Supply Chain Visibility - OK Alliance

Supply Chain Visibility

Oklahoma Manufacturing Alliance Conference 2010

Proprietary & Confidential


You can only improve what you can measure.

You can only measure what you can see.

The Supply Chain is complicated with moving parts

and multiple parties responsible for making it work!


Three supply chain functions that keep you busy . . .


Orders• Purchases

• Finished Goods

• Product Returns

• Product Transfers

Shipments• Domestic

• International

• Parcel

• Less-than-Truckload

• Truckload

• Ocean

• Rail

• AIr

Costs• Raw Materials

• Finished Goods

• Shipping

• Resources

• Inventory

• Storage


Buyers

Suppliers

Materials Management

Production Planning

Shippers

Carriers

Customs

Receiving

Customers

Buyers/Suppliers

Carriers

Finance

Inventory Management

Warehouse/Distribution

2:00 pm

The “Common” Supply Chain


Manufacturer

Purchase Orders Generated

All set with 30 day lead time

To accommodate highest lead time

factor.

30 Day Production

Schedule

Need

100 Widgets

200 Gadgets

50 Pidgets

300 Madgets

Supplier

Controlled

Transportation

Expedite

$$$$$$

Warehouse

Excess Inventory

Obsolete Inventory

2 Days

Domestic / International

Suppliers

100 Widgets

50 Pidgets

Supplier A

500 Gadgets

“Min Order Level”

Supplier B

200 Madgets

“Partial Order Fill”

Supplier C

Terminal

Port

Airport

2:00 pm

1 Month

2 Weeks

8:00 am

2:00 pm Next Day


So Many Types of Supply Chain Technology


WHAT THE ... ?


Proprietary & Confidential 6

Supply Chain Relationships

If you hear the word ERP . . .

An ERP system is one that combines functions of the individual systems into one package

Can be used to run the entire company vs having many different systems

Usually more difficult and costly to implement but highly scalable

R U N


What business need are you trying to satisfy?

Key areas of proactive visibility required in a Supply Chain:

Order Receipt and Fulfillment

Inventory Management and Reporting Shipment Processing and Tracking Financial Processing and Reporting

Performance Measurement and Management


How will you measure success?

Who will use the system and how will its use be enforced?

Understand what you need before you start shopping. . .


Avoid issues or allow time to fix issues before they become critical problems

Provide a forum for continuous improvement

Lots of technology available to Manufacturers today

Make you and your peers more productive

Reduce costs - in inventory, especially safety stock, due to better visibility of

orders and shipments, and less lead time variability.

Automation of processes previously performed via phone or fax - such as order

status confirmation, shipment tendering, and appointment scheduling and invoice

processing

Ability to grow and change - scale logistics operations as business needs changes

Improve quality of work – enforce standard work and reduce errors

Smooth the flow of Orders, Shipments, and Costs

Make your life easier


Understand what you are trying to accomplish with technology. . .



Let’s see one in action . . .

SuiteEdge®

Live Demonstration


Key Business Differentiator

Competitive Advantage

Long term corporate investment - 5+ years

Custom / Unique Business Application

Foundation System within Company

Data Security / Need for Tight Control of Data and Availability

Asset that Increases Corporate Value Significantly


Purchased vs. Hosted Systems

Buying a system is not as difficult or expensive as it once was . . .

Cost Factors:High Entry Cost - Capital requirement / Usually depreciates over 5 years

Can be expensive to maintain

IT Infrastructure/ Vendor Support/ Disaster Recovery

Annual Software Licensing Fees and Hardware Warranty Costs

Consider Purchasing a System When:



Mature Market for Desired System

Business Need is a Relatively Well Established Function

Little Customization is Needed

Desire to Share Cost to Customize / Non-proprietary Function

Easy Start-up

Usually Only Requires Access to Internet from Users Workstations

Anticipate Business Need Changes Over Time

Try before you buy / Shorter Term Use

Data security, Storage and Disaster Recovery Included

Consider a Hosted System When:

Low Financial Entry/ Little to no capital investment

Ongoing expense – Renting vs Owning

Lease to own options

Inherit risk in provider financial stability, security and disaster recovery

Minimal or No Internal Support Structure Required

Cost Factors:

Check out the numbers as a final deciding factor . . .

Purchase

Software Purchase $100k / one time

Hardware Purchase $15k / one time

Implementation / Customization $200k / one time

One Time Capital Outlay $315k

Depreciation over 5 years$63k Annually

$5250 Monthly

Software Licensing (18-22%)$20k Annually

$1667 Monthly

Total expense first 5 years$83K Annually

$6917 Monthly

Total Expense Years 5+$20k Annually

$1667 Monthly

Host

Monthly Hosting fee $5k monthly

Implementation / customization $30k one time

Year 1 Total Expense $90k Annually

$7500 Monthly

Year 2+ Total Expense $60k Annually

$5000 Monthly

General Rule of Thumb: Hosting makes financial sense if planning to use software for less than 5 years



1. Make use of product as a part of users everyday business function

2. Provide adequate resources and time for implementation

3. Ensure customizations satisfy a real business need

4. Measure and manage use of the product

5. Continually train on system

Steps to Success



Domestic / International

Suppliers

Defined

Transportation

Network

Scheduled Receiving

A Lean Supply Chain with Visibility


Days/Hours

Months

Weeks

Days/Hours

Terminal

Port

AirportManufacturer

From

Loading Dock

Direct to

Assembly Line

8:00 am

9:00 am

10:00 am

11:00 am

“Pull” Triggers

Line Inventory

Reaches Min

Level

”Right Place

At the Right Time

In the Right Amount

At the Lowest Cost”

Order Fulfillment

Tracking Centralized Shipping Shipment Tracking and Visibility Tools Order / Shipping / Financial

Metrics



Now that’s what I’m talkin’ ‘bout!


LynnCo Supply Chain Solutions, Inc.

2448 East 81st Street, Ste 2600

Tulsa, Oklahoma 74137

www.lynnco-scs.com

To learn more about our services:

www.gowithlynnco.com

866-872-3264

Documents

Supply Chain Visibility - OK Alliance