Supply Chain Management (SCM) is a strategic technique used by businesses across the globe to improve performance. Both manufacturing and service organizations utilize operational performance as an evaluation metric. Implementing SCM effectively is crucial for firms to achieve their performance and growth objectives.
Learn industry best practices on how to Increase Supply Chain Performance below.
The flow of items, information, and money are the three most important factors of supply chain management. The efficiency and profitability of an enterprise are directly proportional to the quality of management of these resources. To Improve the efficiency and productivity of every step in the supply chain it is important to think about the following factors:
· Strategy
· Planning
· Organization
· Management
· Control Activities
Supply Chain Math: Don’t Bring a Knife to a Gunfight
Math and the supply chain go hand and hand. As supply chains grow, increasing complexity will drive companies to look for ways to manage large-scale decision-making. Math is a fact of life for anyone in inventory management and demand forecasting who is hoping to remain competitive in the modern world. Read our article to learn more.
The Supply Chain Blame Game: Top 3 Excuses for Inventory Shortage and Excess
The supply chain has become the blame game for almost any industrial or retail problem. Shortages on lead time variability, bad forecasts, and problems with bad data are facts of life, yet inventory-carrying organizations are often caught by surprise when any of these difficulties arise. So, again, who is to blame for the supply chain chaos? Keep reading this blog and we will try to show you how to prevent product shortages and overstocking.
Call an Audible to Proactively Counter Supply Chain Noise
You know the situation: You work out the best way to manage each inventory item by computing the proper reorder points and replenishment targets, then average demand increases or decreases, or demand volatility changes, or suppliers’ lead times change, or your own costs change.
An Example of Simulation-Based Multiechelon Inventory Optimization
Managing the inventory across multiple facilities arrayed in multiple echelons can be a huge challenge for any company. The complexity arises from the interactions among the echelons, with demands at the lower levels bubbling up and any shortages at the higher levels cascading down.
Fact and Fantasy in Multiechelon Inventory Optimization
For most small-to-medium manufacturers and distributors, single-level or single-echelon inventory optimization is at the cutting edge of logistics practice. Multi-echelon inventory optimization (“MEIO”) involves playing the game at an even higher level and is therefore much less common.
Assessing How Suppliers Influence Your Inventory Costs
Software for inventory optimization is most often used to crank out the analytical results you need to run your day-to-day business, such as Reorder Points (also known as Mins) and Order Quantities. This specialized software helps you find the sweet spot that balances inventory costs against item availability during routine operations.
Recent Posts
The top 3 reasons why your spreadsheet won’t work for optimizing reorder points on spare partsWe often encounter Excel-based reorder point planning methods. In this post, we’ve detailed an approach that a customer used prior to proceeding with Smart. We describe how their spreadsheet worked, the statistical approaches it relied on, the steps planners went through each planning cycle, and their stated motivations for using (and really liking) this internally developed spreadsheet. […]
How to interpret and manipulate forecast results with different forecast methodsThis blog explains how each forecasting model works using time plots of historical and forecast data. It outlines how to go about choosing which model to use. The examples below show the same history, in red, forecasted with each method, in dark green, compared to the Smart-chosen winning method, in light green. […]
Why Spare Parts Tradeoff Curves are Mission-Critical for Parts PlanningWhen managing service parts, you don’t know what will break and when because part failures are random and sudden. As a result, demand patterns are most often extremely intermittent and lack significant trend or seasonal structure. The number of part-by-location combinations is often in the hundreds of thousands, so it’s not feasible to manually review demand for individual parts. Nevertheless, it is much more straightforward to implement a planning and forecasting system to support spare parts planning than you might think. […]
What to do when a statistical forecast doesn’t make senseSometimes a statistical forecast just doesn’t make sense. Every forecaster has been there. They may double-check that the data was input correctly or review the model settings but are still left scratching their head over why the forecast looks very unlike the demand history. When the occasional forecast doesn’t make sense, it can erode confidence in the entire statistical forecasting process. […]
Spare Parts Planning Isn’t as Hard as You ThinkWhen managing service parts, you don’t know what will break and when because part failures are random and sudden. As a result, demand patterns are most often extremely intermittent and lack significant trend or seasonal structure. The number of part-by-location combinations is often in the hundreds of thousands, so it’s not feasible to manually review demand for individual parts. Nevertheless, it is much more straightforward to implement a planning and forecasting system to support spare parts planning than you might think. […]
