Data-driven supply chain management can bolster business efficiency and improve customer satisfaction. Data aggregated from across touchpoints in the supply chain can be analyzed to create optimized paths in the supply chain for goods to move through. Supply chain analytics also use data, and data is generated in large amounts at every step in the supply chain. This data needs to be streamlined and transformed before it can be used to yield actionable insights.

In this article, we will look at the role of data in supply chain management and understand how you can use it for your specific business needs.

The role of data in supply chain management

It is all too easy to use IoT sensors at all points of the supply chain to trigger data outputs, which can then be mapped, logged, and streamlined.

Before you can begin using data, of which there’s no shortage, you need to select the right data first. Only when the right sources of data are identified can you begin to make real sense out of the datasets. It’s also important to properly clean and process the data before using it to make critical decisions.

Data can help gauge supply and demand and enable businesses to strike the perfect balance between them both. It can help discover pain points in the supply chain and work towards eliminating them with the right solutions.

Data ultimately provides greater transparency and visibility into supply chain processes for informed decision-making.

Create a strategy for using data for your supply chain

One of the best strategies to use data for supply chain management is to improve collaboration. Consider sharing important data with your partners to reduce risks and vulnerabilities. Businesses can also benefit from cutting-edge technologies like the blockchain to track the movement of goods across sources in the supply chain.

Data can also help make your business more agile. An ideal supply chain that is agile can adapt itself to market dynamics and unpredictable changes. Obviously, it is difficult to achieve agility in everything, so strive to be agile in the most important sectors.

Supply chains have traditionally been linear. Businesses should now consider inculcating circularity in their supply chains. End products can often become raw materials themselves, so customers form an integral part of the supply chain.

Harness the might of data for your supply chain

We live in a world that’s ever-changing. Customers can be unforgiving when it comes to their demands, and businesses constantly need to keep up. Supply chain management is at the heart of business optimization, and it relies to a deep extent on data gathered from across touchpoints. It’s data that keeps the supply chain moving in the right direction.

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Contrary to what many business leaders think, supply chain management using lean is not just for companies that manufacture products, but can be used by any business that seeks to streamline its processes through the elimination of waste and activities which add no value to the customer.

Companies have many areas within the supply chain in which waste can be identified in the form of time, inventory or costs. If a supply chain is to be made leaner, a company needs to look at each part of its supply chain, specifically focusing on the following areas:

Inventory Optimization

When a company stocks too much or too little of a particular item, it can be detrimental to its supply chain. In this case, the company’s service parts supply is more prevalent than its current supply chain. Optimization of inventory is dependent on precise and accurate forcasting of needed items. Lean supply chains require that extensive evaluation and quick identification of sudden market changes are carried out to ensure that shipping, manufaturing or other parts of the supply chain are not adversely affected.

Rapid Fulfillment

As connectivity becomes more widespread, especially with the use of mobile devices, consumers now believe that their voice is powerful, and use this power to demand instant gratification. Clearly, it is not possible to offer products instantly, so the best a company can do is to ensure that all orders are processed quickly, without errors and sent using the fastest means of transport available. Lean supply chains go a step further and combine different methods of transport that allow companies to not only gain a competitive advantage, but also satisfy the needs of the consumer as soon as possible.

Customization

Customization is one of the trickiest aspects of setting up a lean supply chain. This is because, for most people, it would seem more appropriate to view customization as having disparate ERP systems to cater to each distributor, supplier and retailer in the supply chain. In reality, customization is a reference to how unique processes are implemented across the entire supply chain to offer customers what they need.

In addition, any increase in the individual businesses within the chain results in the need to manufacture and repair – a more diverse range of products. A lean service parts supply chain is able to adapt and build customized parts to fill the growing demand.

Sustainability

Sustainability is a key characteristic of a lean supply chain. The supply of fossil fuel left on our planet is finite, which means that supply chains have to find ways to utilize renewable sources of energy. The renewable energy used is dependent on geographic location and how it relates to the supply chain’s underlying aspects. In addition, many governments are now enacting strict environmental and sustainability law and regulations as a way of pushing manufacturers towards the use of renewable forms of energy in the years to come.

