not make its way back into the planning systems.

 

I used lead time as an example here. But it could be any supply chain assumptions that go into your planning system, such as capacities, yields, order multiples, etc. Today’s supply chains are far more dynamic, and underlying assumptions and data evolve rather quickly. Applying rigor and discipline to keep supply chain assumptions and the associated master data in sync with the reality is a must have to avoid “garbage in garbage out”. Those with experience in supply chain data quality improvements will attest to the fact that these endeavors are quite labor intensive. But these are exactly the kind of problems that can favorably be addressed by Machine Learning. By mining through plan assumptions and leveraging the actuals from execution systems, learning algorithms and intelligent agents can make recommendations on what data elements need to be corrected. In addition, these algorithms can also detect and surface the persistence and pervasiveness of such anomalies across the entire network, predicting risks and suggesting resolutions. These algorithms offer the potential to autotune the supply chain assumptions as they start deviating. Poor supply chain assumptions are like the deep cuts and bad bruises on your supply chain. However, by leveraging these emerging technologies, we enter the world of supply chains that can heal themselves!

 

The post Supply chain risks: The knowable unknowns that can hurt your supply chain performance! appeared first on The 21st Century Supply Chain.

 

Originally posted by Dr. Madhav Durbha at https://blog.kinaxis.com/2017/09/supply-chain-risks-knowable-unknowns-can-hurt-supply-chain/

by Dr. Madhav Durbha

Supply chain riskCSX, one of the only two railroad operators in the USA that handles nearly all the shipments that move by train east of the Mississippi River has been experiencing serious challenges since the month of May. The reasons behind this were well chronicled in a recent Wall Street Journal article. To sum it up, an activist investor caused a major shakeup in the company earlier this year and a new CEO took over in March. The new CEO embarked on several cost reduction initiatives in conjunction with a number of changes (some may argue too fast and too soon) on how the company operates its freight-trains. This has resulted in significant delays and disruptions in shipment deliveries. An extreme example of this is a ride from Chicago to Colesburg, Tennessee taking 18 days, 13 hours, and 57 minutes!

 

The effects of these delays are being felt by many companies including McDonalds, Kellogg, Kraft-Heinz, and PepsiCo, as the article cites. These companies had to haul expedited shipments by truck so they could keep their production lines running and, in turn, meet the commitments to their customers. This has led to increased costs, not to mention all the inventory stuck in-transit.

 

Needless to say, such major challenges are visible enough and have significant enough disruptive power that considerable energy gets spent on addressing them, including executive engagement. However, did you know there are enough lead time problems lurking in your current supply chain operations that go completely unnoticed? These are the “knowable unknowns” that can hurt your supply chain performance.

 

Over the years, I have partnered with a number of customers across a variety of industries as part of their supply chain planning transformation journey. While implementing a technology solution, a lot of time is spent on cleaning the master data including assumptions around capacities, lead times between nodes, yields and such. However, once the implementation is live, many of these assumptions tend to stay static and are seldom touched. Over time, such assumptions have the potential to drift away from the reality, causing significant downstream execution challenges. For example, let’s say you modeled the lead time from “supplier A” to your manufacturing facility as 7 days. If the supplier performance degrades gradually and on average the supplier is now taking 10 days to deliver, you get into a constant firefighting mode with inventories running low, regardless of how good your planning algorithms are. On the contrary, if the supplier has significantly improved the performance and is able to consistently deliver in 5 days, you may miss out on the opportunity to be leaner.

 

Such gradual degradation of planning assumptions can be performance killers to your supply chain, causing the users to lose faith in the planning system and resort to the all too familiar Excel. Often times, someone in the procurement organization is aware of change in lead times through supplier monitoring/scorecarding, supply chain risk management and such. However, this information in most cases does not make its way back into the planning systems.

