Today we need supply chain systems that bend but don’t break. Lean and the associated processes such as level scheduling can work wonders to reduce waste in the material handling value chain; however, the perfect models that work well in our textbooks and simulation software still fall short as unforeseen events in the real world inevitably happen. We need to find ways to add in agility so that multiple small events don’t compound into a bullwhip effect.
To date, much of manufacturers’ communication to suppliers has involved one-way information flows of rigid production forecasts. In a mass production, homogenous, one-piece flow environment with stable suppliers, this can work well, but black swan events offer consistent examples of impacted supply. Micro local, 2021 Texas power outages, and macro global, microprocessor shortages require us to update our forecasts more frequently. Our global supply chains have become more complex where an issue in one corner of the world impacts another.
In addition, our products are more complex, incorporating a wider range of features and associated parts. Customers in automotive are demanding tailored personalization features such as interior trim options that lead to more vehicle configurations. As an example, a part supply shortage for grey leather at a Tier III supplier in Mexico results in a production line stop at a Tier II supplier of door trim in Ohio. Eventually a production line stop occurs at a Tier I door module supplier in Michigan. Our ability to identify potential supply issues earlier is key to creatively solving problems.
Our more complex world and products require two-way, real-time information flows between buyers and suppliers. Extra minutes of reaction time could mean millions in increased gains or losses. Below, we discuss three level scheduling considerations to help you add more agility into your operations and tame the bullwhip effect.
Determine Current State
Leaders are seeking to digitize manual processes to enhance capabilities with software investments. First, understand your current state information systems and data. Approach bullwhip challenges as you would any other Lean continuous improvement initiative. Start with 5S. In many cases we may think a data input is pulled from one location, when in fact it’s sent via another system. Understanding our master data records is key. Second, there are likely many cases where we have inaccurate data. Thus, enriching our data by gathering, reconciling, and updating our master records will lay a better digital foundation for eventual level-scheduling success.
Configure & Connect
Manufacturers of complex products, such as automotive Tier I suppliers, will have eight key considerations for enabling a level schedule:
- finished goods production forecast
- parts requirements forecast
- parts requirements forecast by delivery window
- parts inventory
- parts in transit
- parts delivery forecast
- parts inventory
- parts production forecast
The art of eliminating the bullwhip effect is less in the algorithms and more in orchestrating the best overall systems and enabling desired business outcomes. Typically, this is done by effectively paring the best systems, timeframes, and data manipulations that allow for the efficient information and physical flows back and forth between buyers and suppliers.
Empower Your Extended Enterprise
It’s not enough to dictate to suppliers what’s needed and to penalize them for noncompliance. We need to be active partners in our suppliers’ success. Leading manufacturers are striving to be a “buyer of choice” by providing their suppliers with more streamlined ways to interact. The growing expectation is that both buyers and suppliers can make micro-adjustments in real time to production and delivery forecasts.
There’s a growing appreciation that business success is tied more and more to the supply chain ecosystems’ success. This awareness is driving greater two-way connectivity of buyer and supplier systems, requiring a strong need for nimble software tools that can bridge the connectivity gap between different buyer and supplier enterprise resource planning (ERP) systems.
Scheduling Agility Drives Better Business Outcomes
Mutual success is best had when buyers and suppliers are collaborating to share real-time, two-way information. The speed at which supply chain data is converted into actionable information will determine how quickly teams can foster a supply competitive advantage.
The journey of addressing the bullwhip effect starts with understanding your data, and from there, leveling your schedule by enabling visibility to reduce waste within your extended enterprise.
Increasing scheduling agility drives better business outcomes. Once buyers and suppliers are collaborating in real time, a wider range of positive supply optimizations can start snowballing quickly.