In this continued series, we’re talking about the four must-haves of a successful factory management operation. First up: Total visibility.
At some point in their careers, every manufacturing or supply chain professional has felt like they’re drowning in data coming from disparate sources, business units, regions, sites, and ERP systems. This is one of the biggest challenges of supply chain complexity today, especially with mergers, acquisitions, and globalization–disconnected and inconsistent information sources that lead to inventory buildup, critical shortages, and ultimately missed deliveries and wasted dollars. While complexity will vary from business to business, one simple truth unites them all: You can’t manage what you can’t see.
Achieving total visibility into your inventory means you’ve successfully done these three things:
- Standardized how you define your metrics across sites and systems
- Consolidated and harmonized those into a single source of truth for everybody to work from
- Resolved any inconsistencies and anomalies that will naturally start to show themselves (especially if you’ve adopted a platform to automatically surface these issues)
It means you and your teams have a single trusted place to drive effective and informed decision-making.
Small, medium, and large discrete manufacturers across all industries can benefit from this type of transparency. Whether you’re making airplanes or metal detectors, these best practices will help establish the total visibility needed to manage and optimize inventory where and when it matters:
1. Clearly define your metrics. Above all else, make sure you’re thinking about the metrics in the same way across the organization. For some, this might mean documenting and rolling out the standard definition of KPIs like critical shortages or excess inventory, but you’ll need to decide which are most critical for your operation.
Once you establish the definitions, roll them out to the business and assign people at each of your key sites or business units to be accountable for their standardization throughout their organization.
2. Prioritize trust. As you put everything into one place, you’ll soon realize the information is not as clean as you might have thought. Prioritize building trust in your data.
A clear definition is needed, but often, data is just dirty in the beginning because it hasn’t been consolidated and harmonized before. Spend some time double checking that your data is accurate and encourage your teams to do the same. Technology is available to help automate this otherwise very manual process. Provide tools that enable your teams to prioritize the biggest outliers and focus on the data elements that will have the biggest impact on your business.
3. Start small. If you’re a larger business, begin with just a few sites and metrics, and let those be your guinea pig. Define the metric, establish trust in the underlying data sets, and demonstrate initial success. Try not to solve every KPI or data set at once.
A STORY FROM A GLOBAL INDUSTRIAL MANUFACTURER: You simply can’t manage what you can’t see. One of our largest industrial manufacturing customers struggled with a very old ERP system and a planning tool that didn’t feed back into it–resulting in a dozen sites working in silos to aggregate planning and inventory data into one, messy view. Their teams were in constant firefighting mode to try and avoid shortages and expedite their required parts. The simple consolidation of ERP data in a modern solution transformed their operation. They instantly uncovered the dirty data that hinder their operation, giving sight into the true state of inventory and critical shortages. In a couple of quarters, they drove down their shortages at a few sites by over 75%.
This first step is a big step to optimize your factories, deliver on time, and reduce excess inventory. Once you have visibility into your inventory data and a standard way to surface key KPIs and critical anomalies, you will be able to effectively standardize work across the organization. We talk about that in the next blog.
Looking for the full story? Check out our webinar with IndustryWeek about how the factory is key to manufacturing survival in 2021.
“Digital transformation” can feel very overwhelming at first, especially with myriad technologies today built for every step in the supply chain. Our advice is to start small and prove out the value quickly. For example, if you’re bringing on a new technology, train a few super users first, make sure they’re bought into the value of the solution, and then train the rest of the organization. Or, begin with just one site, prove success there, and expand to the others in your enterprise. When it comes to consolidating information, start with a few metrics and KPIs, validate and build trust with those first, then add more metrics. It’s a marathon, not a sprint.
Read how medical device manufacturer Terumo took a one-bite-at-a-time approach to optimize their inventory process with LeanDNA.
Factory management is managing the execution of inventory management and optimization practices at the factory level. Factories have been left behind in the inventory optimization conversation. Factory management includes the people, processes, and tools used to optimize inventory and execute on time delivery improvements.
The complexity of the market and inventory challenges have outpaced the tools and processes for buyers, planners, and supply chain managers responsible for executing inventory management decisions. Successful factory management of inventory decisions is untapped potential today.
Inventory visibility is the ability for everyone in an organization to see all inventory data and KPIs in one validated place. Perfect inventory visibility is trusted, refreshed daily, and the prime resource from which leaders drive inventory optimization efforts. For some, this means a one-stop shop for data and information across sites, ERP systems, business units, and product lines.
A supply chain inventory visibility system is a technology solution that gives enterprises end-to-end inventory and shortage visibility. Systems like these help standardize information and analysis across the business, surface root causes and data inaccuracies automatically, and help leaders uncover future opportunities to reduce excess inventory and prevent shortages.