99% of the companies that bring us on board for consulting projects can accelerate bottom line business results by better utilizing their ERP system. The typical 80/20 equation holds true – at least 80% of companies underutilize their ERP system by a significant amount. Even the 20% that utilize their ERP system to a better degree than most have opportunities.

In almost 20 years of consulting, we have found only 1 client that couldn’t utilize their ERP system to a greater degree as their manual work around processes would fall apart. They required an ERP upgrade before they could utilize their system to a greater degree. Every other client could make progress (improve customer service levels such as OTIF on-time-in-full, reduce lead times, increase efficiencies, reduce waste, automate manual functions, reduce inventory, etc.) by better utilizing their ERP system. It didn’t matter if they had a tier 1 ERP system such as SAP or Oracle, or a tier 2 or 3 system such as Epicor, SAP Business One, Microsoft Business Central, Sage 100 etc. It didn’t matter the industry – aerospace, building products, life sciences/ healthcare products, or food and beverage. These statistics apply across the board. To learn more about how to better utilize ERP, read our article, The MacGyver Approach: Leveraging Your Underutilized Asset.

Building Products Manufacturer Case Study

A building products manufacturer struggled to get the “right” inventory to the “right” distribution center at the “right” time to service customers successfully. There were four production facilities supplying around 12 distribution centers across North America. Each production facility also functioned as a distribution center for their region. This consulting client used SAP, and although they were on an older version of the software, the system could support a complex distribution network. However, they were underutilizing the ERP system.

There were various levels of expertise at the production facilities, different processes at different facilities, and different use of the ERP system and different data integrity at different sites. This is not uncommon. In 80% of clients, the employees using the ERP system are NOT resistant to change once they understand how it works, how it will help, and how what they do fits into the big picture. Until they understand how to perform their daily tasks to successfully serve customers and accomplish their goals, they will do whatever it takes to do what’s needed including developing manual processes, updating spreadsheets, etc. That is exactly the situation as we entered this client.

We started by understanding the current business processes and use of the ERP system. By documenting the high-level processes, we could identify gaps and opportunities. We quickly addressed quick wins. There are typically a few quick wins at every client; however, to make sustainable progress, the key is to review how the business processes connect with and interface with each other. Once a full view of the business processes and interfaces emerges, the current use of ERP will also become apparent. Finally, the use of data, integrity of the data, and reliability of the data for decision-making will also emerge during the process review.

In this client situation, we started by sharing best practices among production facilities. One production site had a more advanced use of planning functionality, and so we worked with the second priority site to set up the appropriate system settings, update data, and roll out upgraded planning processes. This use of SAP in conjunction with upgraded planning processes and coordination with Sales and Operations propelled service levels to jump from low 60%’s into the 80%’s within a few months. Next, there was additional SAP functionality that could upgrade the planning process across both sites, and so we worked with SAP experts to test and roll out additional SAP functionality to further automate what made sense. This resulted in a solid production plan.

From a replenishment standpoint, it started with a solid production plan. Beyond a solid production plan, the replenishment process to supply the distribution centers with the appropriate product to satisfy customers required a directionally correct forecast. The forecast was the trigger to supply the distribution centers. Thus, we worked to better utilize the advanced planning module of SAP to whatever degree feasible on an accelerated timeline in addition to upgrading the business process for reviewing the demand plan with the Sales Team. This step was incorporated into the monthly SIOP (Sales Inventory Operations Planning) process to gain executive alignment and to ensure the forecasts passed the smell test.

In addition, we reviewed the current replenishment process including the MRP and replenishment or transfer order settings. We performed inventory analysis to determine optimal settings for safety stock, minimum orders, etc., and rolled out process improvements in conjunction with SAP functionality. These process and ERP utilization improvements allowed us to improve our service levels greatly and rectify relationships with customers. As the process smoothed out, we started to look at ways to optimize inventory levels while maintaining higher levels of service.

Results with Better Utilization of ERP

Results followed the rollout of improved utilization of SAP in combination with process upgrades and associated education. Most importantly, service levels improved from around 40% to the 90%’s. Lead times were also shortened in a critical site that produced a core product line. This made a dramatic impact on customers’ perception and and turned unhappy customers into customers looking for opportunities to expand business with our client.