Inventory Optimization for Manufacturers, Distributors, and MRO
- The top 3 reasons why your spreadsheet won’t work for optimizing reorder points on spare partsWe often encounter Excel-based reorder point planning methods. In this post, we’ve detailed an approach that a customer used prior to proceeding with Smart. We describe how their spreadsheet worked, the statistical approaches it relied on, the steps planners went through each planning cycle, and their stated motivations for using (and really liking) this internally developed spreadsheet. […]
- Why Spare Parts Tradeoff Curves are Mission-Critical for Parts PlanningWhen managing service parts, you don’t know what will break and when because part failures are random and sudden. As a result, demand patterns are most often extremely intermittent and lack significant trend or seasonal structure. The number of part-by-location combinations is often in the hundreds of thousands, so it’s not feasible to manually review demand for individual parts. Nevertheless, it is much more straightforward to implement a planning and forecasting system to support spare parts planning than you might think. […]
- Spare Parts Planning Isn’t as Hard as You ThinkWhen managing service parts, you don’t know what will break and when because part failures are random and sudden. As a result, demand patterns are most often extremely intermittent and lack significant trend or seasonal structure. The number of part-by-location combinations is often in the hundreds of thousands, so it’s not feasible to manually review demand for individual parts. Nevertheless, it is much more straightforward to implement a planning and forecasting system to support spare parts planning than you might think. […]
Service-Level-Driven Planning for Service Parts BusinessesService-Level-Driven Service Parts Planning is a four-step process that extends beyond simplified forecasting and rule-of-thumb safety stocks. It provides service parts planners with data-driven, risk-adjusted decision support. […]
Problem
What is my inventory position today, on any item? Where are we stocking out and how often? What are my delivery times? Why did we ship late? Do we have too much inventory in one location, not enough in another? What are my real supplier lead times? These are obvious, daily questions, and the answers can reveal underlying root causes that when resolved will improve supply chain performance. But these answers are elusive, often because data is locked up in your ERP and only accessible via limited reporting views or spreadsheets. Creating these reports manually using Excel requires data imports, reformatting, and distribution to key stakeholders, wasting countless hours of valuable planning time. This means that getting updated information, when you need it, is not always possible. Not having access to these answers means that problems reveal themselves only after it is too late, and opportunities for improving the inventory planning process are overlooked, further contributing to poor performance.
Solution
Smart Operational Analytics (SOA™) is a native web reporting solution available on Smart’s Inventory Planning and Optimization Platform, Smart IP&O. It provides a fast, easily understood, current perspective on the state of your inventory, its performance against critical metrics, actual supplier lead times, opportunities to rebalance stocks across facilities, and helps you uncover root causes of operational inefficiencies. SOA automatically refreshes as often as you’d like providing all stakeholders immediate, up-to-date reporting on your operations and performance. You’ll have constant visibility of inventory levels, orders, shipments, and supplier performance to ensure you’ll always be in tune with the state of your operations and resolve issues before they become problems. Enhance visibility. Improve responsiveness. Increase your bottom line.
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Smart Operational Analytics
Inventory Analytics
Quantify inventory value
Inventory segmentation
Inventory classification
Trend metrics over time
Operational Performance
Measure service level performance
Measure fill rate performance
Calculate turns, holding & ordering costs
Trend metrics over time
Supplier Insights
Measure supplier performance
Compare supplier lead times
Rank suppliers across available metrics
Trend metrics over time
Who is Operational Analytics for?
Smart Operational Analytics is for executives, planners, and operations professionals who seek to:
- Measure inventory costs and performance in real time.
- Assess and compare Supplier performance.
- Identify root causes of stockouts, excess inventory, and late deliveries.
- share KPI’s such as service levels, turns, costs, and more across the organization.
What questions can Operational Analytics answer?
- What does my inventory look like? By value, count, classification?
- Is my inventory trending up, down, or the same?
- How much of my inventory is overstocked, understocked, or acceptable?
- Can inventory be transferred from overstocked locations to under stocked locations?
- Can existing supplier orders be cancelled or deferred?
- What are my current turns, service levels, and fill rates and how do they trend over time?
- How many out of stock events occurred this week, this month, this quarter?
- How are my suppliers performing, how do they compare?
- What is my supplier lead time and how has it changed over time?
Inventory and supplier reporting for your enterprise
Smart Operational Analytics empowers you to:
- Benchmark service performance and inventory costs.
- Benchmark supplier performance.
- Assess and Classify Inventory by class, stage, and more.
- Share metrics with the organization.