In this blog, we will discuss how project centric engineered to order products and complex build to order products can benefit from being managed by supply chain software set up entirely in the cloud.
First, lets discuss companies dealing with project centric engineered to order products. A recent article in Industry Week gives a perfect example for this type of situation. The story starts with a European company servicing an oil exploration. The company serviced the exploration by delivering large project specific vales and gears. These projects typically took the company years to complete due to the extremely high potency of constant delays. This forced the company to end up manufacturing gears and having to hold them in stock as the project timeline continues to slip.
Due to the simple nature of these types of projects, components were naturally sources from a long lead-time supply base, which only compounded their problem as the projects went out of sync. As you can start to see, communication seems to be a problem for this company.
The company needed a solution. In order to solve their issues “the company deployed a collaborative cloud-based solution where the replenishment was controlled by a workflow. When the company won a new project, the engineering department designed and developed the specifications. Suppliers were provided with specifications and an expected timeline, and received orders electronically. The suppliers then manufactured their goods based on the specifications within their stated lead time. When they were ready, a flag was set which told their customers that the specified elements were ready to ship.” Problem solved. This solution eliminated both problems of high inventory and lack of space.
Next, lets take a look at how customized cloud based supply chain management software can help manufacturers of complex build to order products. The example given in Industry Week is a large equipment manufacturer with moderate levels of complexity and configurability in their product range. Typical of a large equipment manufacturer, this company had a lot of component parts and a huge supply base. In hopes to drive their production schedules, this company was extremely reliant on their MRP. A team of buyers handled the communication with their robust supply base. “As the MRP ran multiple times in a week, the buyers were overloaded with approving, expediting, deferring and cancelling purchase orders,” says Industry Week.
“If MRP recommendations were not being completed prior to the next MRP run, the consequence was substantial communication issues with the manufacturer’s large supply base. Some of the most obvious ramifications were part shortages and high expediting costs.”
The transaction volume combines with a typical MRP multi-screen interface made it difficult for buyers to complete their task on time. In an effort to collaborate with their supply base they decided to use a cloud-based supply chain solution, acting as a front to end their legacy MRP system. “They set up a Software as a Service (SaaS) portal which was tightly integrated with their legacy MRP. Suppliers got their forecasts, planned releases and firm orders through this portal. They were able to acknowledge the orders, suggest reschedules, ship goods, print standardized bar code labels and track their performance. The buyers, on the other hand, were using the portal to approve POs and deal with MRP exceptions using a very intuitive and friendly user interface. The behind-the-scene integration was keeping the MRP and the cloud-based solutions in sync in real-time.” The company instantly saw results.
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