In addition, the critical site increased output and capacity as manufacturing got in front of what was needed to support customer requirements. Manufacturing efficiencies improved as the production schedule transitioned from reactive to proactive.

From a replenishment standpoint, as upgraded replenishment planning was rolled out, service levels improved. And, as MRP settings were updated with optimized variables, inventory levels were reduced without impacting service levels negatively.

Finally, as the process and system upgrades were rolled out, the team was educated and gained confidence with their core tasks. Additionally, as processes were automated, the team could spend more time on exceptions and less time performing mundane tasks. This freed up time for additional improvements to grow revenue and profitability.

The Bottom Line

Pay attention to your business processes in conjunction with your use of ERP. The better you utilize ERP in a smart way to accomplish your goals, the more focus will go to exceptions, bottlenecks, and additional process and technological upgrades. If you are interested in talking about how to better utilize your ERP system to drive superior customer service, customer growth, profitability and cash flow, contact us.

Did you like this article?  Continue reading on this topic:
Better Utilize Your ERP System

The post Better Utilizing ERP for Sustainable Results appeared first on LMA-Consulting Group, a supply chain consulting firm.

CLAREMONT, CALIFORNIA – November 20, 2023 –  In a business landscape characterized by unprecedented business volatility, maintaining stellar customer service emerges as a critical differentiator for companies navigating the ebbs and flows of the current market. Manufacturing and Supply Chain Consultant Lisa Anderson, MBA, CSCP, CLTD and President of LMA Consulting Group Inc., highlights the pivotal role of backlog management in elevating customer service levels, especially significant in a landscape where 88% of buyers, according to Salesforce, deem experience as crucial as the product or service being offered. LMA Consulting Group specializes in supporting manufacturers and distributors in strategic planning and comprehensive supply chain transformation, focusing on enhancing the customer experience and robust business growth.

The decline in customer service, a nearly 20% drop according to Forrester, coupled with diminished customer patience, has spotlighted opportunities for companies to prioritize superior service. This is where proactive backlog management plays a vital role, ensuring high service levels, on-time-in-full (OTIF) delivery, short lead times and preemptive communication.

Backlog management can encompass a myriad of statuses and potential scenarios during order fulfillment, ranging from inventory shortages to waiting on customer approvals, purchase receipts, production engineering, international shipping paperwork or even dealing with credit holds and quality controls. “One of the secrets to success in enhancing service levels lies in implementing a proactive backlog management process. Transitioning from reactive to proactive stances can swiftly elevate customer service levels. We have seen it with a building products manufacturer where service levels increased from 38% to 90% by adopting a forward-looking view and assigning orders with tight timelines to specific people or departments to ensure on time fulfillment. We had an aerospace manufacturer elevate service levels from the low 60%s to the low 90%s by implementing a backlog process that tracked progress through multiple steps of the manufacturing process, adding capacity where needed, and introducing advanced technology solutions. It can be done and it delivers results.” states Ms. Anderson.

For deeper insights into navigating the complex landscape of global supply chains, download Ms. Anderson’s special report The Road Ahead: Business, Supply Chain & The World Order and her eBook SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth.

About LMA Consulting Group – Lisa Anderson, MBA, CSCP, CLTD

Lisa Anderson is the founder and president of LMA Consulting Group, Inc., specializing in manufacturing strategy and end-to-end supply chain transformation.  Ms. Anderson is a recognized Supply Chain thought leader by SelectHub, named a Top 40 B2B Tech Influencer by arketi group, a Top 16 ERP Expert to Follow by Washington-Frank, in the Top 10 Women in Supply Chain by Warner PR, in the top 55 Supply Chain & Logistics Experts by flexport, and a woman leader in Supply Chain by RateLinx.  Her primer, I’ve Been Thinking, provides strategies for creating bold customer promises and profits. An expert on the SIOP process (Sales, Inventory Operations Planning), advancing innovation, and making the supply chain resilient, Ms. Anderson is regularly interviewed and quoted by publications such as Industry Week, Bloomberg, Fox News and The Wall Street Journal. For information, sign up for her Profit Through People® Newsletter or for a copy of her book, visit LMA-ConsultingGroup.com.                 
                                                                                                      ###
Media Contact Kathleen McEntee | Kathleen McEntee & Associates, Ltd. | p. (760) 262 – 4080 | KMcEntee@KMcEnteeAssoc.com

