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For years, supply chains were engineered to be lean. Reducing cost was the primary objective, and most operational decisionsfrom sourcing to fulfillmentreflected that mindset. Lean models alone are no longer sufficient. Procurement is another area seeing change. Metrics must reflect the new priorities.
Introduction Gardner, (1954) and Huntzinger, (2007) define Purchase price variance (PPV) as a metric used to measure the effectiveness of cost-saving efforts by calculating the difference between the planned cost (standard pricing) allocated for purchasing activities and the actual cost incurred.
Data-driven forecasting improves purchasing and cuts storage expenses. Embrace Lean Inventory Practices and Warehouse Layout Optimization Adopting lean inventory principles and and optimizing warehouse operations reduces carrying costs, minimizes waste from obsolescence or spoilage, and frees up valuable warehouse space.
Over the years, working for and with numerous manufacturing companies, I’ve seen many supply chain practices that cost companies money. Reason #9 Relentless pursuit of one supply chain metric at the expense of other metrics. Why do companies focus on reducing a specific metric? by John Westerveld. Sound ridiculous?
The supply chain is complex non-linear system that is easily thrown out of balance through a focus on functional metrics. They rock back and forth in improving singular metrics but struggle to improve a portfolio of growth, margin, inventory performance, and asset utilization. The inevitable is business disruption. Table 1.
Supply chain efficiency is the cornerstone of success and involves the effective management of processes, resources, and technologies from procurement to production, transportation to warehousing. In the automotive sector, manufacturers are simultaneously reducing inventory costs and delivery times.
Today I will discuss how a company can sustain a lean culture once they have implemented lean practices in order to achieve continuous improvement. Your company has started the lean journey, but how do you sustain it? How can we Continuously Improve Daily and Sustain a Lean Culture and Behavior? Why are we doing this?
Customer expectations of reliable quality and rapid delivery forces today’s manufacturers to either shorten cycle times or lose business. Lean systems have provided a formidable operating strategy for leaders determined to achieve and maintain optimal operational systems and customer satisfaction levels.
Keeping track of all your moving parts in manufacturing is a tall order. That’s where manufacturing inventory management software comes in. We’re talking real-time tracking, automated purchasing, and a whole lot less stress. Its your single source of truth for inventory, constantly updated and readily available.
As supply chain disruptions continue the procurement function should adapt to improve transparency, build collaborative relationships, and ensure sustainable sourcing practices, resulting in a stronger, more resilient supply chain with Cloud ERP for manufacturing. Strategic sourcing with Cloud ERP.
Management practices such as leanmanufacturing and just-in-time inventory management, along with globalization, have made tremendous impact on cost and service, but have accentuated risk. Metrics such as lead-times, forecast accuracy, inventory levels, and service are used to measure operational risks. are most exposed to risk?
Tomorrow, I have a call with a manufacturing company to answer the question, “ What is the most important concept in the book?” Joe works for Filipe, and his boss believes that supply chain excellence can best be typified by lean. It is for this reason, that I believe that the traditional SCOR Model metrics are problematic.
Whereas retailers once purchased merchandise largely based on the gut instinct of trend-savvy buyers and the push of whatever manufacturers tried to sell them, nowadays, they need to take a much more customer-focused and data-centered approach. What is Lean Retail? The impact of lean retail on supply chain management.
What are Total Manufacturing Costs? Your total manufacturing costs are essentially an expense analysis that calculates how each of your company’s departments contributed to producing a finalized product. This looks at all stages of the manufacturing process from raw materials to work-in-progress to final result.
Leanmanufacturing involves 13 core principles – many more than the ‘five principles’ that are often associated with this popular manufacturing system. The lean concept originally came from manufacturing, but it has gained in popularity and is now used widely across different industries and sectors.
3 Key Metrics for Measuring Supply Chain Performance Beyond Cost Reduction. Inventory measurement is critical and it is money after all in that it took a capital expense to procure. 10 Soft Metric Considerations in Measuring Supply Chain Performance. The goal is to keep inventory levels at a minimum to meet customer needs.
The Focus Inside-out Supported by Functional Metrics. Functional excellence drove regional supply chain performance in the 1990s, but a focus on functional metrics in large, global and complex supply chains over the last two decades threw the supply chain out of balance. Lean, Blockchain, Industry 4.0, Maturity Model.
Automation is at the center of modern manufacturing businesses, with companies exploring the possibilities of artificial intelligence in improving workflows and profitability. Industrial engineers incorporate these technologies in designing and fabricating advanced manufacturing systems. How AI Is Changing the Manufacturing Industry.
Medical Device Manufacturer. We have used Lean process systems and swim-laned ourselves to death. The most common reporting relationship in the supplier organization is to a leader of supply (focus on logistics, distribution, materials sourcing and customer service). The focus has been on sourcing and managed costs.
Conversely, a student who quickly grasps procurement strategies can be challenged with advanced case studies and leadership projects. For example, a student might work on a project that involves analyzing sales data to predict future product demand, thereby learning how to adjust procurement strategies accordingly.
To achieve this growth, successful manufacturers today are relying on key performance metrics and automating many aspects of their data management processes to gain valuable business insights that can be used to meet their organizations’ performance goals. The Basics of Manufacturing KPIs. Every KPI needs a clearly defined goal.
Lean is a new way of doing business. For shippers, culture and behavior have to change to apply Lean Transportation thinking. Lean thinking focuses on the elimination of all waste (where waste is defined as any non-value added process) and bringing value to the customer , beyond the customer’s expectations. Right Service.
