This past summer Chad Smith, a Supply Chain expert and co-founder of the Demand Driven Institute presented a webinar with Ultriva about consumption-based replenishment.  Smith is the co-author of Orlicky’s Material Requirements Planning, third edition (ISBN 978-07-175563-4) who suggested, “Many manufacturers and supply chains face a huge dilemma related to their operational strategy and tactics.  To put it bluntly, the world of ‘push and promote’ is dead.  Gone are the days when a company could use the past to predict the future, build products to that forecast, and have any hope that the market would want what they produced.  Companies that continue in this mode will see continual erosion in their market share and bottom-line performance until that company simply goes out of business.  Additionally, rules and tools that were developed under those conditions must be reexamined and rebuilt for the circumstance of today.”

Smith extends this supposition noting that over the last decade, the nature of the global manufacturing and supply-chain landscape has become much more unstable.  Some of the factors that contribute to this volatility include: Global sourcing and demand, increased outsourcing, shortened product life cycles, shortened customer tolerance times, and more product complexity and customization.  There are also demands for leaner inventories, increasing forecast error, material shortages, product variety, long-lead-time parts or components.  Adding to these volatility variables is a hypersensitive global economic community. 

Ultriva is uniquely positions to address the solutions to operational strategies and tactics in an environment of variability and volatility.   

Ultriva has a built-in architecture that supports each segment of production, storage and replenishment. Instead of MRP’s all or nothing motto in Finished Goods stocking, Ultriva can identify each point where the inventory could be located for optimal performance.

Assume the manufacturing company is assembling products and selling through distribution. The assembling may be driven by multitudes of configuration such that it would impossible to stock all FG SKUs in the distribution. The company’s supply chain consists of Dealers, Regional Distribution Centers (RDC), Global Distribution Centers (GDC), Assembly plants, component plants and global supply base.

Ultriva will allow the company to size the inventory at each tier of this multi-tier supply chain like Inventory to be carried at the dealers, at the RDCs, at the GDCs, at the Assembly plants, at the component plants.  In addition to identifying inventory carried at each tier, Ultriva will allow the company to increase the tiers to minimize the overall inventory. For example at the assembly plant, the operations manager can break the flow in to semi-finished SKUs for customer configurations or kitting locations in front of the semi-finished assembly area. 

What this means is Ultriva can do three things to improve operations:

-          Right size the inventory at each “Position”

-          Reduce the manufacturing cycle time to cut customer lead times

-          Improve material availability to increase customer service levels.

Everyone knows that inventory buffers are a good way to counter demand variability, however the big issue is how do you identify the right mix to buffer? Ultriva provides that insight.