The post Lisa Anderson, Manufacturing & Supply Chain Expert Highlights Proactive Backlog Management as a Keystone for Elevating Customer Service in Manufacturing appeared first on LMA-Consulting Group, a supply chain consulting firm.

Today’s Supply Chain Disrupted World

We live in a supply chain disrupted world, and there is no end in sight. It started with the pandemic as the global supply chain got out of alignment. The ‘right’ inventory wasn’t in the ‘right’ place at the ‘right’ time to support basic needs let alone nice-to-have items. For example, there were shortages of hand sanitizer and meat at first which expanded into computer chips and building supplies as the pandemic raged on. Further complicated by port congestion, the ship stuck in the Suez Canal, TX storms, the Russia-Ukraine war, China lockdowns (for their zero COVID policy), and much more.

The most successful companies are focused on logistics planning best practices to get in front of these disruptions and create a more resilient and superior customer experience. As service shines and products are available when and where customers want them, there will be opportunities to increase market share. As baby boomers retire and sell their companies and some struggle to navigate a high interest rate, inflationary environment, there will be more opportunities for smartly-run companies to thrive.

Distribution & Warehouse Planning

If you don’t already have one, implement a SIOP process (Sales, Inventory & Operations Planning, also known as S&OP) to make the appropriate strategic decisions on how many distribution centers/ warehouses you should have in your network and where they should be located. Although plans fail in execution, not in formulation, if you don’t have a distribution center in the appropriate location to service customer needs at the lowest cost, flawless execution won’t help you.

Beyond your supply chain network, a critical component is to fulfill your network with the “right” product in the “right” place at the “right” time while minimizing inventory levels, shortening lead times, and maximizing customer service levels. Accomplish these results by implementing best practices in replenishment planning (also known as distribution planning or VMI vendor managed inventory if related to a supplier or customer).

Based upon your SIOP and replenishment plans, you’ll want to set up your warehouse to best support service and efficiency. If very much depends on your unique circumstances as to what will make sense. For example, if 25% of your business is e-commerce and the rest is pallet or case shipping, you’ll have a different layout, equipment needs, and resourcing plans than if your warehouse ships bulky products. As a general rule, e-commerce and box or pallet shipping will not be done in the same warehouse. It could be the same physical address; however, every successful client has separate areas, separate locations, or has outsourced one or both operations. Bulk items require different storage, handling, and shipping requirements, driving a different set of best practices.

Warehouse Storage Requirements

Understanding your warehouse storage requirements as a part of your SIOP process allows you to make informed decisions about the size, quantity, and positioning of your distribution network. Similar to calculating the labor hours required for a particular work center, you’ll calculate pallet positions, cubic feet or bin storage requirements. This information will allow you to determine the best type of warehouse infrastructure (racking, forklift trucks, etc.), technology and automation systems, and resourcing required to maximize your storage utilization while meeting your customer requirements at the lowest cost.

3PL Evaluation

In some situations, it makes sense to evaluate outsourcing a portion of your business or your full logistics process to a 3rd party logistics provider (3PL). As with all situations, there are benefits and costs, and they change along the way. For example, in working with a value-add distributor to evaluate whether it made sense to continue with current warehouse operations or move to a 3PL, we found that the client was efficient and located close to customers. The 3PL would have to charge more to add a profit without commensurate value, and since the client had the warehouse space already or could solve the issue with a small overflow facility, it didn’t make sense.