 

I used lead time as an example here. But it could be any supply chain assumptions that go into your planning system, such as capacities, yields, order multiples, etc. Today’s supply chains are far more dynamic, and underlying assumptions and data evolve rather quickly. Applying rigor and discipline to keep supply chain assumptions and the associated master data in sync with the reality is a must have to avoid “garbage in garbage out”. Those with experience in supply chain data quality improvements will attest to the fact that these endeavors are quite labor intensive. But these are exactly the kind of problems that can favorably be addressed by Machine Learning. By mining through plan assumptions and leveraging the actuals from execution systems, learning algorithms and intelligent agents can make recommendations on what data elements need to be corrected. In addition, these algorithms can also detect and surface the persistence and pervasiveness of such anomalies across the entire network, predicting risks and suggesting resolutions. These algorithms offer the potential to autotune the supply chain assumptions as they start deviating. Poor supply chain assumptions are like the deep cuts and bad bruises on your supply chain. However, by leveraging these emerging technologies, we enter the world of supply chains that can heal themselves!

 

The post Supply chain risks: The knowable unknowns that can hurt your supply chain! appeared first on The 21st Century Supply Chain.

 

Originally posted by Dr. Madhav Durbha at https://blog.kinaxis.com/2017/09/supply-chain-risks-knowable-unknowns-can-hurt-supply-chain/

by Alexa Cheater

SustainabilityHow 25 multinational companies achieved sustainable supply chains

I’d like to think that most companies have moved beyond the point of believing that sustainable business practices aren’t a priority. I hope they recognize the importance of environmental protection and the value of leaving the planet a little better than they found it. Sadly, the reality it seems for many is that it’s all about the tradeoffs. Do we implement greener policies at the cost of our bottom line?

 

But does it really have to be one or the other? In my opinion, thankfully not. And I’m not alone in my assessment. Building sustainable supply chains has been a growing trend for years, and as it turns out, those early adopters may actually be seeing an increase in profits.

 

According to a World Economic Forum report, companies like UPS, SABMiller, DHL, Unilever and Nestle are among 25 multinational companies that focused on sustainability and ended up increasing revenue by up to 20% while cutting supply chain costs as much as 16% as a result. Beyond Supply Chains: Empowering Value Chains outlines 31 best practices for businesses to follow to see similar results. The primary idea behind the best practices is simple – work to achieve profitability through measures that also benefit society and the environment.

 

Some of the more interesting ideas covered in the report include collaborating with competitors and implementing innovative new technologies to drive savings. Nestle combined parts of its supply chain for fresh and chilled products in Belgium with PepsiCo, a clear rival. They bundled warehousing, packing and outbound distribution, and synchronized deliveries to fill trucks. The result was a 44% reduction in transportation costs, 55% lower carbon emissions and higher customer satisfaction levels.

 

With the implementation of a more aerodynamic trailer, DHL realized fuel and CO2 savings of up to 12%. Companies who brought down their carbon footprints saw a direct increase in profitability as a result. The report shows carbon gas reduction between 13-22% uplifted revenue by 5-20%. Brand value also increased an average of 15-30%.

 

Manish Bapna, Executive Vice President and Managing Director of the World Resources Institute, says there are three driving factors pushing companies toward sustainability, but profitability isn’t actually one of them. In a Forbes article, Bapna lists reputation, risk and opportunity as the drivers.

 

Reputation is due to the growing scrutiny companies are under from customers, investors and the media. People want to see sustainability efforts and are willing to spend their hard-earned dollars with companies that prove they care. Risk is a result of environmental factors that could impact supply chains – things like the increase in natural disasters and other recent extreme weather events, which can cause millions of dollars in lost productivity if operations are suddenly shut down. Opportunity comes in the form of uncovering hidden efficiency and cost savings. Just look at the revenue boost those 25 multinationals experienced when cutting their carbon footprints.

 

That’s good news for people like me who have a soft spot for our planet, because it’s evident when it comes to supply chain, it doesn’t have to be sustainability or profitability. You can have both. Companies just need to realize it.

