Optimizing the supply chain is one of the most effective things a company can do to improve its bottom line. Drilling down deep inside logistics resources, identifying potential issues before they happen, and discovering new opportunities for efficiency and optimization, all provide valuable insights into everything from shipping costs and inventory carrying costs, to production scheduling and total cost of acquisition.
Impact cost of ownership
Most companies understand these fundamental processes for reducing costs, but how far is your company actually going? Are you looking at your supply chain all the way down to the production line? Director of supply chain services at TTI, Drew Curtis, offers insight into how a manufacturer can improve not just external supply chain efficiencies, but also impact total cost of ownership. Curtis and his advanced inventory management (AIM) organization have created a suite of proprietary tools they use when working with TTI customers.
Curtis explained: “It all starts with the team. Many of our AIM team members have achieved industry standard accreditation from the Association for Operations Management, the Institute of Supply Chain Management and the Accuity Institute. These certifications demonstrate the commitment of TTI’s AIM organization to stay in touch with the latest supply chain innovations and technology. These team members, which include our field level supply chain solutions managers, work to define customer specific solutions that optimize inventory spend and manufacturing efficiencies.”
Undertake cost analysis
The primary effort of the AIM organization at TTI involves an activity based cost analysis approach and the company’s software engineers have developed proprietary applications for supply chain analysis. One tool specifically suggests the optimum lot size for components shipped to customers. This lot size analysis tool looks at forecast histories, shipments and future demand information in conjunction with total acquisition and inventory carrying costs to arrive at optimum shipment frequencies and lot sizes. The tool also provides additional part and manufacturer specific information utilized by procurement professionals to manage their commodities.
A forecast analysis tool gives the AIM team a window into the customer program as a whole, as well as part specific performance. This tool provides easy access to customer demand history along with consumption-to-forecast information. Measuring each lead-time demand period and the consumption accuracy for that period, the report provides data on component lead-time trends, volatility of the demand schedule, and required reservation information.
When combined with other data points such as available shelf space at the customer’s point of use, the cost of purchasing as well as traditional supply chain cost centers, Curtis finds his team is able to identify potential internal cost savings, right to the production line.
See the difference
Sow how are these savings measured? In the case of TTI, there is a full suite of web services that allow AIM program customers to access real-time status of their entire supply chain from top to bottom. Materials management professionals deal with shortages on a daily basis and this open-book pipeline reporting is exactly the same set of proprietary tools used by TTI AIM program managers for instant status review. This provides the customer with essential information to ensure there are no surprises in production support and advanced notice to take appropriate action to prevent production shortages.
The system reveals the exact positioning of materials in the pipeline from component supplier manufacturing schedules to the warehouse. This system shows what is forecast, provides alerts as to potential issues, and can make automatic adjustments or offer options when unforeseen events occur anywhere in the supply chain.
From lot sizing and optimizing on-site storage, to minimizing the costs associated with generating and tracking purchase orders, Curtis is insistent that the deep-dive process TTI’s AIM organization utilizes for customers will show returns. He claims anecdotal evidence of savings in the six-figure range although, obviously, savings are based on unique cases and the degrees to which TTI has been a part of the production process, but Curtis is confident his supply chain specialists can identify efficiencies and total cost of ownership savings in virtually every application.
One final point Curtis raises to improve the quality of any supply chain program is the requirement for continual review to maintain the integrity of the data sets being analyzed and processes being run. By continuing to look for savings and efficiencies throughout the system, not only are ongoing value areas maintained, but opportunities for creative solutions to bottlenecks and pain points also reveal themselves. Commitment to supply chain programs like those TTI customizes for its customers can have tangible effects over short and long term production programs.