IMPROVED RESOLUTIONS FOR VALUE CHAINS
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IMPROVED RESOLUTIONS FOR VALUE CHAINS
 
Article Introduction
Use of internet has created a market managed by buyers and has brought in a lot of competition. Product complexity and ever-increasing dependence on supply chains are forcing modern manufacturers to create an environment, where both customers and partners can participate in the innovation process, and where new products can be delivered dynamically as per customers requirements. Dependence of the companies on the suppliers increases and along with that they have to respond to the changes of the supply chain. So the article focusses on one of the aspects of finding solutions for better value chain.

Article Description
Since mid-70s, information systems have been running on mainframe computers. Firms and organisations that have invested money and resources into these big and complex systems, entirely depend on them for planning, controlling and managing their enterprises. In the beginning of the 1980s, progressive firms adapted to the client-server technology. In the decade that followed, total client-server versions shipped outclassed mainframe version shipments. Traditional management information systems and database management systems were integrated into enterprise-wide systems, which we today know as Enterprise Resource Planning (ERP). ERP is still evolving and adapting to developments in technology and market demands. Improvements in integration and flexibility, extensions to Web-based business applications and a broader reach, are driving the continuous evolution of ERP. Business processes are being reengineered, largely on the back of ERP systems. These systems have been created to optimise business processes so that cost control, quality improvements, and effective managerial planning are achieved.

Beyond enterprise boundaries
Deregulation of the telecom industry, and innovations in products, services, and business models, have resulted in the expansion of business potentials. At the same time, they have also created a significant gap between the systems in place as of now and the capabilities that will be achieved in the future. ERP has helped midsized companies increase their sales by 300 per cent while restricting workforce growth to only 12 per cent. The combination of globalisation, shorter product lifecycle, and greater product variation, makes it important for companies to maximise the effectiveness of their supply chain. Only a clear vision of the required systems and capabilities can facilitate successful exploitation of this potential. Decision-makers have a growing need to assess the performance of IT elements in the infrastructure of other enterprises. Monitoring of the performance of IT elements within the enterprise is effectively done by Networking and Systems Management (NSM) platforms. Unfortunately, they also face difficulties in providing this level of visibility. This constraint has forced managers to look at experts for outsourcing their IT and networking requirements. Typically, these experts are software developers and network managers offering quality services at low cost. They also offer value added services like project management, and vendor-related and support services.

Manufacturing as a supply chain
As the power of the marketplace shifts to the customer, more pressure is placed on the manufacturer to deliver a wider variety of high-quality products in a shorter lead-time. The survival and success of suppliers depends on effective planning and scheduling for meeting the customers demand. Most of the times, responding to customer demand involves not only the manufacturer of the product, but also a whole chain of suppliers and their service providers. The use of supply chain management systems results in reduced WIP of 29 per cent and increased WIP by almost 90 per cent. This reflects on product demand increasing by 40 per cent. In management and quality circles, new concepts such as lean manufacturing, just-in-time inventory, and synchronised production have emerged over the last two decades. These models have infrastructures with integrated supply chain, which allow production schedules, product data configurations, process definitions, plant data, and status information to be synchronised and made available throughout the chain. Depending on the nature of the business, different manufacturers focus on different parts of their supply chain. Those considered manufacturing centric benefit the most from adopting constraint-based planning practices, since they have majority of their supply chain cost in production. New approaches to manufacturing and advance planning systems have emerged recently. These approaches encompass constraint-based planning techniques, and generate significant profit growth for manufacturers committed to these practices. As the companies dependence on their suppliers increases, so does the need for them to be able to respond quickly to changes in the supply chain. They have to adjust their mix of suppliers appropriately to avail the maximum benefits of new technology, product innovations, domain expertise, and strategic business relationships. With product information dispersed all over the world and managed differently by each supplier, exchange of information becomes difficult. Companies are required to find the means to connect instantly to heterogeneous processes and information systems of each new supplier.

Constraint-based planning
Planning is a two-step process. In the first step, all the constraints that hinder the achievement of a particular goal are found. In the second, appropriate operators are sourced to meet all the constraints. There are different ways of finding the constraints. One is hierarchical planning, where constraints are gathered from top-level structures down to lower ones, and the other is opportunistic planning, where they are gathered when needed. Constraints can be structural, topical, illocutionary, interactive, or argumentative in nature. An energy firm improved the accuracy of its inventory reporting to within 0.1 per cent and cut delivery time from two weeks to 32 hours. The fact that effective planning is necessary for any new enterprise-wide system is increasingly spreading awareness in the field of business process reengineering. It is apparent that the existing technology such as Materials Requirement Planning (MRP) and ERP has been able to provide the predictability and visibility required for modern manufacturing needs. Firms and businesses must discover and adopt tools that can help them plan and schedule production accurately and fast. It is in this context that constraint-based planning offers a solution by realistically modelling the flow of material through the whole production process. The science of identifying critical flow, intelligently managing them while keeping manufacturing lead-times low, and preventing the build-up of heavy shopfloor inventory, is built into the constraint-based planning system. All the abovementioned activities can be beneficial only if other resources are synchronised and utilised optimally. Effectively planning and scheduling every critical and non-critical process in the manufacturing environment requires a user-friendly system and an interface that is easily accessible (like menu-driven GUIs)

Future perfect
Strategically, innovative applications for SCM fit poorly with the existing ERP systems on monolithic platforms. Investments, in creating and supporting software to take care of the changes that take place in business processes, are restricted due to recession. Firms are realigning their business strategies to add maximum value by integrating their existing systems with enterprise-wide systems and focussing on critical areas like production planning for increased customisation. The action plan of most IT integration consultants is customising software under the existing database management system for customer and inventory, redesigning common plant systems with an ability to switch to a centralised server, and connecting branches and vendors through the Internet or leased lines.
Posted : 10/21/2005

 
 
IMPROVED RESOLUTIONS FOR VALUE CHAINS