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0845 345 3300 tellmemore@theaccessgroup.com www.theaccessgroup.com

A supply chain solutions whitepaper

Executive summaryImproving manufacturing effi ciency is among the top challenges for nearly half of companies, yet even more admit their supporting IT isn’t up to the task, unsurprising since half run their manufacturing operations on nothing more sophisticated than a spreadsheet.

There may be fears that a major IT implementation could be disruptive at a time when every customer order is critical, but the lack of real time shop fl oor data integrated to sales, purchasing, forecasting, scheduling and other support systems is costing companies dearly in cash and customers.

Systems such as Access Supply Chain off er high yield, low risk benefi ts both now and to build on in the future.

The Supply Chain Management Survey was carried out for Access Group, the leading Supply Chain Management System vendor, by Redshift Research among

300 business decision makers working in UK manufacturing and logistics businesses

‘Effi ciency’ in manufacturing is often

based on narrow measures such

as the performance and capacity

of individual machines, and on

measures of set-up, production

and idle times. True effi ciency is

a measure of the ability to fully

meet customer requirements

while employing the minimum of

resources, physical and fi nancial.

Achieving such effi ciency

requires the proper integration

of manufacturing operations with

a host of supporting business

processes. Yet a recent Supply

Chain Management survey carried

out for Access showed that while

44% of companies, and especially

medium to large companies,

ranked achieving manufacturing

effi ciency among there most

critical challenges, 52% believed

themselves to be lagging in this

area of IT infrastructure.

One of the most obvious, and

costly, ineffi ciencies is excessive

stockholding, despite or perhaps

because of the pressures of the

recent recession. While companies

still acknowledge the merits of

Just In Time (JIT) manufacturing,

with volatile business levels, cut

throat competition and ever more

onerous customer expectations,

the risks of failing to meet customer

requirements from a leaner, more JIT

manufacturing system are seen to

outweigh the effi ciency gains of JIT.

This need not be so. Our advice to

businesses is that the most obvious

effi ciency improvements attainable

derive from reducing stockholdings

through better forecasting of future

demand and smarter response to

actual orders, reinforced by more

proactive relationships with critical

material suppliers.

Very few companies work in an

environment where customer lead

times are so long that they can

wait until orders come through

before ordering materials and

components, or can force sudden

schedule changes on suppliers

without penalty - automotive being

a possible exception. Timescales of

course vary immensely.

Access customer Surrey Satellite

Technology, for example, builds

satellites and many specialised

materials are on a six-month

lead time, not to mention lengthy

periods for design and sign-off :

clearly they cannot aff ord to wait

until a fully specifi ed order is in

place before ordering material.

In the automotive industry, by

contrast, parts and materials

delivery schedules against a long

term continuing order will often

be ‘fi xed’ two weeks ahead with

more fl exible schedules further out,

although in practice many suppliers

to the automotive industry have

to hold excessive stocks because

those two-week windows are by

no means as ‘fi xed’ as they purport.

Even in a JIT environment, ‘Make

to Order’ is rarely synonymous with

‘Buy to Order’.

Integrate IT & hammer ineffi ciency

Improving manufacturing effi ciency is high among the top challenges faced by

companies. Investing in supply chain management solutions can give all types of

manufacturers a greater ability to accurately forecast for brighter yields and falling

risks – and that’s just the start of a climate change in manufacturing effi ciency.

a recent Supply Chain Management survey carried out for Access

showed that while 44% of companies, and especially medium

to large companies, ranked achieving manufacturing effi ciency

among there most critical challenges

52% believed themselves to be lagging in this area of IT

infrastructure.

EXCESSIVESTOCKHOLDING

So forecasting is vital yet many

manufacturers work on bad

forecasts, or even an absence of

any meaningful forecasts at all.

Sound forecasting and production

scheduling, linked in to all the

other tools in the business and

manufacturing systems, can on

the other hand allow companies

to hold just suffi cient raw material

stocks to start manufacture as

soon as an order is received and

with confi dence that outstanding

requirements can be satisfi ed by

the supply base in good time.

The solution requires the

combination of periodic (e.g.

monthly) sales data and longer term

forecasting to procure and schedule

delivery of the requisite materials.

In eff ect, actual sales orders as

they are received ‘consume’ the

forward materials orders generated

from forecast, and MRP systems

can react to that dynamic quickly

to create eff ective buying of further

materials and components.

There may be some feeling that

Supply Chain Management of this

sophistication is only for the larger

companies: small fi rms believe

this is beyond them, but then few

of them have tried. They tend

not to run the perceived risks of

JIT because they can’t aff ord to

let any customer down: one bad

experience is too many. But to be

worthwhile JIT doesn’t have to

achieve the ‘ideal’ of half-hourly

scheduled deliveries to lineside:

major effi ciencies can be achieved

by systems that maintain the

minimum stock levels needed to

start production,

in case there should be a supply

diffi culty, while at the same time

minimising supply risk by helping

build more positive relationships

with suppliers. Systems for

automated email exchanges

confi rming forward forecasts

and orders, delivery schedules,

proposed and actual delivery times,

enable the supply base to be more

proactive with their own planning,

production and delivery. The ideal

is to have, and be able to share, a

full view of stock and operations

– what is on hand or in progress

and what is scheduled for delivery

and manufacture, so that JIT can

be run without putting excessive

and unachievable demands on

suppliers. That is a goal that is

achievable for large and small

manufacturers alike.