 

Does your company have any sustainability measures in place? Do you believe it’s possible that sustainability and profitability can go hand-in-hand? I’d love to hear your thoughts and opinions, so please post away!

 

The post Sustainability vs. profitability: Is it one or the other? appeared first on The 21st Century Supply Chain.

 

Originally posted by Alexa Cheater at https://blog.kinaxis.com/2017/09/sustainability-vs-profitability-one/

by Teresa Chiykowski

Kinexions - KinaxisKinexions ’17, our annual user and training conference, is right around the corner and we’re ready to blast off. Taking place October 9-13 in beautiful Orlando, it’s more than just an opportunity to have a little fun in the sun. It’s a way to get inspired by some of the latest and greatest supply chain innovations around.

 

From customers sharing their own supply chain innovation journeys to our expert staff guiding you through a look at what’s to come, Kinexions is THE place to discover where you are on your own supply chain journey, and what it’s going to take to propel your company into the stars. It’s all systems go as we explore what’s new in industry trends, and with our cloud-based supply chain management software, RapidResponse®.

 

If you’ve attended Kinexions in the past, you know there’s no better place to get an insider’s look at the best ways to get the most out of RapidResponse. This year, we’ve got some great sessions planned for you on what’s new with RapidResponse, including:

 

  • A mainstage presentation exploring “The Road Ahead with RapidResponse”
  • Breakouts featuring the latest and greatest features in RapidResponse such as easier integration, extended visualization with geo-mapping, enriched inventory planning abilities and expanded admin capabilities
  • Live theater presentations and demos in the Discovery Zone Exhibit Hall

Plus, they’ll be sneak peeks at some upcoming capabilities and details around how we’re delivering the latest innovations in supply chain  even faster to Kinaxis customers. You don’t want to miss it!

 

If you haven’t already done so – have a read through my last blog post:  Top 5 reasons to attend Kinexions ’17 for a few more details on what’s in store for attendees.

 

Check out the agenda and register today!

 

The post An out-of-this-world showcase of supply chain innovation appeared first on The 21st Century Supply Chain.

 

Originally posted by Teresa Chiykowski at https://blog.kinaxis.com/2017/09/world-showcase-supply-chain-innovation/

by Bill DuBois

This guest post comes to us from Argentus Supply Chain Recruiting, a boutique recruitment firm specializing in Supply Chain Management.

 

supply chainIt’s our perpetual hobby horse here at Argentus that Supply Chain needs to be doing more as a field to attract young people. And the industry has started to pick up the slack. Whether it’s organizations partnering with universities to provide information and educational opportunities, or industry associations holding informative events aimed at the wider public, many Supply Chain leaders are using creative strategies to develop the next generation of talent in the field.

 

But is there something about Supply Chain’s image that’s holding it back from being seen as the crucial, strategic function with tremendous career potential it is today?

 

This is an issue that popped up in our discussion of why there aren’t more Women in Supply Chain Leadership roles: it’s the question of Supply Chain’s popular image and whether it’s preventing women and others from viewing it as a lucrative and vibrant career option.

 

On company websites, magazines, promotional videos, and industry association pages, the Supply Chain industry has always employed imagery of the nuts-and-bolts of how products get to market. We’re all used to images of hard hats, warehouses, trucks, trains, shipping containers, boxes, and palettes as a sort of visual shorthand for Supply Chain as a function. We use plenty of these images here at Argentus in our blog posts, service pages, etc.

 

We get it: there needs to be some kind of imagery to associate with an industry or function. But it’s worth considering: does imagery of trucks and boxes adequately convey the strategic edge that Supply Chain offers to companies? Does it offer a realistic vision of what Supply Chain Directors, Planners, Strategic Sourcing professionals and others do every day to uncover efficiencies and integrate global processes across a business? Or does it send a message to young people that a career in Supply Chain is, let’s face it, boring?

