How Strong Are the Links in your Supply Chain?
Supply Chain is the movement of product from one stage of production to another. This process applies to many industries including Manufacturing, e-Commerce, Marketing, Business Development, Information Technology, Retail, Healthcare, Military Defense as well as Warehousing operations.
The Supply Chain is a chain that is created from the inception of an idea to selling a product or service to the consumer. Supply Chain is referenced as a “Cradle to Grave” approach. It includes every facet of research and development, prototyping, initial production, sustained production and end of life cycle for a product or service.
Know and follow these phases in the development and distribution of your products and services to reduce costs, eliminate waste and maximize effeciencies.
9 Critical Phases of Supply Chain
- Engineering Design Development – Designing a product or service to assist the end user and satisfy the needs of the customer requirements packages. The design phase is the foundation for the entire Supply Chain. A poor design or requirements package will result in a failed supply chain.
- Vendor Selection & Qualification – This phase is critical to all future operations especially in a manufacturing setting. Vendors produce parts or sub-assemblies and have a direct impact on the quality of the final product or service. Multiple benchmarking tests and quality control initiatives must be met to move forward with a vendor. The engineering requirements packages that outline cost, quality and schedule are the guiding principles that should be followed when selecting a vendor for long term commitments.
- Configuration Management (e-BOM) – The Electronic Bill of Materials (e-BOM) is the first inclusion of a vendor and internal part numbers associated with top-level assemblies, sub-assemblies, and parts associated with the production of the product or service. These numbers are assigned in an Enterprise Resource Planning (ERP) system such as SAP or Deltek – Costpoint. The purpose of an ERP is to fully track engineering part numbers, vendor part numbers, inventory of individual parts, sub-assemblies or full assemblies throughout the product life cycle. The Engineering Drawing for each part dictates what these numbers are when they are used and all the characteristics of the part or sub-assembly.
- Theory of Constraints – This is a methodology for identifying the most important limiting factor (i.e. constraint) that stands in the way of achieving a goal and how to systematically improve that constraint until it is no longer the limiting factor. A successful Theory of Constraints implementation will have the following benefits:
- Increased profit: the primary goal for most companies
- Fast improvement: a result of focusing all attention on one critical area – the system constraint
- Improved capacity: optimizing the constraint enables more merchandise to be processed
- Reduced lead times: optimizing the constraint results in smoother and faster merchandise flow
- Reduced inventory: eliminating bottlenecks means there will be less work in process
- Configuration Management (m-BOM) – The Manufacturing Bill of Materials (e-BOM) is used to input vendor agreed upon part numbers into the m-BOM section of the ERP system. Similar to Phase 3 above with e-BOM, the m-BOM phase inputs vendor part numbers associated with top-level assemblies, sub-assemblies, and parts are included in the m-BOM portion of the ERP system. Often the biggest mistake organizations make is combining the e-BOM and m-BOM phases. They must be kept separate to ensure accuracy and efficiency.
- Inventory Control – To ensure the accuracy of inventory, it is important to maintain total counts, location and complete tracking of inventory by lot code. First In First Out (FIFO) procedures ensure shelf life accuracy. Barcoding technology that is tied to the system’s inventory provides real-time analysis of overall inventory excess and shortages. It is also the foundation for replenishment of inventory based on consumption due to production, scrap or rework of product. In addition, inventory can be tracked to monitor and delineate customer service calls of repair needs by an allocation of inventory once shipped to the customer. Inventory control also has a significant impact on total fixed asset cost and cost of production based on overall inventory housing of parts, sub-assemblies and full assemblies in house.
- LRIP/Quality Control – Low Rate Initial Production (LRIP) and Quality Control are critical elements at this stage in the supply chain. This phase is used to determine manufacturability with a keen eye to quality metrics being met in accordance with the Engineering Drawing packages. Quality Control requirements are primarily dictated by the customer’s requirements. For example, tighter tolerances would more than likely be applicable to military defense work as opposed to commercial work. There is a direct tie between the quality of the good or service being provided and the LRIP phase of the Supply Chain Development.
- Production & Sustainment – The production phase of the Supply Chain is critical to schedule and cost. The schedule is dictated by customer demand of the product and the production capacity to meet the needs of the customer. Manpower loading, cycle time, facility requirements, time study analysis, tooling and production engineering are critical elements of meeting schedule requirements. The cost of production has many facets. Contractual agreements can also impact the cost of the product or service being provided. The two most common types of contracts that are developed are fixed and cost-plus programs. This determination is written into the contract and will dictate how the cost of the program is managed.
- Managing End of Life Cycle – When managing the end of life cycle of a product or service, this cycle of 9 steps must be followed to remain competitive in the market space. Waiting for a product to end its life cycle to then start building a new product could lead to a disadvantage in technology interface as well as speed to the customer needs. However, not timing when technology is phasing out with a marketspace demand for a newly designed product can be a disadvantage to providing a valuable product or service to the customer.
If you have any broken links or inefficiencies in your Supply Chain, it is solvable. RTG Solutions Group can provide objective assessment and outline steps to improve your processes. Contact us today to begin strengthening your Supply Chain.