Cloud-based Supply Chain Execution - The Next Generation of Pull
What do distributed manufacturing, changing customer demand patterns, global supply chains, undesirable growth in inventory, and increasing pressure to reduce costs and improve profitability all have in common? These are just a few of the challenges faced by today’s manufacturing executives. Wouldn’t it be great if there was a system out there that could address each of the aforementioned challenges cost effectively and efficiently? Well there is, it’s called a pull system (a.k.a. kanban) and it has been around for a long time. Properly implemented, pull systems produce remarkable results. So why isn’t pull more pervasive in manufacturing? The simple reason is there have been more failures than successes.
Reasons for Pull System Failure
- Lack of executive level sponsorship on the need for pull
- Lack of consensus or buy-in at the plant level on the benefits of pull
- The belief that pull should be based on manual and visual systems
- Selecting the wrong pull method for the type of manufacturing
- Not piloting pull before deploying
- Lack of discipline after implementation
- Inability to scale beyond the four walls of the plant
While the above list may seem intimidating it shouldn’t be as each individual failure mode is predictable and, therefore, preventable. However, one of these failure modes, more than any other, stands out as one of the most common causes of pull system failure. That failure mode is the belief that pull systems should be based on manual and visual processes.
The Myth of Manual & Visual Pull Systems
Most pull system deployments are small scale initiatives focused on specific consumption and replenishment loops within the four walls of the factory. One of the main reasons for this is the inherent inefficiencies of the manual and visual approach. Some examples of these inefficiencies include:
- Too many human touch points
- Unacknowledged responses due to the manual process
- Cards are controlled manually and susceptible to loss
- Lack of visibility to card status
- Lack of automated reporting capability
To realize the maximum operational and financial benefits of pull, it must be extended beyond the four walls of the plant to include OEMs, distribution centers and raw material suppliers. One of the most effective and efficient ways to achieve scale is to employ a cloud-based Supply Chain Execution (SCE) solution with electronic kanban (a.k.a. eKanban) functionality integrated with your ERP system.
Cloud-based Supply Chain Execution Systems – The Next Generation of Pull
Imagine a system that signals manufacturing what products to produce, when and where to produce them and the required quantities to produce them in, all based on real-time material consumption data. Now extend that image to include electronic replenishment signals in the form of eKanban cards being automatically released to up-stream and down-stream suppliers when barcode labels are scanned. Add to that complete visibility through a web portal to all associated buyer/supplier related activities down to individual eKanban card status and one begins to understand the operational and financial benefits of cloud-based Supply Chain Execution (SCE) systems.
But it doesn’t end there. Data associated with consumption and replenishment transactions is flowing between your SCE system and your ERP system, routine procurement and inventory control workflows have been automated, and ‘Supplier Master’ and ‘Item Master’ data is kept in-sync. In addition, your procurement and inventory control teams have made the transition from reactive to proactive management, key business decision makers are making more informed decisions on supply chain operations and your company is truly collaborating with your supply chain partners.
Can you get that from a manual and visual pull system? We think not. Click here if you are interested in learning more about the features, functions, benefits and value of cloud-based Supply Chain Execution systems.