 

We all know that’s not the case. We recruit for jobs in Supply Chain every day, and we hear this from candidates all the time: A progressive career in Supply Chain is fast-paced, with tons of variety. It’s very closely tied to both technology and globalization, so it’s rapidly evolving. And it’s rewarding, both intellectually and financially. But many people outside the field have a persistent perception that is rooted in Supply Chain’s origins: that it’s a blue-collar, transactional function. And the imagery that we often employ hasn’t caught up with how the field has evolved.

 

Let it be said: we fully support and admire all the front-line individuals who make Supply Chains run effectively. Distribution centre staff, drivers, and transactional buyers are all crucial components of Supply Chain success. But it can’t be denied that images of trucks and warehouses end up reinforcing an image of Supply Chain as a purely “blue collar” function. Beyond that, they often don’t show the people themselves who really provide the value. Maybe part of the difficulty is that Supply Chain offers value as a connector. It connects suppliers with businesses, manufacturers with distributors with customers. And it’s harder to depict the connections between things than it is to depict the things themselves.

 

We’ve written before about how Supply Chain isn’t the flashiest business function, and it rarely gets recognition in the news. In fact, many in the wider public aren’t even familiar with what Supply Chain is. But at all levels of business all the way up to the C-suite, more and more people are noticing that Supply Chain offers a strategic edge that allows companies to succeed in a global context. It brings business functions together, streamlines operations, and ensures positive customer experiences.

 

Isn’t it time that Supply Chain’s image caught up to the times?

 

The post Does supply chain’s image need to catch up with the times? appeared first on The 21st Century Supply Chain.

 

Originally posted by Bill DuBois at https://blog.kinaxis.com/2017/08/supply-chains-image-need-catch-times/

by Alexa Cheater

7 barriers to aerospace and defense supply chain success

Aerospace & DefenseAs air travel demand soars, aircraft equipment manufacturers continue to innovate in areas like jet engine fuel efficiency, navigation technology and materials science. These improvements, especially around fuel efficiency, are driving demand for newer aircraft models, and speeding up the replacement of previous generations as a result.

 

For supply chains in the aerospace and defense industry, keeping pace with original equipment manufacturers (OEMs) who are dramatically increasing production rates for components, systems and services, is a major challenge. As the flying public continues to demand lower airfares, a ripple effect is running through the entire supply chain, from OEMs to tier one suppliers and lower, as everyone struggles with the ongoing challenge of competitive pricing.

 

The global defense industry is also facing new challenges, including how to grow profitably in the face of a potential market decline and how to cut costs to maintain acceptable financial performance. These organizations are cutting costs to maintain their margins in this declining revenue environment. Successful defense companies have anticipated defense budget cuts, already reducing staff, cutting overhead costs and getting leaner. They’re accelerating process automation instead of hiring more staff, resulting in higher operating earnings per employee.

 

Digital product development and computer-aided design have changed the game further by creating significant efficiencies in the product development process. Lean manufacturing and six sigma initiatives have significantly cut waste and inefficiency in the production process. It’s expected these initiatives and programs will take off further as companies continue to work on managing margins and profitability.

 

Aerospace and defense supply chain pain points

 

Multiple ERPs

Various point-based solutions, multiple enterprise resource planning systems (ERPs) and legacy systems located around the globe mean disparate, disconnected data. That results in poor end-to-end supply chain visibility, latency in critical decision-making and overall inefficiency in supply chain operations.

 

Solution: Incorporate all supply and demand data through a closed-loop process that writes back to execution systems based on decisions made throughout the planning cycle. Integrating data into a single system of record builds confidence in the accuracy of data and the global capacity management system. One data set means one version of the truth and one location where anyone involved can see updates to those numbers.

 

Large-scale data requirements

The computing power required to model global, multi-tier supply chains and explode demand and supply across integrated supply chains is enormous. But the ability to scale is a critical capability to supply chain success.

 

Solution: Make sure you’re using the best technologies available to support scalability and performance requirements for this data-intensive industry.