Fast-forward several years later, and re-assessing the warehouse space analysis and 3PL evaluation, we came to a different answer. In this case, according to the SIOP process and sales forecasts, the client would be short on warehouse space, and more importantly, their e-commerce volume rose sharply. Although they could handle their current e-commerce volume, it made sense to evaluate outsourcing that volume to free up space, position inventory within a 1-2 day delivery window across the country, and utilize specialized expertise in e-commerce fulfillment inclusive of piece packaging, returns, etc. They would leave pallet shipping alone, at least for the foreseeable future.

Transportation Planning

Transportation planning starts with your network setup. For example, if you procure products from overseas, you will include global freight shipping considerations in your planning processes whereas if your network supports North America, you will focus attention on air or ground transportation. There are a plethora of options to consider in just trucking options ranging from over the road to LTL (less-than-truckload), to dedicated truck lanes, to multiple stop truckloads and much more. Rail is also a popular and less costly mode of transportation depending on your customer requirements and network capabilities.

Mode of Transportation

Typically, a client will set a strategy inclusive of mode of transport upfront. Our most successful clients are reevaluating transportation strategy on a quarterly, semi-annual or annual basis as a part of the SIOP process, and they will make adjustments as required. In today’s supply disrupted world with continually changing networks and manufacturing points, the frequency should be increased to stay ahead of changing conditions.

For example, a building products manufacturer reevaluated replenishment to a distribution center and determined that a hybrid strategy of shipping over the road and by rail made sense to best support changing customer requirements with optimal inventory levels instead of shipping all by rail. Clearly, transportation costs would increase, but they would be offset by improved customer service, reduced inventory and storage requirements etc. Similarly, an equipment and tools manufacturer reevaluated international shipping strategies as they transitioned manufacturing from China to Vietnam and later to Mexico. In the first instance, the mode of transportation didn’t change, but the ports and routes changed. In the second, the mode of transportation changed. In both cases, once in North America, they used over the road and rail to replenish their network.

Optimizing Transportation

Depending on your mode of shipment and network complexities, how you optimize transportation will vary widely. As an example, in a healthcare products manufacturer, they shipped partial loads relatively consistently to customers outside of the local region. Shipping LTL would be costly, require longer lead times, and proved unreliable. It made more sense to combine multiple customers on a truck and make 2-3 stops along a route. Thus, planning multiple stop truckloads provided the best service at the lowest cost. The transportation management system (TMS) would review customer orders within key routes and combine into multiple stop truckloads. It also would provide carrier options for review. The transportation planner would perform a similar role to a production planner or material planner to optimize transportation plans.

There are countless ways to optimize transportation. Since there are many variables, it leads to a multitude of options for satisfying customer needs at the lowest cost. You could also take a proactive stance by working with customers on their service policies to find win-win strategies to meet their needs while providing an advantage over your competition and minimizing cost. For example, an absorbent products manufacturer met with customers to provide additional demand data which allowed the company to optimize shipments to the customer yet providing improved service levels and reduced inventory levels with a collaborative replenishment (also known as vendor managed inventory or VMI) program. Additionally, they worked with key customers to use space in certain geographies to better serve customers and improve profit for both.

Refer to our blog for many articles on planning, capacity and related concepts. Also, read more about these types of strategies in our eBooks, Thriving in 2022: Learning from Supply Chain Chaos and Future-Proofing Manufacturing & Supply Chain Post COVID-19. If you are interested in talking about what it would take to optimize your production scheduling scenario, contact us.

Did you like this article? Continue reading on this topic:
Improving Service Levels, Logistics Efficiencies, and Inventory Turns with Replenishment Planning Best Practices

The post Logistics Planning Best Practices to Drive Service & Profitable Growth appeared first on LMA-Consulting Group, a supply chain consulting firm.

Manufacturers are experiencing continued inflationary pressures threatening customer service and profit margins with record-breaking price increases and lack of material availability.  To add fuel to the fire, they are also starting to worry about preparing for a potential recession. It is becoming increasingly difficult to navigate these volatile times, and the most successful are not doing it alone. Instead, they are pursuing collaborative programs with supply chain partners. What is clear is that there will be more winners and losers created than at any other time in history. Thus, it is worth figuring out how to work with your supply chain partners to ensure mutual success rather than mutual demise.

