Tag Archives: supply chain

Lead Time

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Lead Time is the amount of time between the placing of an order and the availability, after the receipt, of the goods ordered. It is a major factor that needs to be taken into account in order to achieve inventory optimization, and its control is most advantageous for retailers and wholesalers. Lead times, however, typically are shown to vary when examined.

A few supply chain examples that exhibit a standard lead time are:

  • 3 months of lead time for an Asian manufacturer that has a warehouse in North America or Europe
  • 1 week of lead time for a wholesaler ordering to a local manufacturer
  • 1 day of lead time for next-day delivery for stores replenished by a regional warehouse.

A common principle is the longer the lead time, the higher the total inventory level. Total stock certainly includes inventory-on-hand in addition to inventory-on-order, and a longer lead time increases the dependence of the ordering company on using precise forecasts. To be sure, when next day delivery is available, an inaccurate order (too large or too small) can be fixed with two or three days by applying corrective measures. In the instance of shipments from overseas, inaccurate orders can penalize the business for six months or more.

In most companies, stock cannot be replenished immediately. Thus, to guarantee that the occurrence of stock-outs stay few and far between, demand planners need to anticipate how much stock is likely to be consumed between the current moment and the next replenishment, while also assuming that orders are passed right away. After all, one can expect that while items are in transit, stock levels will certainly be reduced.

One reason for varying your lead times is for stock-outs from your suppliers. When this occurs, suppliers have to wait until their own stock is replenished before shipping the items to you. Depending on their own lead times, suppliers’ stock-outs certainly can result in a dramatic increase of your lead time in comparison with the usual situation.

Another reason for varying your lead times, if they are measured in calendar days, is that suppliers may have a day or two closed every week (ex: no delivery during the week-end) which can increase the (calendar) lead time of respectively one or two days, and national holidays around the world can also increase the discrepancy between your lead time and special days on the calendar.

Standard safety stock models anticipate that lead time will be a constant that gets factored into calculations of optimized reorder points. To best optimize the process of making your lead time decisions, a comprehensive inventory management software is exactly what you need. SIMMS is the world’s leading stock software package. Visit www.simmssoftware.com or email sales@kcsi.ca today for more details how SIMMS best suits your needs.

2013: The Centenary of Malcolm McLean

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2013 marks the 100th anniversary of the birth of Malcolm Purcell McLean, an entrepreneur from North Carolina who came up with an idea that completely transformed the world.

In 1937 McLean was in Hoboken, New Jersey, to drop off a load of wool bales from his truck. Having waited most of the day to unload, he had watched the stevedores putting bales into slings then hoisting them one-by-one onto the ships. He concluded that a lot of time and money was being wasted in the current process. His sudden epiphany was that it would be much simpler to take off the rear of his truck and put that on the ship.

He subsequently founded Sea-Land, a company that became the world’s first container shipping line. Employing this new concept, ships could be loaded and unloaded within hours rather than days or weeks. A future concept was to drop off empty containers in countries such as Japan, where they could be filled with exportable items for distribution to wholesale and retail markets around the world.

In 2013, we have seen the advent of ships — 20 of them — commissioned by Denmark’s Maersk Line that are capable of carrying 18,000 containers each, doubling the capacities of the largest ships active only a decade before. McLean could not have foreseen the scope that his idea would acquire, but its influence has truly laid the pattern for all commerce and supply chain ideas that have followed since.

Supply Chain Management Factors to Consider

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With a Supply Chain Management (SCM) solution in place, a business can streamline and centralize their distribution strategy, to eliminate the logistical errors and lack of coordination that can lead to delays. You need your warehousing, ordering and shipping departments to be coordinated.

Supply chain performance improvement requires that a number of factors are considered. The following areas of interest must, at some juncture, be addressed:

Strategic Theory
Such metrics of strategy include defining the company, establishing a budget, managing oversights, as well as creating and maintaining the overall supply chain.