 

Supply chain complexity

Limited visibility due to increased supply chain complexity makes it difficult to see the true reality of the extended value network when it comes to capacity, material availability and the likelihood of supporting schedule shifts.

 

Solution: Connect your end-to-end supply chain by harmonizing data in a single source, which will drive improved visibility and offer insight into planned and current demand, inventory, capacity, constraints and supply at any desired level of the product hierarchy.

 

Product complexity

Products typically have a large number of models, options and configurations available, and engineering change orders are usually ongoing as products are customized to meet each consumer’s individual demands. This results in deep and varied bills of material (BOMs) that need to account for a large number of planning attributes including model/unit BOM effectivity, prioritization, inventory pooling, interchangeable parts and BOM substitution.

 

Solution: Complex analytic support. A solution that supports all aerospace and defense specific planning parameters into demand, supply, inventory and capacity balancing. BOMs should hold the product structure for manufactured products and include draw quantities (quantity per assembly), start and stop effectivity dates, production yields and mix factors, etc. that drive the explosion of top level demand through to the lowest level of the product structure requirements. Separate models or units of common parts and net them independently of one another. This ensures supply for a given unit is allocated to demand for that same unit. Effectively manage different pools of inventory for a part and ensure proper segregation during netting by preventing intermingling of inventories for a given part associated with different customers, contracts or projects. Group together parts considered equivalent in form, fit and function to satisfy demand for any part in the interchangeable group. Be sure to set different levels of priority and assign them to specific demands. This ensures higher priority orders receive supply first.

 

Inadequate tools for rate simulations

Existing tools to support schedule change simulations require extensive expertise to run, and fail to fully represent limitations within the extended supply chain. Adjusting rates can be extremely time consuming, spanning weeks in some cases.

 

Solution: Deploy a tool that allows you to test rate changes in seconds. You’ll be immediately able to see impact across the supply chain and project delivery dates, identify the impact on gating material and capacities, and quickly invite users to participate in resolving any issues. What-if analysis and scenario creation capabilities also allow for faster facilitation and broad collaboration to ensure schedule alignment and feasibility. You also need support for the definition of rate-based constraints for virtually any unit of measure. View constraints for load-only comparisons, constraint availability or limit the timing and availability of supply and demand. This allows for a simple way of producing a constrained demand and supply plan that respects key limitations and identifies the impact on demand and supply commitments. Don’t forget to evaluate material availability before identifying when work will be loaded.

 

Line of balance analysis

With a high degree of individual unit configurability, there’s a strong need for visibility into supply chain alignment and the delivery of each unit to ensure delivery and revenue attainment predictability. Unfortunately, that visibility isn’t always available.

 

Solution: Connect your data, processes and people into a single, harmonious environment so you can easily see the entire set of items, including the source of the supply (on-hand, on-order or planned) of an aircraft in production. That allows you to determine whether any items needed are missing, and whether the timing will support the customer delivery window.  

 

Engineering changes

Engineering changes are commonplace, and since these changes are often managed in multiple systems, it’s difficult to assess the impact on the supply chain.

 

Solution: Test and identify the operational impact of selecting particular dates for selected engineering changes. This lets you determine effectivity timing that maximizes alignment with performance objectives and avoid excess or shortage conditions.

 

These are just a few of the specific aerospace and defense supply chain pain points. Are there other challenges you’re facing in your supply chain? Let us know in the comments section below.

 

Don’t forget to check out the other industries featured in this blog series:

 

The post Supply chain pain points in the Aerospace and Defense industry appeared first on The 21st Century Supply Chain.

