How Do I Solve Common Supply Chain Problems?

Since the 1990s, due to the advancement of science and technology and the development of productivity, customer consumption levels have continued to increase, and consumer demand has become increasingly diverse and personalized. Increasing marketization, liberalization and globalization of the economy have made enterprises face more pressure to shorten delivery times, improve product quality, reduce costs and improve services, and competition between enterprises has become increasingly fierce.

Extreme Supply Chain

Right!

Since the 1990s, due to the advancement of science and technology and the development of productivity, the level of customer consumption has continued to increase, and consumer demand has become increasingly diverse and personalized. Increasing marketization, liberalization and globalization of the economy have made enterprises face more pressure to shorten delivery times, improve product quality, reduce costs and improve services, and competition between enterprises has become increasingly fierce.

Chinese name

Extreme Supply Chain

common problem

Inconsistent production and sales

Present background

Market demand

Coupled with the drastic changes in the political, economic and social environment,

The long whip effect is a terrible amplification effect. The most obvious problem is that it leads to a straight rise in corporate inventory and operating costs. In serious cases, it even involves the development of the entire industry chain. According to the latest analysis of corporate cost structure, in some industries like electronics, computers, and automobiles, the total amount of inventory accounts for more than about 50% of the turnover. According to a survey by the US Department of Commerce, an average company spends about 26% of its total inventory management expenses each year. For an electronic manufacturing industry with a turnover of 1 billion, the inventory amount is set at about 50%, which is about 500 million, and 26% of which is about 130 million. So the higher the amount of inventory, the greater the backlog of endless working capital, and the higher the cost of the entire inventory management. The research report also pointed out that if this cost can be reduced, companies can generally bring considerable profits.

Traditional inventory management methods, whether they are safety stocks, reorder points, min-max, MRP, or VMI or CPFR, which have become very popular in recent years, have their limitations in application. The effectiveness of implementation often depends on the Accuracy of "Market Demand Forecast". For industries with less market changes and easier forecasting, such as retail and fast-moving consumer goods, usually have better results. However, for industries with large market changes, such as electronics manufacturing, IT, computers, or high-tech, the performance of these management methods is often very disappointing. One of the main reasons is to effectively grasp the "market demand forecast". It's almost impossible. Therefore, in order to effectively reduce the dependence on the accuracy of forecasting and bring into play the benefits of inventory management, many electronics manufacturing companies focus on accelerating the market's response to "speed" and "speed" to overcome "market uncertainty". Therefore, how to build an ultra-fast supply chain based on networking, platform, and flatness in order to reduce inventory costs and achieve the goal of responding to customer needs in real time will become a topic of great concern in enterprise management. ^[1]

The construction of an extremely fast supply chain is not a one-time project. It requires not only advanced concepts, but also process analysis at each stage and an effective integrated supply chain system to ensure smooth procurement, production, inventory, and delivery.

The core of Extreme Supply Chain Management is to accelerate the response speed of the supply chain by integrating and integrating all aspects of the supply chain. It requires the cooperation of three elements: information collection, planning and guarantee execution, that is, to collect data from various links in the supply chain from time to time, use the collected data to generate various related plans, and finally rely on the company's execution capabilities to ensure the implementation of the plan . At present, domestic companies are most keen on ERP. In fact, this is the initial level of internal integration management. ERP plays the role of data collection, but its focus is on the collection of internal company information, including inventory information, order information, financial information, etc., but for external information collection, B2B, middleware, and other Internet-based Technology platforms and systems.

After the enterprise has the ability to collect information, what needs to be improved next is the ability to use the collected information to generate related plans such as demand planning, production planning, inventory planning, and purchasing planning. Related IT systems to improve the company's planning capabilities include tools such as APS (Advanced Planning and Scheduling), DP (Demand Planning) and SCP (Supply Chain Planning).

With the ability to collect and plan information, the realization of extremely fast supply chain management ultimately requires the effective coordination of execution capabilities. From delivery to production and raw material procurement, all links are interlocked. The weak execution of any link will lead to the backlog of inventory or the lack of materials. The SRM (supplier relationship management) system for the procurement side and the MES (manufacturing execution system) for the manufacturing side are the main IT systems to improve execution capabilities. ^[1]

1. Technology integration issues. In the process of establishing an extremely fast supply chain, the information flow between upstream and downstream enterprises and customers is very important, and the rapid flow of information needs strong technical support. Although many supply chain companies have established their own information processing systems, the lack of system coordination and low technical level are still the bottlenecks that restrict the rapid transfer of information. For the construction of information systems, most companies did not exceed the traditional ERP system, but just tailored according to their own conditions, instead of taking the actual situation of the entire supply chain system as the starting point for construction. As a result, various enterprise systems were incompatible with each other, and the entire supply The chain system is out of balance, and the flow of information is blocked, let alone quickly circulated. At the same time, the normal operation of the supply chain information sharing system requires daily technical maintenance and upgrades, which is often a burden that each supply chain company is unwilling to bear. Once a system problem occurs, each company may suffer severe losses, but it will also be hot. Pot ants can not come up with effective emergency measures to respond to system failure.

2. Organizational structure. The organizational structure of the virtual supply chain has its unique advantages, such as rapid response, high efficiency and low cost, but also has its inherent deficiencies. Management without organization and leadership without authority are its biggest weaknesses. Due to the loose management and the risk-avoiding instinct, each supply chain company will inevitably make some decisions that are in line with its own interests and hinder the normal operation of the entire supply chain. There is no strict management system and formal rules and regulations, and each enterprise has its own policies. As a result, the flow of information is blocked and the supply chain materials are not smooth. Establishing a strict and reasonable organization has become the fundamental guarantee for building a rapid supply chain.

3. Cost and speed issues. When building an extremely fast supply chain, the focus is often on speed, doing everything possible to reduce lead time, and ignoring the cost increase brought by rapid response. Responsiveness comes at a price. If you want to increase the ability to respond to large demand, you must increase production capacity, and the cost of products will increase accordingly, which will lead to a decline in the level of profitability of the supply chain. Each strategy to increase the response capacity will pay additional costs. Of course, while establishing an extremely fast supply chain based on time competition, the integrated management of the supply chain should be strengthened. The integrated management of the supply chain does not refer to some kind of management information system. The management information system is just one of the tools to realize the integration of the supply chain. Integration management now requires a people-centered corporate transformation methodology, emphasizing that fish is taught rather than fish, and how to make good use of these management information systems is the goal of integrated supply chain management. The training of senior management talents is the only option to achieve this goal. Therefore, we should pay attention to the cultivation and use of professional talents while integrating the supply chain. ^[1]