First, it makes sense to evaluate your supply chain partners – both customers and suppliers. Most executives are reshoring, nearshoring, and reallocating capacity in their supply chain, and so the supply chain will continue to evolve. However, as the pandemic has proven, we are only as strong as our weakest link, and so we must be vigilant in selecting our supply chain partners and change them if needed. Don’t simply assume that your current partners are prepared for what’s ahead. Navigating both inflation and deflation is not for the faint of heart. Only the most action-oriented, innovative, and collaborative will thrive. Thus, assess your situation and be deliberate in your choices.

Once you have strong partners, turn your attention to how to work together to achieve dramatic results. One successful approach is to roll out a collaborative ordering process, also known as vendor managed inventory (VMI). For example, when working with an aerospace and defense company that supplied controls for the cockpit, we partnered with our client to implement and upgrade VMI. We partnered with our client’s customers (such as Boeing) to determine what to send to their locations for them. We were able to improve service to Boeing and maintain high OTIF (on-time-in-full) levels while eliminating their cost of ordering and achieving their inventory level targets. From the manufacturer’s perspective, they were able to expand business by achieving the top supplier status. Additionally, they were able to improve margins and working capital by better managing inventory and costs with visibility into their supply chain.

In another example, a specialized distributor of bearings used VMI to manage their customer’s inventory for them. Their customer was a steel manufacturer, and so although bearings were not significant in price as compared with the rest of their raw materials, they were critical in keeping the steel mill running. Thus, this value-added service became the key reason the steel manufacturer considered the bearing supplier as strategic and vital through both inflationary and deflationary times.

From the supplier point-of-view, an outdoor lighting manufacturer used a vendor managed inventory program with its suppliers. Instead of hiring planners to determine how many components to keep on hand with limited space, they asked their supplier to manage it for them. The manufacturer always had the appropriate stock to supply the line, and they never ran out. Their suppliers became integral links in the supply chain and part of a collaborative S&OP process (Sales & Operations Planning, also known as SIOP for Sales, Inventory, Operations planning), resulting in mutual business growth and success.

As manufacturers focus on collaborative supply chain partnerships and programs such as VMI, they are creating unique value in their supply chain. To thrive during inflation and deflationary times, it is important to be ready to pivot quickly with changing conditions. Additionally, by partnering with their end-to-end supply chain, these manufacturers create sustainable, profitable growth for mutual success.

As originally published in Brushware Magazine on July-August, 2022

The post Supply Chain Collaboration & VMI to Get Ahead of Economic Challenges appeared first on LMA-Consulting Group, a supply chain consulting firm.

Improving OTIF and Reducing Cost and Inventory

Every client wants to support growth goals while improving service levels (OTIF, on-time-in-full), operational efficiencies and inventory turns. These are timeless objectives for every planner. During the pandemic, the priorities shifted to service levels because clients struggled to keep up with dramatic increases in demand and extreme volatility. There has been an all hands on deck focus to improving OTIF (on-time-in-full), OTD (on-time-delivery), and fill rates.

As we did whatever it took to service customers, logistics costs started to skyrocket, even before the dramatic increases in oil and gas prices. Thus, logistics costs also came into closer focus. Depending on the supply chain network, logistics costs could relate to container costs (which have gone up four-fold since pre-pandemic levels), drayage costs, storage costs, freight costs, e-commerce fulfillment costs, and more. For example, a consumer products manufacturer supplied outside distribution centers across the U.S. and Canada to support short lead time customer requirements. As volatility increased, freight and logistics costs went up accordingly. Thus, additional focus was put on how to optimize logistics costs.

