Paul Myerson, author of Lean Supply Chain and Logistics Management is my guest enxt week on the Business901 podcast. Paul claimed to have written a practical guide hand from this excerpt I think you can tell. He takes the most complex subjects and makes them simple. I re-read many parts of the book not because I did not understand but because I wanted to understand more.
Joe: When we think about lean, we always think about pull. Is forecasting the pull for a supply chain?
Paul: Customer demand is the pull. That's another thing you talk about. What's the supply chain? It's really, to me, more like a supply web. Also, some people break it out ‑ there's really a demand chain, which is really part of the supply chain, but at the front end between you and the customer. It is pull, but a lot of these days, and I got involved in this in the early '90's, with what they call "quick response." Now, they refer to it as CPFR, collaborative planning forecasting replenishment ‑‑ basically, working with your customers to develop accurate forecasts by getting to actual point‑of‑sales, and using that information to have a much improved forecast. My thinking is, if you can get your top 20 customers going through some kind of quick response CPFR programming, you're at least collaborating on the forecast, if not managing your inventory for them and placing orders for them.
That top 20 customers could be 80 percent of your forecast. You could then minimize what they call the "bullwhip effect," where things get magnified along the supply chain disruption. You can help to get closer to actual demand and build that into your forecast and have a much more accurate forecast. That's one major step to becoming leaner because we know inventory is used to cover a lot of things, one of them being variability and demand and lead time.
Joe: You're saying the secret to good supply chain is getting deeper with your customers?
Paul: Right. One of the secrets and with technology today, it's a lot easier. These days, you hear a lot of the terms, "visibility," "collaboration." It's critical to have visibility downstream in your supply chain towards the customer. Maybe it's not a secret anymore because a lot of people are doing it, but I think some people look at it as more of a, "Well, our customer wants us to collaborate or work with them on forecasts or manage or place their orders for them." You have to look at it as a competitive advantage, a strategic choice to go that route to improve not just your process with your customer and make them happy, but to improve your process and also your suppliers' processes.
About: Paul Myerson has been a successful change catalyst for clients and organizations of all sizes. He has more than 25 years of experience in supply chain strategies, systems, and operations that have resulted in bottom-line improvements for companies such as General Electric, Unilever, and Church and Dwight. He is currently Managing Partner at Logistics Planning Associates, LLC, a supply chain planning software and consulting business (www.psjplanner.com).
Related Information:
Why won’t Lean commit to the Demand Chain the way it committed to the Supply chain?
A Collaborative approach to Value Stream Mapping
Customer Experience more powerful than the Supply Chain?
Summary of the 6-part blog Series using DDMRP
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