How to reconcile production and the supply chain?
28/04/2023
Reading time: 4min
It is not uncommon, during S&OP meetings, to realize that the production and supply chain teams are misaligned. Often, they do not use the same tools, and consequently, they do not refer to the same data. They also do not have the same objectives.
In most cases, we encounter teams that work and juggle between a certain number of Excel files specific to each team and their ERP. So in addition to not working with the same tools, production and supply chain try to exploit static data on a daily basis.
In these cases, it is complicated to obtain KPIs that truly make sense and on which we can rely to build in a solid and sustainable way.
To reconcile production and supply chain, several solutions can be considered.
Test and adopt solutions
Aligning Objectives: First of all, it is essential to ensure that the objectives of production and the supply chain are aligned and complementary. It is not as "easy" and obvious as it seems, but it is a low-cost solution that will facilitate communication and collaboration between teams.
Consider a Software Overlay:
Intelligence and Dynamism: There are several solutions on the market that manage data and collaboration very well, can simulate scenarios, and bring intelligence to the end of the system or in decision-making. This or these solutions will provide dynamic data to teams, as well as common tools that will promote communication.
Information Sharing: It is also highly recommended to opt for a solution that shares real-time information on stock levels, demand forecasts, and production lead times. This will help synchronize production and supply chain activities.
Integrated Planning: Integrating production and supply chain planning can facilitate access to a comprehensive view of the company's needs. This will help identify synergies and avoid potential conflicts.
Flexibility: Choosing a solution that can incorporate data unknown to the ERP, such as a breakdown or shortage, will promote flexibility in production and the supply chain to react quickly to changes in demand or supply issues. This may include adjusting production levels or seeking alternative supply sources.
Collaboration with Suppliers: Working closely with suppliers, or even integrating supplier information in real-time into a solution, would ensure a regular and quality supply of raw materials. This would reduce production delays and improve supply chain efficiency, and could even reduce a potential bullwhip effect in certain cases.
Fluid Communication: Encouraging open and transparent communication between production and supply chain departments is a good way to bond the teams. This communication should take place during meetings, such as S&OP meetings, but also outside of them, and include updates to allow each party to understand the needs and expectations of the other.
Training and Skills Development: Investing in training and developing the skills of production and supply chain teams will improve their mutual understanding and strengthen collaboration.
There are HR solutions specialized in the industry such as Mercateam that will easily identify not only training needs based on the current skills and knowledge of employees but also gaps, missing skills, and qualifications within an organization.
Measurement and continuous improvement
Setting up KPIs
Once the initial measurements are taken or implementations completed, establishing key performance indicators (KPIs) will help measure the effectiveness of production and supply chain teams now that they are working "hand in hand" with new tools. These indicators will help identify areas for improvement and implement any corrective actions.
Validate a ROI
Next, it is necessary to validate a ROI because one can have successful adoption and teams that love the solutions and new routines, but it is essential to check that these new processes and investments in digital solutions generate gains.
If your company has multiple production sites, do not hesitate to set up pilots. The goal is to have some occurrences to validate the ROI while acknowledging that, as we do not always start from the same starting point in all pilot plants in terms of underlying digital maturity, the ROI will not be identical everywhere.
The rhythms of S&OP type meetings and the frequency of strategic interactions also play a role because clearly, if the frequency is higher, the ROI will also be greater.
→ Learn more about implementing a digital tool within an industrial site
In summary
Reconciling production and the supply chain requires an integrated, collaborative, but also iterative approach. If it were that simple to have the two teams work together with a shared data and KPI view, the secret recipe would have been revealed long ago.
However, each industrial group has its own constraints, its own structure, and its own culture. Thus, it will be necessary to find motivated individuals within both departments to successfully carry out this essential operational mission, but also conductors (site directors, directors of innovation and digital transformation) to maintain a macro, strategic, and ROI-focused view.
