If you got a dime every time you heard the phrase, “Supply chains are complex,” you’d be rich.
In fact, most people would be. However, the statement often comes with a shoulder shrug to brush off any mishaps.
Yes, supply chains are complex.
What does that exactly mean, though? And how should our understanding of it guide the solution?
Let’s take a close look at how the how the convergence between supply chain execution and manufacturing operations management can be addressed to improve performance.
Supply chain complexity is a business problem
It wasn’t long ago when the term “supply chain” was synonymous with “back office” work.
Supply chains are in the spotlight, garnering mass media attention and consumer interest. The reason is simple: Every industry is impacted and everyone wants to know, “When will I get my stuff?” Everyone’s talking about supply chains. And that’s a good thing. Because, hey, if toilet paper can get a TED Talk, you know its serious business.
All kidding aside, the heightened interest in supply chains has made it necessary to look at every detail from the inside out. It all starts with mapping out quite literally everything needed to, well, run your business. Not just your supply chain – your business.
Now, that doesn’t mean what worked in the past can’t work in the future. However, it does mean you need to pinpoint exactly where you have issues with customer fulfillment across your extended enterprise value chain and address them before they become big problems. The key point here isn’t to rush to solve these problems with technology.
Start slow to go fast
Rather, look at your business process mapping and figure out how to get the most out of your internal operations and people first, then find the right technology solutions that work within that environment and with other systems you have or plan to install. Technology will only go as fast and as far as your internal processes can move.
In a recent report entitled, Understand the Need for Supply Chain Execution and Manufacturing Operations Management Convergence, Gartner® notes, “Attack the business problem by focusing on end-to-end supply chain customer fulfillment issues, not individual technology pieces.”1
In other words, manufacturers and plant operations leaders need to work with global and regional supply chain stakeholders to do what’s best for everyone’s operational and financial performance.
The difficulty in defining a model for Supply Chain Execution (SCE) and Manufacturing Operations Management (MOM ) convergence is organizational much more than it is technical. Nevertheless, it is critical for manufacturers to achieve this convergence in order to obtain the levels of flexibility, agility and speed necessary to compete in today’s economy.
Gartner, Understand the Need for Supply Chain Execution and Manufacturing Operations Management Convergence, Rick Franzosa, Christian Titze, 3 March 2022
The new reality for supply chain leaders
This is especially true for global organizations that use various solutions, including Enterprise Resource Planning (ERP) systems, for a wide range of needs in supply chain – from the sourcing and procurement of raw materials to managing operations and distributing finished goods.
The reality for supply chain and manufacturing leaders today is ERP systems alone can’t support everything manufacturers need to run an end-to-end value chain. The same can be said for systems that support supply chain planning, warehouse management, inventory, scheduling, manufacturing operations, and just about every other function within supply chain.
On their own, each of these technology solutions can support certain functions within the supply chain. When these solutions come together, they provide supply chain execution (SCE) and manufacturing operations management (MOM) leaders the best chance to close the gap on any customer fulfillment issues in the supply chain.
In fact, the convergence between SCE and MOM makes it necessary to reevaluate the ability of these systems to support and maintain true supply chain visibility and collaboration inside and outside the four walls of a plant.
How to improve supply chain performance
The right strategy varies from one manufacturer to the next, but the overall principle is key: The unique aspects in every supply chain are just as important as the most established and routine in the business.
For example, manufacturers may decide to adjust their inventory replenishment strategy to carry the right mix and levels of raw, work in process, and finished goods inventory. This might mean putting some items on Material Requirements Planning (MRP) forecast, min/max replenishment, pull-based demand, eKanban, lot-for-lot, least unit cost, and so on. For others, stocking up on inventory and moving away from just-in-time might also be the right thing to do.
When internal and external supply chain partners work off the same strategy and can make decisions based on near real-time information from across different systems, they can reduce risk and be more proactive with their decision-making.
The benefits of multi-vendor ecosystems
Part of the solution is accepting the new reality in supply chain – multi-vendor environments specifically designed to work with other systems to support unique business and operational processes.
Gartner adds, “Prepare for a multivendor ecosystem by giving significant weighting to data integration, workflow integration and collaboration tools when evaluating solutions.”2
Applications designed to support business processes are perfectly positioned to play a major role in addressing the twin challenges of increasing supply chain complexity and getting the most out of existing line of business systems. These specialized solutions accomplish this by quickly relieving pressure at the most constrained part of the supply chain.
In the end, you want to easily do three things.
- Get the right information as fast as possible.
- Provide easy access to that information with all internal and external stakeholders.
- Work together with your stakeholders to make the best decisions possible.
Major benefits to manufacturing firms who adopt this approach include quantifiable improvements in supply chain process efficiency and effectiveness, a single-version-of-the-truth of supplier and supply chain performance, and improved collaboration with their supply chain partners.
Embrace the convergence
The very nature of supply chain management today isn’t completely linear or siloed as it once was. Every day, countless decisions and trade-offs are made, and the ripple effect can impact short-, medium-, and longer-term business results. At the end of the day, you need to evolve your business strategy from the inside out, which will impact how you manage your supply chain.
Easier said than done, right?
To help support your journey, read Gartner’s report to find out how you can increase collaboration and coordination between MOM and SCE so you can improve the business and supply chain performance of your organization. You’ll learn about the top recommendations and gain deeper understanding of key concepts such as:
- Why SCE is hampered by limited interaction with manufacturing operations
- How manufacturing operations solutions optimize production execution, not supply chain execution
- Why the convergence between SCE and MOM requires participation from a broad set of stakeholders
1,2 Source: Gartner, Understand the Need for Supply Chain Execution and Manufacturing Operations Management Convergence, Rick Franzosa, Christian Titze, 3 March 2022
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