As the pandemic unfolded, consumers switched from services to products, thereby increasing demand. Similarly, as stimulus packages were passed, consumers gained cash, further increasing demand. Finally, as lockdowns ended, demand has stayed at high levels even though services are skyrocketing, driving inflation. As supply chain disruptions abound, product availability is limited, thereby driving prices higher. There is a combination of inflationary and deflationary pressures going on simultaneously which is further exacerbated by the Russia-Ukraine war. These incidents have led to a return of focus on managing inventory to free up cash.
Utilizing Planning Best Practices to Optimize Service, Cost & Inventory Objectives
From a best practice point-of-view, in order to optimize service, cost, and inventory objectives, you’ll want to upgrade the appropriate planning processes. No matter your business type and complexity, demand planning will be a priority. From a supply planning perspective, the priorities will depend on your specific situation. If you produce internally, production planning, material planning and supplier management will be a priority. On the other hand, capacity planning, purchasing, and logistics planning will be important regardless of your supply chain network although to varying degrees. Replenishment will be more relevant if you have a more complex distribution environment or if you replenish your customer’s network for them (also known as vendor managed inventory or VMI).

If you have a more complex distribution network, replenishment planning (also known as distribution planning or DRP) will be a critical component to achieving your objectives. Replenishment planning should consider the following factors:

• Order frequency – are you receiving orders on a daily, weekly, monthly, seasonally, or sporadic basis?
• Order size – when you receive orders, are you receiving several small orders over a period of time, one large order covering the same period of time, or another option?
• Order volatility – how predictable are your customer’s ordering patterns?
• Lead time requirements – how much time do you have to react to customer orders vs. the lead time to replenish?
• Replenishment lead time flexibility – do you have options to decrease your replenishment lead time by shipping via a different mode of transportation (such as rail vs. truck)?
• Replenishment cost with various modes of transportation
• Replenishment frequency – how often do you replenish the distribution center.
• Service policies – can your customers change their orders after placed? Can they change it until the last minute prior to shipping?
• Network flexibility and stocking patterns – if you have a stockout in a distribution center, are you stocking that same product in another distribution center that could supply the customer within standard lead time?
• Safety stocks – how have you set safety stocks to cover for variability in demand and supply?
• Forecasts and/or consumption information – do you receive collaborative forecasts from customers, or, better yet, consumption information real-time? For example, when working with an absorbent product manufacturer, our key customer Allegiance Healthcare provided us with our consumption data from their distribution centers so we could sell real-time consumption. Additionally, when consulting with an aerospace firm, we received consumption information from Boeing so we could see when they used our parts in production of the plane.
• ABC value – are your items set as A B or C based on volumes, value or another method to designate frequency and importance?
• Storage constraints and warehousing costs
• Inventory objectives
• Sales orders, transfer orders, and purchase orders

Replenishment Planning Strategies

A replenishment plan should take the factors described above into account when building a plan. Typically, you’ll start with demand and determine your replenishment plan based on what’s needed to serve the customer with the agreed upon service policy, and then evaluate replenishment strategies, logistics options, and resulting inventory levels to determine the optimal schedule.

Depending on your network complexity, product and customer mix, your tools (ERP and related technologies), and your objectives, there are multiple replenishment strategies you could follow. Conceptually, consider the following options:

• Reorder point / Kanban strategies – in essence, you replenish the reorder quantity when you hit the reorder point inventory level
• MRP/ DRP strategies – in essence, you replenish to sales orders, transfer orders, and forecasts as needed when reviewing your inventory and orders in process.
• DDMRP strategies – demand-driven material requirements planning (MRP) which is more sensitive to variations in demand and supply.
• Advanced planning – these systems take what if scenarios, capacity, capabilities and costs across sites into account in replenishing

There are tradeoffs, benefits and costs to each approach depending on your demand, supply, factors, and objectives.

Incorporate Replenishment Planning into a Monthly Review Cadence

Review your replenishment plan summary information and related impacts as a part of your monthly SIOP/ S&OP process. Gather inputs from appropriate parties, compile and synthesize data, and design a monthly review of the replenishment plans required to support customer orders. This will result in transportation volumes by mode of operation (truck, rail, air), storage requirements by distribution center, distribution / supply chain network changes and stocking strategies (and resulting inventory levels) required to support service policies, and appropriate resources and system capabilities to support the plans.

