Managing Your Supply Chain on the Rebound

In uncertain economic times, farsighted executives make the investments that will prepare their organizations to take full advantage of unexpected opportunities. Their readiness to take calculated risks assures the future success of their companies.


net.com said it needed to improve management of its order fulfillment process, and wanted to use a solution that would operate seamlessly within its Oracle enterprise resource planning (ERP) environment. At the time, the company was managing customer commitments manually based on a standard 20-day lead time. With these manual processes, employees spent most of their time expediting orders and responding to events, rather than anticipating supply and demand.

In an intense effort to meet demand at the end of the quarter, net.com sought a quick solution that would apply business rules that matched its corporate goals and objectives, while decreasing fulfillment lead times and setting balanced inventory levels. After considerable research, net.com chose the processes and operations supported by one supply chain software provider.

With 14 weeks to complete implementation and integration within the Oracle environment, net.com created a high-velocity supply and demand chain through real-time visibility, collaboration and execution. With interactive, what-if analysis, net.com said it is now able to identify potential shortages or delays and determine what orders to ship based on the business objectives and priorities the company has set. The result is that net.com has experienced improved results in customer service, order lead times and on-time delivery.

Taking Advantage of Supply and Demand Chain Visibility

Instead of managing orders with a standard 20-day lead time, today net.com provides promise dates based on the availability of materials and actual demand. Orders and supply data are pulled from net.com's ERP system into its supply chain software, and promise dates are computed using allocation rules for each customer as well as the best approach for the business as a whole.

net.com's operations scheduling team can perform what-if analysis to determine if required parts will be available by the commitment date. The prioritized orders then are fed back into the ERP system for shipment processing. net.com employees can review and revise allocations based on demand and supply fluctuations and share demand information more efficiently with contract manufacturers.

Specifically, when faced with a shortage, net.com uses its supply chain software to identify the highest margin customer orders that can be shipped with the available supply. Or the company applies a business rule to first ship the strategic customer orders or to maximize customer satisfaction or some combination of the two, running what-if scenarios to project the impact on revenue and margin.

Collaboration among various departments within the organization and with partners also has increased. The processes and data shared between sales, planning and operations have been made much more transparent. Now these groups have a much clearer understanding of what they are all doing at any given moment.

net.com also has been able to re-engineer its processes with contract manufacturing partners to share demand and other valuable information in real-time. Employees now are spending more time thinking strategically instead of reacting tactically. Efficiency has improved as a result, reducing the order cycle time and increasing the number of orders per quarter.

"Our goal was to maximize our potential. We had to focus on process change and get more involved in sales," said Jeff Range, net.com vice president of operations. "With ERP and supply chain software, we are meeting customer demand while maximizing revenues and margins."

The Results

net.com said it has experienced impressive results with significant improvements in customer service. The company's new supply chain software applies weights for orders based on business rules and contracts, enabling net.com to make solid commitments to customers on product information and delivery times.

The company has improved order-to-delivery by customer requested date by 58 percent and cut book-to-ship lead times by 25 percent. On-time delivery has increased from 60 percent up to almost 90 percent, which accelerated revenue 60 percent at order line level within the first month.

Conclusion

Supply chain software includes global inventory visibility and intelligent order fulfillment applications. Its primary advantage for business is the ability to rapidly respond to fluctuations in demand and supply as they occur.

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