 

 Inventory management: 5 building blocks for success

 

Originally posted by Alexa Cheater at http://blog.kinaxis.com/2017/08/supply-chain-pain-points-aerospace-defense-industry/

by Dr. Madhav Durbha

Supply chain professional advancementThere is a standalone vehicle emission check shop that I visit to get my car checked prior to the annual tag renewal. For those who are not familiar with the emission check process, you drive your car into the shop. As you wait in your car, a technician hooks your car up to his computer, measures emissions and prints a certificate. The whole process takes about 5 minutes. Just about 4 or 5 years ago the service had cost $25. The aforementioned shop was one of the very few shops providing the service in the vicinity. However, over the next few years, nearly every auto mechanic shop in the area started offering an emission check service. For them, it was simply a loss leader to get the cars in. Then they took advantage of the opportunity to sell higher margin services they offer. Soon, the prices for the service started dropping. The cost of an emission check went down to $20, then $15, and now stands at $10. It wouldn’t take a genius to figure out where the trend will continue to go!

 

The moral of the story is simple. When a service gets commoditized, the differentiation disappears, and the price that one is willing to pay drops. It doesn’t have to be a service. It can be a product, or even a professional like you and I. We get commoditized, too! Jack Welch said it – “If the rate of change on the outside exceeds the rate of change on the inside, the end is near”. While he said it in the context of organizations, this could very well be true for individuals, as well.

 

Let’s talk about the implications of this for supply chain professionals. Supply chain management is quickly evolving to be quite an interdisciplinary field. Just recently, I was talking to a youngster studying industrial engineering with specialization in SCM. The curriculum he is going through is quite well rounded with coursework and internships that included industrial engineering, operations research, big data analytics, systems engineering, and programming. Besides majoring in industrial engineering, he is also getting a minor in computer science.

 

Now, think about this. This young man and many like him will be entering the workforce with skills that several of us did not have an opportunity to acquire while in school or thereafter. In a few years, he will be a supply chain professional with wide ranging skills, and could very well be sitting in the cubicle or in the office next to you and I.

 

Contrast that with several professionals I run into whose job descriptions have not changed in the last ten years and have not had any major skills refresh. How can one keep pace? There are plenty of cost effective ways to keep your skills fresh and up to date through online learning platforms, such as Coursera or Udemy. If watching video lectures and taking quizzes and exams are not your thing, there is a wealth of knowledge in the form of free online materials and digital content (including the site on which you are reading this post). For your reference, towards the end of this post I am including links to a variety of blogs and newsletters you may find useful. There is no substitute for ongoing learnings when it comes to maintaining your edge. Certain fields of study mandate continuing education. For example, physicians have CME (Continuing Medical Education) credits they need to earn and report to the regulatory agencies as an ongoing requirement to practice their profession. Supply chain professionals in most organizations don’t have any such mandates, exposing them to the risk of irrelevancy. The motivation to learn in case of most supply chain professionals has to come from within!

 

If you have not watched the highly inspiring and provocative movie Hidden Figures, I encourage you to do so. In this real life story, Dorothy Vaughan, a human computer at NASA in the 1960’s comes to learn about an upcoming installation of IBM 7090 computer that could take her job and that of her coworkers. Instead of resisting change, she takes matters into her own hands by training herself in FORTRAN and helping her co-workers get ramped up, too. In essence, she saw the risk and turned it into an opportunity so that her team became the operators of the new technology!

 

Enough is being written and said about robots, drones, artificial intelligence, and automation and how these technologies are threatening human jobs in supply chain. Faced with the changes happening in the field of SCM in light of these technologies, what would you like to be? Would you like to be the auto mechanic shop that offers a portfolio of services and thrive, or be single threaded like the standalone emission check shop? Would you like to be like Dorothy Vaughan and control your own destiny, or sit, complain, and fade away into irrelevance? The choice is yours… and the time to act is NOW!

 

Some useful links for supply chain professionals

This by no means is an exhaustive list. Please add any other sites you recommend in the comments section of this post.

