These strategies worked when manufacturing forecasts were accurate enough to meet market demands and product mix was lower, production volumes were higher and product lifecycles were longer. But beginning in the late 1990s this was no longer the case. As product lifecycles began to shrink and more product mix started moving through manufacturing, forecast-based manufacturing plans were no longer a valid predictor that finished goods inventory would be in synch with customer orders and demand. Unless manufacturers can link all of their strategic initiatives together in real-time, including planning ERP, product lifecycle management (PLM), manufacturing (Six-Sigma, lean) and their extended supply chain, enterprise performance will not achieve the levels of efficiency and profitability needed to survive in today's dynamic market.
Extending the Value of SCP and ERP Systems
SCP and ERP applications promise to use all of the relevant information in the enterprise and produce plans that allow the company to run at its optimum level of performance. However, once real-world market demands and variability are introduced, the plans these systems create are quickly out of date. For example, because of the batch processing nature of these systems, their output can be days or even weeks behind actual market events. This creates a system that is incapable of catching up and is perpetually unable to produce a plan that allows manufacturing to make the exact products for exactly the right customers within the exact timeframe.
Today's enterprise planning systems collect and analyze information based on assuming a high degree of predictability. This approach makes real-time event visibility and execution virtually impossible. Consider a sub-contractor who has a yield problem with a specific product. The status of the supplier's product is collected on a daily basis, but by the time this information arrives back into the manufacturer's master planning system, it could be two days late, or longer.
To further complicate this hypothetical example, imagine that the manufacturer just committed a delivery date to one of its best customers based on the assumed availability of the faulty part from its subcontractor. Changes in manufacturing status can occur by the hour or even the minute. The lack of real-time visibility and the inability to react to these types of common events prevents enterprise planning systems from providing the kind of information manufacturers need to make better business decisions.
Manufacturing's Role in Improving Supply Chain Effectiveness
Companies must have flexible and adaptive supply chains capable of reacting in real-time to changing market dynamics. To truly optimize supply chain performance, applications must be able to see within the four walls of the factory in order to provide manufacturing managers with visibility to supply chain key performance indicators (KPIs). If the channel has too much of product A it makes no sense for manufacturing to continue making more of it, even if directed to do so by the master plan. Without the ability to share real-time market information, a company's lean manufacturing and supply chain initiatives cannot improve overall enterprise performance.
Manufacturing managers are beginning to realize that they must link real-time manufacturing applications that support the dynamically changing engineering bill of materials (eBOM), manufacturing bill of materials (mBOM), product mix, option content and shorter product lifecycles into supply chain execution strategies to improve manufacturing effectiveness. Making supply chain decisions based on real-time information from the shop-floor, and conversely changing product mix based on real-time information from the supply chain, can dramatically improve overall enterprise performance.
Bi-directional Contact with the Manufacturing Floor
Greater visibility to manufacturing data is a critical step toward providing manufacturers with the information needed to make more informed business decisions. But to enable a real-time enterprise, the applications must support bi-directional communication with other enterprise systems and the shop floor. Because this effort is not always straightforward or easy, traditional supply chain applications have historically excluded the manufacturing floor. For example, if the supply chain execution system decides that the priority of a product in manufacturing must change, it needs to pass this change to the manufacturing execution system (MES) to ensure that the operations are being managed in real-time.
Multi-site Collaborative Manufacturing