Although there are skeptics who think that it is not possible for industry to move to renewable energy, a case in point is the decline in use of incandescent lightbulbs. The process began in manufacturing, and eventually trickled down to homes. Renewable energy will take the same course, and a lean supply chain should anticipate this and prepare for it.

Compliance and Visibility

Perhaps the most significant characteristic of a lean supply chain is its unwavering focus on maintenance of compliance and visibility. When we talk about compliance, we refer to adherence to the applicable local, state or federal regulations that relate to supply chain entities. Lean supply chains feature end-to-end visibility, which allows people to see into the entire process, eliminating potential compliance issues. In essence, this kind of visibility provides a means of self-assessment and a way to monitor the supply chain, leading to greater compliance.

Conclusion

In lean supply chain management, it is necessary for businesses to carefully examine each process within the supply chain in order to isolate areas that waste any resources that can be measured in time, money or raw materials. As a result, the company’s competitiveness will improve and profits will rise.

The post 5 Important Characteristics of the Lean Supply Chain appeared first on 6sigma.

When trends emerge in the world of business and industry, they offer unique insights and provide opportunities to explore customer expectations and work towards their satisfaction. The future requires that the blueprint for supply chain management evolves into a more effective and efficient model. The future of supply chain management involves a lot more than just inventory management and logistics; organizations are being forced to rethink their supply chain strategies since customers now have access to much more information and an unlimited array of choices.

For companies that want to gain the upper hand, it is essential that they take the bold and innovative step of setting up a supply chain based on lean principles. The emerging lean supply chain management trends have given countless businesses the edge they need over their competitors. Here are some key trends in this area.

Advanced Cloud Analytics and Big Data

As data security concerns quickly give way to the need for fast, high-powered and flexible computing, fear of the cloud has started to diminish. With legacy systems continuing to be retired, they are being replaced by cloud-based, on-demand data storage and management solutions. It is a trend that has been driven by the need for more responsive lean supply chains and the necessity of management teams to better grasp the drivers of logistics costs.

Without the help of technology, the above objectives are very difficult to achieve, ensuring that cloud computing gains favor as a quick and inexpensive way for an organization to gain the analytic capacity it needs. In addition, there have been tremendous improvements in data visualization to the point where it is not necessary to have specialized technical competency to understand and structure massive data sets generated by the supply chain processes.

With the foregoing, it is expected that we will continue to see cloud analysis of big data being adopted alongside the development of highly advanced analytics services and technology solutions focused on the lean supply chain.

Penetration of Enterprise Mobility Solutions into Supply Chain Management

In just a few short years, the concept of enterprise mobility has developed in leaps and bounds. Surprisingly, it has been less than 10 years since the first rugged, big-budget mobile devices started to find use within the warehouse environments and logistics operations of large businesses. Even more incredible is the fact that, in less than five years, they have become generally irrelevant, with consumer-level smartphones and tablets providing the same capabilities at a much lower price point.

The move toward people bringing their own devices to work is pervasive and, though it has seen a slower uptake in the field of logistics compared to many other areas of business, the popularity of supply chain management apps for lean organizations is definitely on the rise.

This trend is also driven in a major way by the pressure put on organizations by employees seeking mobile access to a range of business information systems as the awareness of enterprise mobility benefits increases.

Knowledge Is Becoming a Key Resource

To ensure that lean supply chains work as they should, knowledge of all the components, including supply on the upstream and distribution on the downstream, is required. This knowledge is usually in the hands of managers and operators. When any of these individuals leave a company, they take the supply chain knowledge with them.

The value of business knowledge in general, and that of the lean supply chain in particular, is something that many organizations have come to recognize in the last few years. This knowledge has not suddenly become a storable asset it has always been. The thing is that enterprises have begun to understand that there is a need for them to retain this so-called tribal knowledge of the workings of the supply chain and propagate it.

Once again, technology has played a big part in this, by providing knowledge management strategies, knowledge bases, digital repositories, and a host of similar knowledge management tools that help to perpetuate the process of organization-wide memorization.

Conclusion

Financial traders who deal in stocks, commodities and currencies have known for a long time that the trend is their friend. This is because, statistically speaking, their chances of making money increase when they follow the trend. Similarly, a company is more likely to find success with lean by following, rather than bucking, the current major trends in supply chain management.