Generate:
1) New product revenue contribution

2) New stock-keeping unit (SKU) volume

Planning
This includes the metrics that drive customer service and working capital (including inventory levels across the supply chain) and that address the many functions of inventory management, distribution requirements planning, demand planning and supply planning.
Some of the metrics reviewed as part of this category include:

1) Forecast accuracy

2) Perfect order rates

3) Working capital

Sourcing
Such metrics that effect your procurement effectiveness and efficiency — strategic sourcing, operations and management of suppliers, contracts and commodities. These include the following details:

1) Sourcing of contracting

2) Sourcing cost

Manufacturing
Such metrics as cost and staffing around manufacturing, including engineering, maintenance, material availability, production, quality assurance, and sanitation. These include the following details:

1) Capacity utilization

2) Direct labor vs. indirect labor

3) Manufacturing outsourcing rate

4) Overall equipment effectiveness

Deliveries & Returns
Such metrics include cost and staffing levels for order distribution, fulfillment, logistics, returns/recalls and transportation.

SIMMS 2013 Inventory Management software can help you do that. Using the newest technology to increase both versatility and accuracy, you can keep ahead of the curve and know what you need and where you need it long before the actual requests come in. Contact KCSI here to implement the most versatile and specific inventory and accounting management system on the market today — SIMMS 2013.

Demand Forecasting with SIMMS

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Supply Chain Management solutions provide comprehensive series of features to support their end-to-end processes including supply chain planning to improve all related operations by enabling accurate demand forecasting, improving order promising, and eliminating manufacturing over-runs.

Try these concepts in your forecast approach:

1) Calculate the actual forecast. While there are several different formulas used for this process; many include the assumption that a fixed percentage of the target market will consume the item a particular number of times within the forecast period. Usually, these percentages are based on either industry standards relevant to the product or the particular history of past periods associated with the actual good or service offered by your business.

2) Collect data relevant to the effort to forecast demand. Information such as breakdowns in population within targeted areas, dividing by age groups or economic classes, will often simplify the determination of the estimated number of sales to anticipate during the considered period.

3) Designate parameters for your demand forecast. Set a specific time frame for the projection (like the beginning of the second quarter to the end of that same quarter). Such an approach makes it easy to include highly likely events to occur in that time frame and that have an effect on consumer demand for the product under consideration.

4) Pinpoint the products that you will consider as part of the forecast. Doing this helps creates a sense of focus for the forecast and simplify gauging the public recognition and attraction to the particular products. You can avoid the simple reliance on the overall reaction of consumers to the entire product line or brand name.

5) Specify the target market(s) for the product. The market might be composed of certain demographics that include gender, age, location or any particular set of identifying desired characteristics. This adds focus to the demand forecast because it provides understanding to your business about the level of business volume that can be reasonably expected from that demographic.

SIMMS 2013 Inventory Management software permits for the review of all processes in place within your business. Comprehensive and customizable reporting features, progress printouts and stock forecasting features make your plans — and adjustments — both easy to understand and to implement. Contact KCSI today to learn how SIMMS can make your plans a reality.

Properties of a Good Supply Chain

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A comprehensive software program for inventory must incorporate the features needed by companies that employ a supply-chain system that include management capabilities for global orders, warehouses and transportation. Your software must grant you enough features to guarantee control of planning, monitoring and analysis of the supply-chain. Some necessary features are:

Planning

– You need to be able to manage the wide variances possible because of seasonality and new products so the decisions and scheduling is automated across various types of dependency

– Your Replenishment Module needs to optimize inventory across a possibly-wide network of trading partners and locations

– Interface is necessary with possible trans-shipment hubs or warehouses will allow re-routing and efficient cross-docking of supplies to the necessary destinations

– Versatility to handle scenarios where short supply scenarios occur and the chance to prioritize stock allocation throughout your web across multiple stores or varied groups of customers

Monitoring

– Provides a  comprehensive tracking and tracing of shipments and logistical units to leverage Advance Shipping Notice (ASN) data for efficient receiving and cross-docking processes, with proof-of-delivery records

– Creates an access point for the monitoring the execution of the supply chain, including the in-progress production(s) occurring in warehousing and shipping, and support for proactive detection of potential problems like capacity overages or point delays

– Supports a standardized method of managing alerts and events and, with the steps of the different processes and records exceptions to them. Alerts within the system should be generated and then distributed to designated people for action

Analysis

– Lays out the steps in the path toward all of the company’s goals and lets you assess effectiveness levels of all areas of the operation

– Is easily installed and used while allowing for complete information access and easily-verifiable measurements

– Provides access to consistent and accurate information for precise assessments

– Analytical users must be able to understand the process on their own and learn quickly and easily