The “unprecedented” hits to global supply chains keep coming. As demand fluctuates and shortages run rampant, the chain continues to fail at multiple vulnerable links, leaving manufacturers unable to produce, and consumers left holding an empty bag. However, like most bad situations, if you look closely enough, you can see a silver lining.
All of this was the backdrop for an April 2021 IndustryWeek webinar titled, “Going Beyond ‘Status Quo’ Supply Chains.” It featured several subject matter experts, ranging from industry analyst Bob Ferrari, Lean Manufacturing leader and CEO of LeanDNA, Richard Lebovitz, and VP of Global Operations at lngersoll Rand, Paul Aram. These practitioners and visionaries shared a wealth of real-world insight on the next big thing in execution-based inventory management: The emerging Lean-hybrid approach.
In this case, the glimmer of positivity comes from all of the gaping cracks exposed in supply chains. In particular, an acknowledgement that the “right way” to manage inventory—the decades old status quo that worked in simpler times before globalization, mass customization, and multi-tiered supply chains—no longer works.
Bob Ferrari set the stage by encapsulating the current environment that manufacturers find themselves in.
The Status Quo: Excel Runs Production
In the past, when products were often make-to-stock, supply chains were flat, suppliers were regionalized, and factories were often disconnected islands of information. Data was more sparse (often analog and visual on kanban boards), and demand was more level, making it easier to rely on forecasted demand. For the most part, shortages and excess inventory could be avoided. But those days were already over when the pandemic hit and further illuminated the need to change. As customer-centricity becomes a corporate guiding principle and products become significantly more customized, the volume of make-to-order products grows proportionally—all compounded by the exponentially more complex, globally connected supply chain and its sea of data. Manufacturers tried to juggle push and pull methods, but often ended up relying too heavily on demand planning and forecasting (Note: Forecasts tend to be wrong), and underestimated the difficulty of normalizing and prioritizing ERP/MRP data. Spreadsheets became the de facto “tool.” Now, the dirty little secret in manufacturing? ERP stands for “Excel Runs Production.”
Manufacturers tried to juggle push and pull methods, but often ended up relying too heavily on demand planning and forecasting (Note: Forecasts tend to be wrong), and underestimated the difficulty of normalizing and prioritizing ERP/MRP data. Spreadsheets became the de facto “tool.” Now, the dirty little secret in manufacturing? ERP stands for “Excel Runs Production.”
Richard Lebovitz then summed up the challenges with this status quo.
The critical role of the factory, Lebovitz described, is heightened when the unpredicted events happen.
Paul Aram wrapped up the webinar by explaining exactly how he built a Lean-hybrid approach in his factories at Ingersoll Rand to stay agile and keep customers happy.
Paul, Bob, and Richard covered much more in the session, which is available in its entirety here. But the big takeaway (no surprise) is “what got us here in manufacturing won’t get us there.” The factory can be the strongest link in the supply chain, but the status quo of juggling push and pull with spreadsheets as exposed during our perfect supply chain storm must change; it isn’t resilient, doesn’t scale, and will always lead to excess inventory and critical shortages (aka unhappy CFOs or unhappy customers). Instead, the hybrid approach that thoughtfully and seamlessly interweaves the best of lean thinking with modern MRP management is the light at the end of a long string of dark days.
To learn more about the processes and tools used by Paul and his team at Ingersoll Rand, reach out to one of our experts to chat.