But IT’s contribution to

manufacturing effi ciency by no

means stops at forecasting and

scheduling. Even those traditional,

narrow measures of effi ciency

can benefi t. Many fi rms manually

capture data on machine, process

and labour time and performance –

and then do nothing with it, beyond

perhaps the occasional spot check

of cycle times.

Manual records, often taken in a less

than conducive environment, if they

are used at all are typically rekeyed

into various systems, with all the

waste and error that implies. Yet hand

held scanners, touch screens and

direct feeds from machine operating

systems are inexpensive and easy

to implement and allow real time

reporting and visibility of, for example,

actual as against standard times. If

a job is taking two hours against the

‘standard’ one, then necessarily the

whole of the schedule is thrown, or

expensive overtime incurred. One of

our customers, Chesterfi eld Special

Cylinders – a leading designer and

manufacturer of engineering solutions

for high pressure markets, previously

employed an individual one full day

a week to record and input times,

which were of course never up to

date. Now she can actually see and

focus on what is actually happening

in the production cycle. A day spent

entering shop fl oor time sheets is a

day wasted.

And when the systems around the

manufacturing operations can off er

real time visibility of what is actually

going on and what is planned for the

future, other things become possible.

There will always be last minute

changes: an integrated view allows

the eff ects of possible scenarios to be

calculated almost instantly, and when

a course of action is determined,

everybody’s ‘work-to’ lists - supplier,

operative, dispatcher, courier – can

be updated simultaneously.

Similarly, the sales force can

enjoy, without leaving its desk,

all the information – when did

manufacturing start, when will it fi nish,

how much is available to be picked

and dispatched – that an anxious

customer may need, all essentially

attached to a single sales order entry.

Production scheduling, based on real,

current facts, enables sales to make

the delivery promise to the customer

in confi dence.

So we see the main challenges

in achieving greater effi ciency in

manufacturing operations around

exchanging up-to-date information

with suppliers (which may of course

include other parts of the company,

perhaps on other sites) and creating

visibility both of customer orders

received and forecast, and of

supplies ordered, received and

scheduled for delivery.

MANUAL

DATACAPTURE

LACK OFSALESVISIBILITY

UNPREDICTABLEFORECASTING

Our software automates the

collection and dissemination of this

information to people and systems,

and provides what they need to

make informed decisions. Indeed

a major focus for Access currently

is in presenting system-generated

reports and recommendations in

a full context so that, for example,

the Buyer can understand why she

is being asked to place the order.

Giving people a complete picture

without them having to pull the

strands together themselves gives

users confi dence that what the

software is telling them is correct.

An example of what can be

achieved comes from Access

client WDS Component Parts, a

50-employee company in Leeds

off ering next day delivery on a

14,000 part stock list. They were

looking for a step change in stock

availability and delivery to promise

execution without raising stock

levels. In practice WDS has met its

target of fi lling 97% of orders from

stock while reducing inventory

by 12% (worth around £800,000).

Enabling steps have included daily

reports on overdue works orders,

which are treated as you would

an aged debtor, and have been

reduced by 40%.

Sales receive daily ‘promise

review’ reports helping them keep

customers informed and satisfi ed.

Warehouse shipping performance

has been tightened, a reliable

perpetual stock-take has removed

an annual £3,000 overhead, and

many manual processes simplifi ed

or fully automated. For a relatively

small company these results are

seriously signifi cant.

That has to be more effi cient than

the current situation. Our survey

showed 48% of companies using

nothing more sophisticated than

Excel spreadsheets for SCM

while only a third use ERP or

SCM systems. 23% don’t record

cycle time data, and a very large

proportion of what is recorded is

done manually. Firms claim they

want integration with warehousing

and fi nancial systems, adaptability

to last minute changes, and up-

to-date shop fl oor data: multiple

site operation, what-if simulation,

and the ability to cost new jobs

on the basis of past jobs are also

important to signifi cant numbers of

companies.

What is clear, and what many

manufacturers are belatedly

realising, is that if you are not

capturing and using basic shop

fl oor information, and comparing

it with the theoreticals generated

by forecasts, schedules and

standard times, if you don’t know

what you’ve bought, what it cost

to process and how long that took,

then your margins are wrong, your

product pricing is wrong, your

delivery promises are wrong, your

sales and marketing strategies are

wrong. The customer, however, is

always right.

Access client WDS Component Parts, a 50-employee company in Leeds off ering next day delivery on a 14,000 part stock list. They were looking for a step change in stock availability and delivery to promise execution without raising stock levels.

In practice WDS has met its target of fi lling 97% of orders from stock while reducing inventory by 12% (worth around £800,000).

COSTLYLL

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0845 345 3300 tellmemore@theaccessgroup.com www.theaccessgroup.com

Customer case study

Read how leading engineering components manufacturer WDS achieved 97% order fulfi lment while operating 12% less gross inventory.

www.theaccessgroup.com/wds

About Access

We are a leading author of integrated business management software. One

of the UK’s top fi ve fastest-growing software developers (Sunday Times

Buyout Track 100), over 10,000 businesses and not-for-profi t organisations

use Access to unlock their potential. Off ering solutions for ERP, fi nance, HR,

payroll, warehousing, business intelligence, PSA and manufacturing, our vertical

expertise and template solutions allow for rapid and easy deployment, whatever

your industry or sector.

0845 345 3300 tellmemore@theaccessgroup.com www.theaccessgroup.com