 

  1. Supply Chain Quarterly by CSCMP: The magazine has some very interesting, emerging trends, and practitioner points of view.
  2. Supply Chain Shaman by Lora Cecere: Lora puts out some great, provocative content. She also touches upon some emerging areas in supply chain such as cognitive computing, blockchain, machine learning and such. Follow her on Linkedin as well.
  3. SCM World’s blogs and newsletters: Subscribe to Kevin O’Marah’s weekly newsletter as well. He brings up quite a few macrolevel factors such as economy, GDP, and such and ties them back to what matters for supply chain.
  4. Wall Street Journal’s daily supply chain and logistics news: Introduced a couple of years ago, it provides a daily digest of key news items relevant to supply chain professionals.
  5. Join the ”supply chain management group(SCM)” on LinkedIn: With close to 200,000 members, individuals post interesting articles they came across or questions, concerns they have around career choices and such to get advice from the broader community.
  6. Supply Chain Brain: A high quality online magazine with articles collated from external sources as well as original content. A good site to bookmark and visit.
  7. SupplyChainDigest: With daily news roundup, weekly newsletters, video interviews, and the fun supply chain caption content, the site contains research and points of views from vendors and practitioners. The editor Dan Gilmore also attends a number of major industry and vendor events and does a good job with trip summaries and such.
  8. Martha Heller’s report: While not exclusively focused on supply chain, Martha’s newsletter keeps you abreast of the IT trends in light of the rise of Cloud platforms and such, interviews with leading CIO’s and such.

The post Career advice: Keeping your edge as a supply chain professional in the face of change! appeared first on The 21st Century Supply Chain.

 

 Inventory management: 5 building blocks for success

 

Originally posted by Dr. Madhav Durbha at http://blog.kinaxis.com/2017/08/career-advice-keeping-edge-supply-chain-professional-face-change/

by Alexa Cheater

inventory management practicesDon’t get caught having your company’s inventory management conversation alone!

 

Making the most of one of your company’s largest assets means bringing together everyone involved from the manufacturing floor to the corner office, and focusing on more than just what’s in your warehouse.

 

Re-evaluating your inventory management practices can help you overcome rising supply chain costs, increasing customer demand and the growing complexity of global operations. It can also help raise profits and reduce risk. Successful inventory management all boils down to a delicate balancing act. You need to have enough of a product to satisfy customer demands, but not so much that it risks becoming obsolete or sinks your business with high carrying costs. As David Thomas, Director of Global Capacity Planning at Ford Motor Company says, inventory is “… dead money.”

 

Your job as an inventory manager is to strike a compromise between conflicting priorities – and almost as importantly, those of your colleagues. Inventory management is a continuous value-driven activity that needs to include all key stakeholders to collaboratively plan, monitor and respond to changes to inventory plans as they happen.

 

The inventory manager acts like an air traffic controller, effectively collaborating with and directing peers in a way that leads to optimized inventory results. And just like an air traffic controller, you don’t always have the required control over key functions – like weather conditions, air speed or even how many flights airlines schedule to arrive and depart.

 

When it comes to inventory management, critical functions like setting safety stock levels, determining order policies and finding ways to reduce lead times and cycles won’t always be in your complete control. So before you set your company’s inventory policies and targets, it’s best to make sure you’ve talked with everyone involved.

 

Here’s a handy checklist of whom you should reach out to in order to get the inventory conversation started.

 

  • Inventory planner: defines ordering policies and minimizes the costs associated with inventory
  • Material planner: manages the detailed plan for all materials
  • Master scheduler: plans the correct amount of each finished good item at the best time
  • Demand planner: represents customer expectations internally that impact network complexity
  • Capacity planner: determines the production requirements needed to meet demand
  • Distribution planner: ensures the availability of stock for the distribution network
  • Customer service representative: communicates commit dates and order information to the customer

Interested in learning more about successful inventory management? Check out our latest eBook, Inventory management: 5 building blocks to success, to find out how to simplify your processes and get the right people involved from the start.

 

The post Why inventory management should be a company-wide conversation appeared first on The 21st Century Supply Chain.