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Drop shipping involves a retailer making an arrangement with a wholesale distributor to ship their product after a customer has purchased it. The retailer sells it, and the wholesaler distributes it with the retailer’s label on the item’s packaging. This is a mutually advantageous relationship in which both parties benefit. The wholesaler acquires more product sales and new outlets for retail. Similarly, the retailer benefits from the percentage they earn from each sale. A further advantage for the retailer is that they don’t have to concern themselves with the shipping or carrying of inventory. The wholesaler takes care of it all on their behalf. Today, we look at some of the advantages of drop shipping and how Six Sigma ideas can help you make the most of it.

Why is Drop Shipping Beneficial?

Drop shipping is beneficial as it does not require retailers to maintain an inventory. Not does it require them to handle shipping. They can simply buy at wholesale prices and sell directly to the customer at retail prices, with the distributor supplying product information as well as new products. Amazon, Alibaba, and Overstock all use drop shipping in their online operations. Using this method has helped them cultivate a prosperous online business presence with virtually no initial inventory investment required. By having wholesalers source and dispatch the items they sell, Amazon makes substantial revenue to dominate the online market.

When a retailer sets up a website to sell goods, customers buy the goods, paying the retailer plus any shipping costs. For example, a $10 item may necessitate $3 shipping. It’s then up to the retailer to contact the wholesale distributor, informing them of the details regarding the order. The wholesaler can then package and ship the item to the customer using the retailer’s label. The retailer pays the wholesale price of the product(s) and shipping while retaining a 30% profit. This is how sites like Amazon have managed to make billions of dollars.

Going Where No Retailer Has Gone Before

Certain markets regularly become flooded as multiple retailers try to woo customers with competing products. There is a way around this, though, and Amazon is a great example of ingenuity here. Moreover, Amazon has gone a step further than most as they are both retailers for external products and wholesaler for their own-branded goods. But not only that, Amazon is not just a retailer and distributor, but also a manufacturing and technology giant too. The AmazonBasics line of products aims to provide affordable alternatives to a vast array of everyday essentials. Everything from batteries and phone chargers to backpacks and fashion items. Using Six Sigma principles, they have managed to significantly streamline their manufacturing, distribution, and retail processes for their own-branded products. This affords them a substantial market advantage over competing vendors. Why pay more when you can pay less?

Supply Chain Management

Supply chain managers have a lot on their plate. Their work is often externally focused, requiring them to work with outside partners to source goods or parts to produce products. This is integral to the way modern retailing works. For wholesale distributors and delivery companies, supply chain managers source the inventory retailers require, selling it to them so that they can sell it on again to make a profit. Supply chain managers often work for large corporations, particularly online stores and retail giants like Alibaba and Amazon. They negotiate contracts with distributors to maintain inventory on in-demand goods. Using Six Sigma, you can make a real difference to your wholesalers and how you deal with them. This will help improve efficiency and increase revenue for both.

Improving Delivery Businesses with Six Sigma

As a retail supply chain manager, it’s up to you to decide which products you want to sell. Six Sigma uses raw data to make justifiable decisions about process changes. Without a strong plan to follow, you won’t make the most of Six Sigma strategy. Think about the market you are targeting. Make certain that the products you want to sell are in demand. Search engine analytics are a great way to shed light on what is trending, on which products and services people want. The more you know, the more prepared you are to drive successful change. The more data you have, the greater control you have over the value chain, allowing you to predict potential future demand.

It’s important to utilize reliable drop shippers to ensure success. Be wary, though, as there are plenty of charlatans out there masquerading as good drop shippers. If you chance upon a bad egg, get rid of it quickly, as they will cause more problems for you later. A reliable drop shipper demands lots of pertinent information to do their job. This is your golden ticket. You can expect them to ask for references from other suppliers as, remember, they want to benefit from the arrangement just as much as you do. Once you get going, we recommend applying tools like Root Cause Analysis and DMAIC as regular assessments of your business operations.

Additional Six Sigma Improvement Tools

If you keep running into similar problems, like missing product information and shipping alternative or defective items, apply Root Cause Analysis to identify the source of the issue. Similarly, DMAIC can help you take control of inefficiencies to improve your business processes. It can also help you locate sources of variation that lead to defective products using Analysis of Variance. Applying Lean principles will also help eliminate sources of waste such as over-processing and human error. Black Belt-led improvement projects can also actively seek out inefficiencies and replace them with innovative solutions. All these tools and techniques coalesce to make significant improvements across the board. Cultivating a Kaizen culture of continuous improvement is also a beneficial strategy to stay on top of these problems and ensure future success. This not only benefits the customer but, of equal importance, you as well.

