Striking the Balance Between Supply and Demand

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Posted by: briansittley Comments: 0 0 Post Date: March 24, 2015

supply_demand_balanceThis month’s APICS Magazine (Mar/Apr ’15) presented what we thought was an ideal example of the utility of an ERP system combined with a little Excel expertise in defining the benefits such a powerful combination can bring.  In an article titled Steady Supply and Demand, APICS Managing Editor Elizabeth Rennie writes of a bearing manufacturer that was able to get a much better handle on matching order demands with supply capacity.
The company had extended lead times due in part to capacity constraints that could negatively affect sales opportunities and on-time deliveries, as well as causing increased expediting costs.  Basically, sales planners needed better visibility over inventory and production, and the shop floor wanted consolidated purchase orders for all sales units in order to identify potential capacity issues.
The solution was a report – drawn from the central repository of data found in the ERP system, matched with an Excel report to parse, filter and report the desired results, and all based on foundational APICS training and knowledge.  In other words, APICS taught them how to look, and the report they designed gave them the visibility they were looking for.
The company needed to know “what products were made on what production line, how many machines were on each line, and what capacity was available on each machine.”  Once they had that, their team could identify the items and SKUs associated with each product and inventory group code.  They then added a field to the ERP system’s item master card where the production line code was assigned to the SKU.
An Excel prototype served as the output format, and with some programming effort (at our firm, we’d think in terms of Jet Reports of course), orders and forecasts were extracted and mapped to a table of production line assignments.  After validation, the report was introduced to both sales and factory teams as a “source of reference to make capacity planning and investment decisions at the factory.”
Employees get real time visibility into production line use and can drill down to order details.  It enables a high level of responsiveness to issues like constraints, machine downtime, order changes and the like.  Their report evolved and grew to display available capacity and backlog development, so planners can recognize potentially damaging trends before the damage is caused.
And of course, because the report is built from the company’s single, trusted silo of uniformly available data – its ERP system – and then tested and validated, all users gain a ‘trusted’ view of orders and current plant capacity, in real time.  As the article points out, “this establishes trust among operational units that often have conflicting priorities.” (Sound familiar?)
Just one more fine example of how ERP and a little clever modification and reporting can yield improved business performance and customer responsiveness.

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