Refer to our blog for many articles on planning, capacity and related systems. . Also, read more about these types of strategies in our eBooks, Thriving in 2022: Learning from Supply Chain Chaos and Future-Proofing Manufacturing & Supply Chain Post COVID-19. If you are interested in talking about what it would take to purse the replenishment planning and SIOP journey in your business, contact us.

Did you like this article?  Continue reading on this topic:
Recovering Capacity with Production Planning Best Practices

The post Replenishment Planning Best Practices to Improve Service Levels, Logistics Efficiencies, and Inventory Turns appeared first on LMA-Consulting Group, a supply chain consulting firm.

Amazon is propelling this age-old topic into a new realm. Since the CEO of the Ontario Airport Authority used the phrase “last mile” has become “last minute” on a panel I facilitated last year, I have shamelessly reapplied his brillant quote.

If customers don’t even know what they want, how can we? Interestingly, we have found that many customers, even the seemingly most confused and volatile ones, have a pattern to their demand. If we take a holistic view of their demand and inventory planning processes from beginning to end and from high level to the minute detail, solutions emerge.     

One strategy that has proven quite effective is to “remove the middleman”, the customer himself. Instead, with access to demand information direct from the customers’ customer or end user, you can not only manage the extended supply chain inventory better for a happier customer but you also can improve margins, efficiencies and cash flow to boot.

In consumer products circles, this strategy often termed, vendor managed inventory (VMI) is usually dictated by the “big guys”.  In aerospace, it is also expected but termed differently, customer-based ordering, min max and other names. It is also common in healthcare as we won “supplier of the year” for two years in a row because of what we accomplished with VMI for Cardinal Healthcare when I was VP of Operations at PaperPak. We decided to make it a strategy for key customers at PaperPak, even though Cardinal is the only one who requested it. Should you consider a strategy like this to get ahead of your customers’ demand?  It is just another aspect in creating a resilient supply chain. Check out our series on the topic.

The post Let’s Manage Inventory for Our Customers appeared first on LMA-Consulting Group, a supply chain consulting firm.

As with almost every topic our clients call about, Vendor Managed Inventory or VMI and supply chain partner collaboration programs are no different. Success directly correlates to people.

Questions You Should Ask When Coordinating VMI

1. Do your employees and partners understand VMI and the benefits of VMI? Undoubtedly, success is better when people understand how it matters.
2. Do your employees have relationships with their VMI counterparts? Do they have a good relationship with their suppliers and/or customers related to Vendor Managed Inventory? Have they met them? It goes a long way to meet a few key contacts.
3. Do your employees understand what is expected of them on a daily, weekly and monthly basis? Don’t assume if your customer requested VMI that they have clarified how the process works. Make sure the processes, systems/technologies, and communications are clearly understood.
4. Do all VMI parties understand the measurements? Often, we see scorecards used as a way to track performance. Do you understand what goes into the calculations? What is important to your customers? Have you explained what is important to your suppliers?
5. Have you set up check points? One of the keys to success is to set up time to talk with all VMI-related parties to see what’s working, what’s not working and how you can improve the process and results. 

Did you like this article?  Continue reading on this topic:

4 Keys to VMI Success
VMI: What are the Benefits?
VMI: Supply Chain Collaboration on Steroids
VMI: Do You Need Software?
VMI: Success Depends on People

The post Vendor Managed Inventory (VMI) – Success Depends on People appeared first on LMA-Consulting Group, a supply chain consulting firm.

Supply chain collaboration is in vogue. Customers have figured out that if suppliers have access to more information on what they need and what is important to them that they’ll typically do a better job of meeting those needs. Suppliers have figured out that the more they understand customers, the more likely they’ll be able to delight them while minimizing spending. And this type of thinking carries over to your suppliers’ suppliers and customers’ customers and all supply chain parties in-between such as transportation and logistics partners, trusted advisers and more.

So, what are some of the ways supply chain partners collaborate?

