It's almost a given that things rarely go as planned. Whether it's a camping trip or jobs scheduled to run in a production facility, the best laid plans of campers and manufacturers oft go astray. In the past, a primary culprit on the manufacturing side could be traced to the relationship between planning and execution applications. Planning software gathered data related to such things as vendor lead time required to run a job and the resources required to complete the job. The execution software used this information to take the job from production to delivery. What the two solutions didn't account for were changes that occurred between the time the forecast was created and its completion. "In the real world, deliveries sometimes show up late, machines break down, key people call in sick, and miscommunication happens," says Lori Mitchell-Keller, senior VP of market and technology strategy at supply and demand chain solution vendor Manugistics (Rockville, MD). "Additionally, because planning and execution solutions traditionally operated in batch mode, inventory accuracy was sometimes a problem to predict." For instance, the planning software might confirm 1,000 parts are required to fulfill an order. It determines all parts are available in the warehouse on Monday and proceeds to plan the rest of the job. By Tuesday, however, all the parts could be allocated to another job, and by the time it gets down to running the job, it's not ready to go. The problem is further compounded if engineers already spent hours setting up the machines and customers were promised the job on a short deadline.
SCEM Keeps Supply Chain Planning On Task
Within the last four years, however, there has been a shift toward repair-based planning and forecasting, also known as SCEM (supply chain event management). "SCEM is a solution that coordinates the activities of planning and execution software and incorporates near real-time - and sometimes real-time - planning changes," says Mitchell-Keller. "The goal of SCEM goes beyond alerting the appropriate personnel to unexpected changes in the production plan. The software also helps companies fix the plan without disrupting the entire supply chain." For example, if an unexpected rush job comes into a manufacturing facility, the initial reaction may be to immediately stop production on current jobs, set up the machines to do the rush job, and proceed with the rush job. SCEM, however, helps enterprises take into account the cost of having engineers program machines, the cost of having machines down, the effect of having the other jobs finish later than planned, and other metrics that must be considered before action is taken.
By working with near real-time or real-time data and balancing changes in planning with the impact on the entire supply chain, enterprises can get closer to the goal of running their businesses according to plan. This is one step toward running a more efficient enterprise. The next step is to expand this functionality across the enterprise ... and beyond the enterprise.
Collaborate With Business Partners
Besides getting their planning and forecasting up to speed, enterprises are discovering value in collaborating among their various warehouses and DCs (distribution centers). "Through the use of Internet-enabled collaboration tools, a DC on the West Coast can collaborate with a DC on the East Coast," says Tony Perri, marketing communications manager for North and South America at supply chain software vendor Finmatica (Atlanta). "By creating a single repository - virtual or real - enterprises make better use of their resources and better serve their customers. For example, Wal-Mart may contact a supplier and request 2,000 products right away. Companies that have the capability to see inventory available across all their warehouses can more quickly and efficiently fulfill the request. They can avoid, for instance, sending 200 products from the nearest facility and creating a work order to manufacture more parts, while the required parts sit in a warehouse somewhere."
This kind of collaboration isn't fully realized until it extends beyond the four walls of the enterprise, however, which leads to a more recent trend in business partner collaboration. To achieve this type of collaboration, companies share planning and forecasting information with their business partners, who in turn share their raw material availability, lead times, and other important information with the company. When executed properly, business partner collaboration can eliminate excess inventory and improve in-stock positions, making each of the business partners more profitable. "I know of a large medical supplier that took over some of its customers' forecasting and planning, and helped one of its customers reduce drop shipments by 75% and improve its customer service level by 6%," says Perri.
Some of the factors driving this trend are advances in open standards and improvements in integration tools. "Enterprise application integration [EAI] used to be a very expensive proposition, requiring a lot of IT support," recalls Perri. "Over the last few years, however, there are new Windows-based EAI tools on the market that feature GUIs [graphical user interfaces] and don't require IT specialists to use."
Improvements in EAI tools are further enhanced by improvements in integration standards such as J2EE (Java2 Enterprise Edition) and .NET. Java, an object-oriented programming language, takes advantage of Internet Protocol (IP) and can be used with Windows, UNIX, and Macintosh operating systems. Because Java is supported by major Web browsers, such as Netscape Navigator and Microsoft Internet Explorer, Java-based applications are easily uploaded and downloaded over the Internet.
Successful Collaboration Requires Trust
"Collaboration among business partners isn't impeded by the present state of technology; it's an issue of trust," says Mike Campbell, president and CEO of Demand Management (St. Louis). "Many businesses worry about who is seeing their data and what the potential consequences are if their data is mishandled." (To learn more about how businesses can establish trust, see the article on page 66, "Avoid Supply Chain Disconnect.")
Another challenge enterprises are facing as they attempt to move their data silos to virtual repositories and collaborate with business partners is adapting their thinking processes to the new capabilities these technologies offer. "As we move toward real-time data collaboration, we see a disturbing trend emerging," says Campbell. "Businesses are using their event management information in a reactive mode instead of being proactive. A lot of money is being spent on sending alerts after a problem has been detected, but at the expense of coming up with a good plan in the first place." Campbell relates that a good plan is worth 10,000 reactions.