Omnichannel has become the buzzword of the moment for retail supply chains. 

Recently, four hundred retail CEOs were surveyed by PwC, for a study commissioned by JDA Software. The survey is titled “Retail’s New Imperative: Supply Chain Optimization as a Growth Strategy.” The study revealed a large number of these retail CEOs reporting that their supply chains were not optimized to support the new omnichannel. 

Warehouse’s inventory at an all-time high, choosing a location for storage is tougher than ever. Demand for space is causing prices to go up, and manufacturers want to make sure they are still getting top notch service, especially when expenditures are higher than previous levels.  DC Velocity reported U.S. warehousing costs spiked in 2013 as retailers, incented by low interest rates and inventory carrying

Third party logistics providers (3PL) offer a variety of services, but the primary function of these organizations can be summarized as providing transportation, warehousing, and management of inventory for another company. Some companies handle inventory on consignment. Consignment stock is often defined as inventory owned by one party (in this case the “Supplier”), but held by another (the “3PL”). This risk rests with the first party, and do not get paid until the goods are sold (in this case the third player, the manufacturing “Company”). 

Manufacturing companies must uncover opportunities to reduce inventory to stay competitive. One way to reduce excess inventory (without the risk of stocking-out of important parts) is to determine an optimal replenishment cycle. This can be done by identifying which parts would benefit from an eKanban loop replenishment system.

Recently, Modern Materials Handling magazine published a case study of a pet supply company struggling with inventory. Warehouse workers had to physically bring the inventory to a computer to scan it, then send it on to the destination.  The process was “cumbersome and inefficient.” The problem was solved by adding mobile workstations with scanning capabilities. There was a definite, measureable ROI, productivity increased by 40%, with the added benefit of freeing up workers. Warehouse employees now dedicate less time to product movement.  Workers also use the mobile carts as label makers for pallets to save time instead of walking across the warehouse to the workstation to print. 

Often overlooked in lean manufacturing initiatives is the supply chain; in particular supplier replenishment. Global multi-national manufacturers can use supplier replenishment as the ultimate tool in lean manufacturing best-practices. 

Nowadays most companies are asking their suppliers to hold inventory from which they can pull at a moment’s notice. In my fifteen years of service as a Senior Application Consultant for Ultriva, I have noticed a trend of towards Consignment/Vendor Managed Inventories/Supplier Owned Managed inventories. The reality is whether the company carries the inventory or the supplier carries the inventory, inventory is an inventory.  At the end of the day manufacturing companies are committed to acquiring this inventory. 

Last week we discussed the first requirement on why a collaborative transactional portal is a must have for establishing End to End (E2E) pull replenishment. Feel free to refer to the original blog that described E2E Pull and all the requirements.

Recently when I was walking through raw material warehouse at a manufacturing facility, I was reminded of the famous verse from “The Rime of Ancient Mariner”, which I had read over 30 years back;

Water, water, everywhere,
And all the boards did shrink;
Water, water, ever where,
Nor any drop to drink

I could metaphorically relate this to the filling of warehouses with bloated inventory while encountering production stoppages due to non-availability of parts.

Material Handling Industry (MHI), the leading trade association for the material handling, logistics and supply chain industry, recently reported that when it comes to supply chain risk, firms need to peel the onion past their tier-one suppliers to get the complete picture. Referencing a recent study by Resilinc Corp., leading global supply chains have become dependent on the same small group of sub-tier suppliers – concentrating risk and increasing the potential for supply chain disruptions.