1. Sharing of customer preferences – the more your supply chain understands about the end customer (whether a consumer, patient, manufacturer etc.), the better served the customer will be.
2. Sharing of forecasts – the better your supply chain understands your likely production schedule/ usage or sales forecast, the better your supply chain can ensure you have what you need when you need it at the lowest cost.
3. Sharing of inventory – key to VMI is the sharing of inventory information. The best way to maximize performance of the supply chain is to provide access to inventory information in combination with trust. For example, if your supplier can save $1000 by temporarily reducing your inventory slightly until an already-scheduled truck is available to deliver the next day and you will not run out for 5 days, why not save $1000?
4. Sharing of resources – vendor managed inventory experts can help set up these types of programs with minimal disruption and maximum results. Not every supply chain partner will have the same type of resources. Why not share to better the entire supply chain? For example, one of our clients had a technical guru, another had a spreadsheet guru and another had a VMI guru. If they had access to all three for the implementation of VMI, it would be a win-win-win.

Did you like this article?  Continue reading on this topic:

4 Keys to VMI Success
VMI: What are the Benefits?
VMI: Supply Chain Collaboration on Steroids
VMI: Do You Need Software?
VMI: Success Depends on People

The post VMI – Supply Chain Collaboration on Steroids appeared first on LMA-Consulting Group, a supply chain consulting firm.

Vendor managed inventory can have many benefits – both from a strategic perspective and a tactical one. We are seeing that it is gaining in popularity as manufacturers and distributors and retail locations see the value of collaborating with supply chain partners to drive dramatic benefit across the supply chain.

Several of the top benefits include the following:

1. 1. Increased revenue – By partnering with customers on VMI and customer collaboration programs, you become a trusted and value-added partner. As new business opportunities arise, we’ve found that those who offer VMI typically have an advantage. First, the customer knows they will have what they need, where they need it and when they need it to satisfy demand. Next, the customer knows it is easy to work with a VMI partner and so will prefer to expand capabilities with them. And, lastly, the customer is likely to recognize these preferred suppliers.
   2. Responsiveness & agility – By collaborating up and down your supply chain, you build a greater agility and responsiveness into your supply chain. With a greater access to information and a quicker view of market changes, responsiveness will increase throughout.
   3. Improved customer service & reduced lead times – Often, this is the most critical benefit across the board. With VMI, there is better collaboration, information-sharing and visibility. In every client project, we dramatically improved service levels and reduced lead times.
   4. Accelerated cash flow – As inventory is managed across the supply chain, inventory levels can be reduced while service is maintained or improved. We have frequently reduced inventory levels to the customers’ target level while reducing supplier inventory by 20-60%.
   5. Improved margins – As the supplier is able to plan across the supply chain, he/she is able to optimize transportation, warehousing and production efficiencies internally while meeting service and inventory targets for the customer. We have seen rather significant improvements (around 20%) by pursuing this opportunity.

Did you like this article?  Continue reading on this topic:

4 Keys to VMI Success
VMI: What are the Benefits?
VMI: Supply Chain Collaboration on Steroids
VMI: Do You Need Software?
VMI: Success Depends on People

The post VMI – What are the Benefits? appeared first on LMA-Consulting Group, a supply chain consulting firm.

As with almost every topic our clients call about, VMI and supply chain partner collaboration programs are no different. Success directly correlates to people.

What should you be thinking about when it comes to VMI and people?

1. Do your employees and partners understand VMI and the benefits of VMI? Undoubtedly, success is better when people understand how it matters.
2. Do your employees have relationships with their VMI counterparts? Do they have a good relationship with their suppliers and/or customers related to VMI? Have they met them? It goes a long way to meet a few key contacts.
3. Do your employees understand what is expected of them on a daily, weekly and monthly basis? Don’t assume if your customer requested VMI that they have clarified how the process works. Make sure the processes, systems/ technologies, and communications are clearly understood.
4. Do all VMI parties understand the measurements? Often, we see scorecards used as a way to track performance. Do you understand what goes into the calculations? What is important to your customers? Have you explained what is important to your suppliers?
5. Have you set up check points? One of the keys to success is to set up time to talk with all VMI-related parties to see what’s working, what’s not working and how you can improve the process and results.

© Lisa Anderson

The post VMI – Success Directly Correlates to People appeared first on LMA-Consulting Group, a supply chain consulting firm.