Leveraging Supply Chain Logistics: Get Physical and Agile

In order to perform on a world-class level, companies must redesign the supply and service chains to meet market demands. Dramatic changes are in order.


In order to perform on a world-class level, companies must redesign the supply and service chains to meet market demands. Dramatic changes are in order.

U.S. manufacturing is facing stiff foreign competition in most markets. There is no question that the pressure is on for U.S. manufacturing to design and build the best quality product in the shortest time possible. Over the decades the United States lost significant world market share in key industries: wide-bodied aircraft, semi-conductors, automobiles, electronics, and steel. The U.S. manufacturing base eroded to offshore competition, and subsequently set the path for companies to rush overseas in search of cheap labor: Mexico, Taiwan, mainland China, etc.

But since the advent of just-in-time (JIT) manufacturing in the United States, lead times have shrunk considerably to levels that have substantially spoiled our customers to expect quick deliveries, not only for commodity products but for specialized and "customerized" products. In the retail garment industry, where retailers used to buy and stock clothing for an entire season, they no longer practice this habit. Instead, they stock minimal quantities at the beginning of the season, and wait to see which of the styles move quickly, then restock those on a JIT basis. If you are a supplier to these outlets, and cannot deliver quickly, you are out of business.

The same holds true for most products, including electronics and fabricated/assembled metal products. A recent survey of customers for a fabricated metal products manufacturer revealed that their highest priorities were reliability, availability and delivery. Price was at the bottom of the list. Quality is a given. Therefore, it is evident that products must be delivered with speed, quality and agility through the supply chain, or suffer the same fate as the automobile and steel industries in the 1980s when market share was lost to corporations with more efficient supply chains.

This type of organizational ability requires an agile supply and service chain, quick to respond to customer needs in the blink of an eye. Some companies have responded to these demands by offering electronic drawings on Web sites, allowing a potential customer to "red-mark" an electronic copy and upload the marked up drawing to the Web site for immediate pricing and delivery. Once the order is received, the drawing can be transmitted to production for next-day manufacture, assembly and shipment. From that point, getting the product delivered within a day or two within the United States is no longer a "nice-to-have," but a necessity, requiring a fast logistical network. The supply and service logistics are a fundamental part of an agile infrastructure that needs to be set in place for a company to perform on a world class level.

The key lies in refocusing and redesigning the supply and service chains — physically and logically — to meet market demands. Taking dramatic steps to become agile is necessary to be a world-class contender in the 21st century.

Part of this supply and service chain agility is virtual in nature: computer servers connected and electronically linking potential customers to sales engineering departments to order entry to production. But the most critical components of the supply and service chain that can slow the process are physical in nature: the distribution network, transportation, plant location and how components are manufactured. It makes little sense to get a "customerized" electronic drawing to the plant quickly if the production lead times are six to eight weeks. If a manufacturing organization is characterized by component plants located away from assembly, scrambled factory flows, poor communications, physical walls, functional walls and colloquial empires, the ability to be responsive is lost, as is recognition of and service to customers.

Getting Physical

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