A partner-controlled supply chain meant stiff penalties for delays
An American corporation which designs, develops, and sells audio equipment wanted to plan, measure, and analyze manufacturing performance against both sales demand and manufacturing capacity. In the current system, factory managers did not have insight into how their sister factories were performing. As the demand increased, the client needed to optimize the use of resources to maintain production levels while driving down costs.
Moreover, a new partnership with a global corporation resulted in additional pressures to have better visibility and insight into anticipated manufacturing performance and demand.
The client faced two distinct problems.
First, the client was growing very fast and developed a strong relationship with another corporation. However, this corporation ran its own supply chain. The partnership meant that the corporation would pick up the raw materials from the client and transport them back to its own plants. The client was unable to anticipate how many components its partner would need or when their trucks would arrive on site. They also faced penalties ($100,000/hour) if they slowed their partners’ trucks down.
In same the light, the client did not know what items or components their partner would need at any given time. The client had no way to track variance between their own manufacturing plan and their partner’s expectations and demands. Their MRP (Manufacturing Resource Planning) was limited to their own products and did not track to manage the updated needs of their partner.
The second problem came from the production of a popular new product, a wave radio. The high demand for this product was far more than the client anticipated. The current set-up gave incentives out to factory managers to keep the cost down. There were five factories and none of them had insight into how much the others were manufacturing. One factory may be short staffed and overcapacity and others could do the extra capacity but did not know it was needed. The client needed a way to manage this better with the upcoming holiday season. How could they optimize the use of resources to maintain production levels while driving down costs?
Archetype utilized Oracle Hyperion Essbase solution to create more detailed analytic reporting for the client. By creating a drill-down dashboard, MRP vs. Demand Variance by SKU by Hour, the client could ensure that their factories had the components needed and adjust to the new demand.
Archetype also created a dashboard for the factory managers. By tracking over 1,000 SKU numbers in this multi-dimensional database, as well as their own factory’s capacity, the managers could collaborate to assign which factory could manufacture the needed components. This collaboration saved costs – and saved equipment – as no piece of machinery was overworking to meet demand.
By having a consolidated view of the capacity across factories, the client (and their factory managers) could anticipate things better. Moreover, the visibility into their partner’s data (looking at their SKU by the hour) allowed the client to understand what components were in current demand. This allowed the factories to be nimble and retool the components and build something different if necessary.
Before Archetype’s assistance, the client often wondered if they were going to be ready for their partner’s truck tomorrow morning. Now, they had the ability to track variance between their manufacturing plan vs. demand plan their partner was expecting.