PROCESS
Best practice, science based procedures to optimise your supply chain.
Related ArticlesAll Supply Chain professionals recognise the difficulty in determining the specific, complex and interlinked trade-offs that exist within every Supply Chain.
It sounds obvious; a Supply Chain has to be designed to enable the business to deliver what your customer requires – in terms of service levels, response times, agility and product mix.
So, it is essential to work back from this when re-engineering the Supply Chain or when determining the appropriate parameters within which to operate. There will be compromises:
The optimum Supply Chain is dependent both on your customers’ needs and the physical attributes of your products and your infrastructure, systems and processes.
Sequoia brings our extensive experience, incorporating your data and deploying science to the process design, ensuring trade-offs are evaluated, the impacts elsewhere in the Supply Chain are recognised and the parameters that are used to support the day to day decision making are appropriate. That way you can ensure that customer value is delivered.
Our process and supply chain design work sit alongside some of our proprietary tools and have had major impacts on Supply Chain costs and performance. Focussing on design embeds stability, reduces the need for continual fire-fighting and frees up time to focus on activities that add-value to the business, for example:
- Reducing Supply Variability
- Strategic and medium-term planning
- Event analysis and management, including VMI
- Excellence in NPI
Every question we are asked about Supply Chain processes is different and we take time to understand the subtleties of your particular Supply Chain challenges. Some of the questions we have answered are outlined here – it may spark a question or two about your Supply Chain, or maybe there is something you are wrestling with now. If so, get in touch. We relish a challenge!
How do I decide on Optimal Manufacturing Cycles? Will Cycle Based Scheduling and Fixed Production Cycle Work for Our Business?
Sequoia’s strength is in finding the optimal balance between manufacturing costs and stock holding costs by SKU/Location. The analysis often results in higher asset utilisation and lower production costs. There is often an inventory benefit too: an all-round winner!
We have successfully implemented cycle-based scheduling in multiple FMCG companies, using comprehensive analysis techniques to determine each of the impacts. Quantifying the benefit of moving to cycle based scheduling in terms of capacity, line loading, labour planning and inventory is complex and unique to each business.
The challenges have ranged from dealing with the obsolescence and bacterial challenges within short shelf life diary to premium whiskey manufacturing where sales opportunities need to be balanced against high value inventory.
Why do my Forecasting KPIs drive the wrong behaviour? Forecast Value Added (COV)™
What should my forecast accuracy be? Our honest answer… Who knows?! However, we can tell you whether your forecast process is adding value to your business.
Sequoia have developed a unique methodology that allows you to measure the value that your demand planners or commercial teams are adding to their forecasts…and also where they are not!
Our Forecast Value Add metric reflects the characteristics of each SKU enabling that facet of the challenge to be considered when determining performance. It leads to a realistic assessment of whether the forecasting process is doing a good job – irrespective of the degree of forecast accuracy that is being achieved. Clients find that it is a valuable insight and facilitates the identification of opportunities for improving the forecasting process.
How do I ensure the adjustments made to the Baseline Forecast are realistic?
Whilst the right algorithm can do a good job of baseline forecasting, events such as promotions and new product introductions are of course impossible to predict using an automated approach. Sequoia has developed the decision support tools your team need to make informed forecasts based on the cost & service implications of their decisions.
Forecasts are often biased driven by a persistent over-optimism, usually to hit a performance target. 100% bias in a forecast translates into double the amount of working capital tied up in inventory.
The importance of clear ownership of elements of the forecast, along with an appropriate, well understood process cannot be underestimated. Sequoia’s extensive experience across a range of businesses enables us to provide insight and guidance to ensure that organisational responsibilities are clear and the process is efficient and effective.
Collaboration, both within the business and with trading partners, is key to ensuring Demand Planning is successful. We therefore incorporate coaching in communication and decision making into most of our Demand Planning work.
S&OP Process
Most businesses have an established S&OP processes. The art is to ensure that this is successful: an empowered team, communicating effectively and using an appropriate level of data over the right horizons to make informed decisions.
Our S&OP work ensures decision makers have complete visibility, using dynamic dashboards to fully assess the impact of decisions on both the Commercial and Supply functions.
As effective communication lies at the heart of a successful Sales and Operations Planning process, we also incorporate Management Drives® to help to understand individual and team communication and working styles. This in turn facilitates the identification of practical techniques for enhancing the decision-making process.
How can I deliver a significant working capital reduction without impacting service?
It could be that the focus should be on Forecast Performance and reducing Bias. Or the answer could be to reduce cycle stocks by operating at the lower end of the cost trade-off curve. But most often it is by refining the approach to setting safety stock and overall inventory levels.
Sequoia’s proven methods calculate precision inventory targets to achieve a given service level by SKU/Location which are then fed into the ERP system to be used by the replenishment process. Aspects such as seasonality, variants, obsolescence risk, legal or quarantine times and minimum order quantities are all incorporated into the analysis.
The replenishment process from purchase/manufacture through to end distribution models needs to be fully understood to deliver targets that are appropriate to the ways of working. Often the implementation of our ground-breaking Inventory Management Tool, OnTarget, highlights anomalies in that process and opportunities for improvement through its dynamic user interfaces. Find out more.
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