In this final blog on agility and why you should consider becoming an agilist to survive the new completion (of the continuous mention) of the application of enterprise decision management systems (EDMS) from Taylor and Raden cited in the first blog, I turn to the metric of agility and a new ROI metric of decision yield.
It is critical to monitor inventory effectiveness using five key metrics: Expedited orders, inventory turns, obsolete inventory, safety stock and stockouts. Whether you measure purchase orders or customer orders—and you should do both—high numbers indicate problems in your inventory planning and flow.
Manufacturers and distributors experienced huge supply chain disruptions due to the pandemic which exposed many vulnerabilities and tested the resilience of supply chain leaders globally. Manufacturing KPIs. can be measured to define this metric.
Abby and I are writing an e-book on Supply Chain Metrics that Matter. Likewise, in today’s supply chain environment, I find that supply chain leaders favor a single function of logistics, manufacturing or sourcing. Companies that are not looking holistically at metrics are stuck. Measurement. What do I mean?
While Contract Pharma & BioPharma manufacturers continue to experience an increase in demand for more projects, new challenges are emerging from nearly every angle including new regulatory and quality requirements, workforce shortages and of course, supply chain disruptions. is likely to reach 2.1
Supply chain organizations within the automotive supplier industry contribute to manufacturing excellence in many ways, including quality, cost, and delivery to their OEM and subsystem customer base. From a measurement perspective the key trending metrics at a high level include: Supplier on time delivery.
With the purchase of i2 by JDA, and Logictools by IBM, manufacturing companies serious about network design started looking for a company, with a well-established community, that was more serious about network design. I smiled as I began to present the story of the “Metrics that Matter.” Value-based Analysis.
Cash-to-Cash Metrics. Cash-to-cash is a compound metric: (Days of Receivables+Days of Inventory)-Days of Payables=Cash Conversion Cycle. While touted as a digital procurement provider, it took the Company nine days to onboard me as a vendor, and two weeks to process a Purchase Order. In times of uncertainty, cash is king.
Top management knows that lean can add value , but many still haven’t moved past the initial education stage into full-scale lean supply chain implementation. One reason may be that they haven’t made the paradigm shift as to how to implement lean. These metrics should be reviewed frequently to ensure supply chain success.
In the first post our long tme guest blogger, Chuck Intrieri of The Lean Supply Chai n, gave us 5 core metrics to evaluate supplier performance using supplier quality management and a 4 step process to execute. Review of SQM Metrics and Issues Across 5 Core Industries. #1: Trend Metrics Collected per Site. Consumer Goods.
Editor’s Note: This is the first in a three-part series on Supplier Quality Management processes and how to evaluate your suppliers from Chuck Intrieri of The Lean Supply Chain. The next posts in the series will break down metrics and issues to consider in SQM by industry and conclude with a case study on the application of SQM.
When the world changes around you, and when it changes against you, what used to be a tailwind is now a headwind — you need to lean into that and figure out what to do because complaining isn’t a strategy.”. To improve your capability to manage demand shifts and customer expectations it is mandatory to have dual sourcing.
Bottom Line: Manufacturers are reaching a new level of results in 2018 because they have clearer, more actionable insights based on real-time manufacturing and quality metrics than ever before. Quality Metrics Enable Customer-Driven Manufacturing Networks. What Success Looks Like In A Customer-Driven Manufacturer.
Lockdown of cities and manufacturing plants have significantly impacted many industries’ supply chains. The philosophy of lean, triggers us to look for the “Ideal Way”. Arguably, it is criticised that acting too lean can cause breakdowns in crisis. fashion, automotive, spare parts, airlines). Customer Centricity.
Supply chains must be connected and collaborative so all links can align to business strategy and oriented toward a common set of the most important metrics (and not functional metrics that drive siloed behavior). But to operate at the board level we need to be able to speak the CFO’s language. Spike up to protect against attack.
Every company today runs on data – the key to using your data is choosing the right metrics for visibility into your supply chain. While Key Performance Indicators (KPIs) may be reviewed quarterly or monthly, the speed with which supply chain operations occur makes a daily view of more tactical and operational metrics a growing necessity.
Manufacturing systems and regulatory compliance are considered to be very complex, coupled with the limited number suppliers due to the high barriers to entry. Moreover, the aircraft manufacturers have to do whatever it takes to win the order long before the commencement of production.
As with the logistics category where we featured 15 most popular blog posts vs. the 10 we covered in the top manufacturing blog posts and supply chain blog posts , we write so many transportation blog posts in that category, we are going to feature the 16 most viewed transportation blog posts. Read the Full Blog Post. Read the Full Blog Post.
Food and beverage manufacturing and distribution companies usually operate on smaller margins than most organizations in other industries. Wages are another significant cost for food and beverage manufacturers and distributors , and they’re going up, with labor currently very difficult to find and retain.
In the last decade, many companies, especially those with manufacturing operations, have evolved direct materials sourcing from an administrative function to a strategic procurement process. As a strategic process, transportation procurement may still seem very tedious and challenging.
In their time leanmanufacturing and just-in-time were game-changing concepts. Supply chain execution is required to distinguish between the high runner purchases and the slower-moving products customers are willing to wait for. Strategic product segmentation, sourcing and inventory management.
As a manufacturer, a lot of businesses and customers rely on you to get things done on time. So, let’s break down how to improve cash flow in a manufacturing business and look at the various cash flow challenges faced by manufacturers around the world. In other words, it leaves you with no cash to spend until they pay.
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