Current supply chain management systems often lack the tools necessary to quickly and cost effectively react to the constant stream of changes in customer demand, production schedules, and supply deficiencies common in global markets. Relying on different systems with multiple tools is often expensive, time-consuming, and inefficient. The best technology solutions must support true collaboration and execution between manufacturers and supply chain partners to enable seamless performance and increase revenue.
Kanban is at the core of many solutions, including Ultriva. That tells only a small part of the story which is about solutions that enhance the process and automates them across the value chain. Beyond kanban is an execution platform which sets up the pull process from the point of consumption to point of production. It means scheduling the production based on actual demand, real orders or pull signals.
Lean quality concepts constantly reference continuous improvement. After a kaizen event and several months pass, there is often fatigue because the notion of continuously looking for better practices (en route to best-practices) is exhausting.
The Gartner IT Glossary explains that, “Demand forecasting applications incorporate historical and predictive customer demand information into production line and sales quotas.” Sounds simple enough…not really. Matters become more complex when extending the definition to an end-to-end pull process…still trickier when sensing customer demand and synchronizing supply.
Ultriva Director of Business Development Bill Swisher Discusses How He Has Viewed the Re-shoring Trend over the Course of his Career
I have been blessed to have worked for leaders in the manufacturing industry who have been dedicated to helping US manufacturing companies compete in the global marketplace. My introduction to this shared vision was in 1991 working for John Costanza, the "father of flow manufacturing" and founder of JCIT. John helped hundreds of companies transform from being schedule-based and forecast-driven to demand-driven with minimal working capital. Many of those companies were able to compete with their manufacturing based here in the United States, while their competetiors chased cheaper labor overseas.
Remember the 1983 Wendy’s commercial that had an actor that said “Parts is Parts"?
We all knew it wasn’t true for chicken, so why do some people think “parts is parts” for purchased parts in manufacturing?
Well to be frank, most supply chain professionals do understand that purchased parts have many different characteristics that impact how they are managed. At minimum, most materials managers will assign an ABC classification to parts that may impact how they are planned and ordered, what safety stock is carried, how often the parts are cycle counted, what types of PO’s or vendor agreements are used and many other considerations.
While inventory velocity is not a new term, it is always good to begin such topics with a clear and simple definition. Inventory velocity is the speed at which the inventory is cycled in a given period for each item. Inventory velocity is the underlying measure to improve Inventory turns, which accountants define as follows:
Starbucks has found a hit with their seasonal pumpkin spice lattes. I should know. My discriminating and highly opinionated thirteen-year-old daughter Priscilla loves them. She likes the pumpkin spice lattes so much that she convinced a small platoon of girls to join her at the end of the first half day at the Starbucks just a short walk from their middle school.
Companies that use ERP and MRP systems are constantly looking for solutions to increase inventory turns, streamline the procurement process and improve supply chain agility. Many of these companies assume that the only way to reduce cost, lower risk or increase flexibility is to improve forecast accuracy. But various factors including customer demand variations, changing market conditions and questionable sales projections make it exponentially difficult to improve forecasting. One solution that most of these companies often don’t contemplate is moving away from a forecast based or MRP replenishment methodology to Electronic Kanban (eKanban) for high consumption items.