 

 Inventory management: 5 building blocks for success

 

Originally posted by Alexa Cheater at http://blog.kinaxis.com/2017/08/inventory-management-company-wide-conversation/

by Melissa Clow

Automotive PlantThis guest post comes to us from Jim Fulcher, Blogger on the Supply Chain Expert Community.

 

Last week, Toyota and Mazda signed an agreement to enter a business and capital alliance to further strength their partnership. The outcome is expected to either significantly impact an existing automotive supplier network or prompt manufacturers and suppliers to move or begin operations.

 

Specifically, the companies agreed to establish a joint-venture plant which produces vehicles in the U.S., jointly develop technologies for electric vehicles, jointly develop connected-car technology, collaborate on advanced safety technologies, and expand complementary products. As might be expected, it’s news of the joint-venture plant that is attracting attention, especially since the companies announced the plant would have an estimated annual production capacity of approximately 300,000 units, will require a total investment of approximately 1.6 billion U.S. dollars, and will create up to 4,000 jobs.

 

At the new plant, Mazda expects to produce cross-over models which Mazda will introduce to the North American market, and Toyota plans to produce the Corolla for the North American market. By producing vehicles in the U.S., Mazda aims to build a production structure to further grow in North America, allowing the company to more quickly respond to its customers’ needs depending on the region and model. By further increasing its production capacity in the U.S., Toyota will be better positioned to respond to the growing North American market.

 

The Wall Street Journal reports that at least 11 states are in talks to land the manufacturing plant. Besides Texas—Toyota’s new North American headquarters—other states on the companies’ shortlist are Alabama, Florida, Kentucky, Illinois, Indiana, Iowa, Michigan, Mississippi, North Carolina and South Carolina, WSJ reported, citing unnamed sources familiar with the potential investment. Those sources also said the manufacturing facility would require at least 1,000 acres of land.

 

Some auto industry analysts believe Mississippi may have an edge because it’s already home to a Toyota Corolla factory which has been producing the compact car for almost six years. Locating the plant near Toyota’s existing manufacturing site would enable the two companies to source parts from companies nearby that supply components for Corolla production. What’s more, a head-start on a supplier network would be particularly attractive for Mazda, which doesn’t have a U.S. plant.

 

“We do have supply lines in the U.S. that are pretty extensive, particularly for the Corolla,” Scott Vazin, a Toyota spokesman, says in an article on Bloomberg. “We hope these supply lines can be used for this new entity, because there are clearly some efficiencies in it.”

 

Needless to say, other states’ governments are very interested in the possibility of gaining the plant. For instance, Kentucky Governor Matt Bevin told a group of automotive suppliers and industry officials gathered in Lexington on Monday that the state will pursue the proposed factory and mentioned a 1,550-acre site in Glendale, Ky., as a prime location, a USA Today article reports.

 

The [South Carolina] Post and Courier reports that the Toyota-Mazda partnership may very well make its plant-location decision based on labor force and government incentives, which were key factors in recent decisions by Mercedes-Benz Vans and Volvo Cars to build manufacturing plants in the Charleston region. In addition to Volvo and Mercedes-Benz Vans, each of which are building $500 million manufacturing campuses, South Carolina is home to the world’s largest BMW manufacturing site, the article continues. The state’s automotive industry includes more than 400 suppliers and other companies which employ about 66,000 people.

 

One would think that locating a new plant near an existing facility may be the most appropriate decision, especially if there is an opportunity to leverage a pre-existing supplier network, along with a labor force and government incentives. Then again, there is always risk in location-sourcing decisions, such as whether the skilled labor pool is large enough to support continued growth and whether suppliers can accommodate a demand for increased capacity.

 

What are your thoughts on location decisions, and in particular, the potential impact on existing supplier networks? What supply chain risks do you see?

 

The post Plant-location decisions and potential supply chain risk appeared first on The 21st Century Supply Chain.

 

Top 4 capacity planning obstacles

 

Originally posted by Melissa Clow at http://blog.kinaxis.com/2017/08/plant-location-decisions-potential-supply-chain-risk/

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