During the past few years, companies have focused on supply chain improvements with initiatives centered on operational excellence and cost cutting. But have they worked?
In today’s on-demand environment, company's are facing growing challenges around market volatility, costs, long lead times and unpredictable forecasts. Your inventory management decisions can make or break your firm’s financial bottom line. LeanDNA's Lean Procurement solutions lets your company meet these daily challenges and optimize working capital efficiency.
The challenges of Supply Chain Management in Today's Complex Business Environment
In today’s volatile market, forecast accuracy is almost non-existent. Manufacturing operations are more global and complex. Customers demand more but want to pay less.
Companies expect their procurement and supply chain organizations to provide purchased materials and assemblies on time, at the lowest costs, and highest quality to meet their customer demands. But Procurement staff often lack the processes and visibility to drive the efficiencies required in today's competitive environment. The lack of analytical tools and Lean Best Practices often results in the procurement of too much of what is not needed and critical shortages on those items needed today. The end results is excess inventories with missed deliveries.
Purchasing organizations cannot afford long material lead-times. And if suppliers cannot deliver consistently on time, they will be replaced. Today’s “pull” supply chain replenishment processes are better than traditional procurement practices, but they are still not optimized, lack visibility, lack tools for collaboration and are not leveraging the best practices expected of Lean principles.
What are the financial and business objectives for your company? Inventory management and supply chain decisions are becoming a critical component in the financial performance of your company.
The Objective: A Lean Procurement System
Today, the buyer’s responsibilities have changed dramatically. Instead of simply finding the right materials and services at the best price, buyers must play a critical part in improving the flow of information and materials throughout the supply chain. Through these demand-driven supply chains, their goals are to accomplish the following:
1. Prevent Shortages
Supply chain deliveries must be flexible in order to meet the changing demands of the demand driven enterprise. In addition to the sheer cost of disrupting production, critical shortages can damage existing customer relationships and significantly weaken market credibility.
2. Reduce Inventory Investment
Companies are under increasing pressure to reduce inventory levels. The key is to obtain the right mix of products based on a strategic analysis of your business characteristics. In the demand-driven enterprise, inventories should adapt with the changes in customer demand in a way that minimizes inventory while maximizing service levels.
Applying a strategy approach to inventory management will yield savings through reduced carrying costs, lower operational costs, and reduced obsolescence.
3. Reduce Procurement Lead Times and Optimize Buying Quantity
Reducing lead-time is always a goal, but where do you start ? What supplier ? LeanDNA provides solutions to identify those vendors where lead-time reduction and MOQ optimization can have the largest impact on your bottom line. LeanDNA allows companies to take a data-driven approach in implementing their supplier development strategy.
4. Implement Lean Best Practices and Systems
The old way of doing business consists of buyers managing MRP forecasts and communicating with suppliers via phone, fax and e-mail. Spreadsheets and manual reports are passed between the suppliers. These manual processes are slow and cumbersome. They cannot support today’s on-demand enterprises.
Supply chain procurement professionals spend too much time “managing the hot list” and reacting to short-term issues. They lack the data visibility to manage their operations strategically. They cannot seem to find the time to develop strategic plan with suppliers and deploy improved lean processes that are focused on eliminating the root cause of thier procurement problems.
The Solution: Lean Procurement through LeanDNA
LeanDNA combines Lean Procurement best practices with cloud computing technology to drive a new era in supply chain improvement. The goals are as follows:
Remove the obstacles to the free flow of information to your supply chain
Create real-time visibility into inventory opportunities
Cross-site visibility to drive inventory reductions and assure consistent Purchasing Master Data in ERP systems.
Transition your supply chain from “push” to “pull” consumption based replenishment models such as min-max and kanban
Provide your buyers and planners with Lean Business Intelligence tools to identify opportunities and issues in real-time
Identify Suppliers for joint improvement workshops to reduce long lead-times for critical materials and assemblies
LeanDNA Lean Procurement Solution
Lean procurement is based on three core principles that are derived from demand-driven manufacturing and supply chain initiatives:
1. Supply Chain Tune-up of ERP Master Data
LeanDNA will analyze existing ERP Purchasing Data and Policies to identify short term financial opportunities that can be realized in days or weeks. This includes:
ERP Order Policies
ABC Classification based on Product-Quantity Analysis
MOQ/Lot Size Optimization
Top 20 Opportunity review for inventory reduction
Projected shortage reporting and analysis
Analysis of current Pull system trigger levels and bin sizes
The result of the tune-up is an identification of clean short-term opportunities with an execution plan and completion timetable.
LeanDNA provides analytics and business intelligence software to optimize your “PULL” supply chain strategies and enhance collaboration with your planners, buyers and suppliers. Real-time visibility driven by lean procurement analytics will give your team the tools they need to execute.
The LeanDNA Cloud Platform™ connects people – buyers, suppliers and partners – directly to their “PULL” business processes anytime, anywhere. LeanDNA allows planners, buyers and suppliers to easily identify issues and quickly collaborate and react.
Projected Critical Parts Shortages: Working to resolve CURRENT shortages means your business is already impacted. The goal is to predict potential shortages in a way that allows planners and buyers to respond.
Min-Max Dashboards: Planner / Buyers can easily monitor critical issues on min-max (re-order point) components. The can view by plant, buy supplier or buyer item.
Kanban Alerts
3. Develop a flexible and responsive supply chain
Deploy a more responsive supply chain. When customer demand unexpectedly goes up, your supply chain can meet that increase. When forecasts go down you are not left with excessive levels of inventory:
Quickly identify and prioritize threats to supply chain cost or performance
Reduce the long lead-times normally associated with complex procurement
Proactively manage potential shortages through Lean Business Intelligence analytics
Collaborate with planners, buyers and suppliers through LeanDNA's Cloud Platform
Real-time performance management based on Lean Procurement best practives
4. Eliminate waste in the procurement process
Without lean procurement, buyers spend the majority of their time on non-strategic processes like tracking down order status, expedite/de-expedite the same part from week-to-week, manual changing improper order quantities, and maintaining “private” spreadsheets for analysis. As a result, they lack the time to focus on realizing opportunities to create mutual benefits through supplier negotiations and process efficiencies.