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There are at least 3 critical items that allow you to reduce costs and increase service level in warehousing:

1. Tight and Necessary Warehousing Processes
2. What Warehouse Metrics do you have in place to help you determine if your processes are going well or not.
3. You warehouse location is optimal in the first place to meet service level commitments.
4. These together will help you reduce costs in your warehouse.

Single Piece Flow, while an ideal state for a company to be at, is not realistic when it comes to warehousing. Why? Well, there is a fixed cost any time product is transported. This is especially high when the carrier is ship or plane or train; and to amortize this fixed cost it is necessary to fill the carrier to capacity. Consequently, a distributor may consolidate shipments from vendors into large shipments for downstream customers.

Similarly, when shipments are consolidated, then it is easier to receive downstream. Trucks can be scheduled into a limited number of dock doors and so drivers do not have to wait. The results are savings for all involved in the supply chain.

Put another way, suppose there’s a large retailer with thousands of suppliers. Imagine if those suppliers replenished each retail store directly. That scenario would mean that each trailer would leave the supplier mostly empty or Less-than-truckload (LTL). The model might be illustrated as follows:

In the example where each supplier replenishes each store directly, we achieve the following transportation plan:

Vendors v * Stores s = # of direct shipment transportation runs.

And, each direct shipment will likely be less than truckload and the consequent costs will be much higher.

The alternative is to have a consolidation warehouse. In this scenario, we have Vendors or Suppliers that have inbound shipments to a consolidation warehouse, then that warehouse delivers direct to the stores. The result is the following transportation plan:

Vendors v + Stores s = # of direct shipment transportation runs.

In this scenario, the costs incurred is much lower and the shipments will likely be larger with lower fixed costs. This model might be illustrated by the picture below:

So, despite the negative attitude toward inventory and the field of warehousing in general, lean advocates need to understand the warehousing can be strategic and can actually reduce the overall landed costs in the supply chain.

The post Reduce Cost in Warehouse and Increase Service Level: Strategies you Can Employ Today appeared first on 6sigma.

An article in the New York Times explains the reason why manufacturing the iPhone in United States will likely never happen [1. http://nyti.ms/AEHFOY]:

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

The speed and flexibility is breathtaking, the executive said. There’s no American plant that can match that.

The article goes on and explains that it is flexibility and NOT cost that makes China so competitive. With added commentary that the Middle Income in America will continued to get squeezed and eventually disappear, the article is overall very unoptomistic on the prospects of America being able to compete with China. Indeed, the article claims that flexibility of that type is unheard of and virtually impossible in America.

I don’t know about you, but I’m glad that this type of Taylorism and inhumane treatment of people is not allowed via government legislation. True, whenever the government steps in, lead time increases and costs also increase, but sometimes the price for liberty requires added precautions and boundaries that keep people from treating others inhumanely. Freedom has bounds.

In general, there are two things wrong with the New York Times article:

1. It is celebrating slavery Indentured Servants is a more fair term. By claiming that flexibility will, in its current state and in the end, beat out America, the article is inadvertently celebrating slavery. If the price of flexibility for a company like Apple means that people work 14 hours and $17 a day and are woken up in the middle of the night and given a biscuit and tea to then work some more because of a last minute design change from Apple, then China wins on flexibility.
2. Their definition of “flexibility” fails to acknowledge the power of Lean Manufacturing for last minute changes the article describes. In fact, lean manufacturing – properly applied and executed – shines in situations where there are last minute changes, provided the operation had Heijunka in place and was already operating on a single piece flow philosophy. But that approach doesn’t require people waking up in the middle of the night and slavery-like conditions. It requires a well-formed and designed operation built on the tenets of lean manufacturing.

Despite Apple’s Code of Conduct for suppliers, last minute design changes like the article describes will continue to “train” suppliers to treat their people badly. Indeed, Apple will continue to be demanding on the one hand, but making it almost impossible for suppliers to comply to its demands on the other.

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