Many companies have Supply Chains that impact nearly every organization within their company. In order for these Supply Chains to run effectively, they require a rich understanding of the organizations they serve as well as the technology each uses. Well-orchestrated supply chains offer huge rewards when focusing on demand management through the integration of their own processes with those of their internal customers to gain visibility into current and future needs.
When it comes to Supply Chain, there is no one at Cohesive we look to more than Joe Jordan. A seasoned practice lead and one of our Supply Chain SMEs, Joe has over 35 years of experience in the manufacturing, and the energy and utility industries. Joe is often called upon for his extensive background in implementing IBM Maximo Asset Management for Supply Chain at large asset-intensive organizations.
For this month’s Employee spotlight, we sat down with Joe to chat about the current state of supply chain management and took a hard look at a few of the related processes.
Where do most supply chain managers spend their time? I see many spending their time on managing vendor backlogs and expediting purchase orders. However, it would be better if purchasing managers were more focused on sourcing. A dollar saved is a dollar earned. Sourcing is locating sources for the goods and services your company needs. It's a subsection of the procurement process. While final procurement is concerned with the logistics of acquiring materials, sourcing focuses on finding the best and least-expensive suppliers for those goods.
Inventory is a balancing act and the most considerable expense in the supply chain. Do you have suggestions on how companies can more carefully monitor their inventory to improve efficiencies while managing risk? We suggest analyzing your inventory movements by storeroom and making sure slow or non-moving inventories are identified. Once the slow or non-moving items are known, make sure the items can be consumed in another storeroom within the business before selling them or writing them off as scrap. Next, fine-tune your order points, order quantities, safety stock and lead times to meet your average demand. Often, non-moving items can be the result of decommissioning or disposing of equipment. If decommissioning or disposing of equipment is found to be the case, selling the items on the open market may be an option. Always double check this option before you write them off as scrap.
Let's take a more in-depth look at inventory. It is commonly made up of three classes. Class A items typically make up 15 to 25 percent of stock but 70 to 80 percent of inventory value (fast moving items). Class B items are often 30 to 50 percent of your stock at 40 to 60 percent of your inventory value (slower moving items). Class C items might be 70 percent of stock items, but hopefully only 15 to 20 percent of the inventory value (slow moving, critical, spare, insurance items). Analyzing your inventory can help manage all items including critical, spare or insurance stock for your business. These slow-moving items often make up a sizable percentage of your inventory.
You may very well know that reducing items is a huge challenge. Class A items, the items that are quickly moving can be managed as “Just-in-Time Inventory,” make these non-stock demand only items or consignment. This can help reduce your inventory dollars quickly and keep order fill rates under control. All things considered, always remember to do everything possible to reduce the class C items, as they are slow movers and can haunt you for a long time.
There is a lot of chatter now about how managers can audit their deliveries, inventory accuracy and their daily counts. Any thoughts on how a company can initiate the auditing process? The key to auditing inventory is good data management. This means clean master data, accurate cycle counts, and visibility of material requirement and vendor delivery dates. Utilizing a performance management and metrics tool like our Propel solution for auditing can prove to be invaluable. As an example, the metrics in Propel can help inventory leaders forecast long-term needs by federating information from the demand-side of the business with available inventory to accurately prepare and satisfy that future demand. This takes a tremendous amount of pressure off Supply Chain in the form of last-minute high priority buying while reducing the risks associated with a lack of materials needed to satisfy demand. Regularly analyzing and correlating past usage with near-term demand and lookaheads help ensure accurate predictions. Smart forecasting is a result every inventory manager desires, but it is a struggle without the right solution.
IBM Maximo for Supply Chain Management and Process Alignment
Maximo has been enhanced by materials management to purchasing, receiving and invoicing. The overall effect of these enhancements is that workflows are streamlined, and usability is significantly improved.
It is a delicate balancing act to align supply chains with respective business units within a centralized supply chain organization. Aligned supply chains enable a consistent focus on driving value, reducing risk, and improving supplier relations.
Contact our team today to learn how we can help you align your technology AND your processes to reach higher operational excellence.
Learn more about Maximo for Supply Chain Management here.