Rapid Supplier Identification Using Automation – Fives Steps to be More Agile

Guest Author: William Crane, CSCP, CEO of IndustryStar

Have you needed to adjust your suppliers quickly during this pandemic?

Many supply chain professionals have felt the fragility of their supply chains. As they strive to adjust their supply base to bend not break; time is a luxury they can’t afford.

Supply chain leaders are now required to select and source alternative suppliers in a compressed, more stressed market environment. Moving forward, managers will have to re-evaluate their supplier selection process and criteria, as traditional approaches with a heavy emphasis on low piece cost has resulted in too much risk.  

Manufacturers heavily reliant on high-risk low-cost country global sourcing will need to identify domestic alternative suppliers to combat volatile tariffs and fluctuating delivery times. High industry spend concentrations in financially distressed suppliers will lead to supplier cash flow constraints and resulting bankruptcies forcing manufacturers to re-source.

In planning for similar future disruptions, supply chain leaders will need to seek out alternative suppliers to simply mitigate risk, e.g., different regions, shorter distances, and dual sources. Supply risks and their consequences have become glaringly apparent with the US-China tariffs, COVID-19 pandemic and 2020 recession.

Preparedness fosters agility. We’ve outlined five key steps below to help you be better equipped moving forward to adjust suppliers quickly if needed.

  1. Earlier Identification of Risk in Secondary and Tertiary Suppliers. For example, a Tier I supplier of handlebars can experience cash flow issues, due to the rapid motorcycle sales slowdown at OEM Harley-Davidson, which then results in little to no invoice payments to a Tier II supplier of powder coating for the handlebars. As supplier invoices can range from Net 30 to 90 days, a 60 day drop in revenues for the supply base can quickly wreak havoc. Supplier available funds to restart and maintain high manufacturing fixed costs in raw materials, parts, and people are stretched thin. One at risk supplier, like the Tier II supplier of powder coating can quickly halt production not only at the Tier I supplier of handlebars but also at OEM Harley-Davidson.

Earlier identification of risk by the Tier I supplier of the Tier II supplier’s cash flow issues and swift remediation could have avoided costly manufacturing disruption throughout the supply chain. When proactive actions to remediate supplier issues break down, the Tier I supplier may be forced to rapidly identify, qualify and ultimately resource a supplier.

  1. Shift from an Event to Cycle Mindset. World-class supply chains must continuously identify suppliers to maintain a healthy supply base to account for normal and unforeseen exits of preferred suppliers. The problem with supplier selection though is that it is often described as a cumbersome manually – driven process that requires enormous amounts of time, of which we do not have.

Many supply chain managers describe the supplier identification process as the “event” bottleneck to strategic sourcing. However, it is a bottleneck that is completely unnecessary and easily overcome with already proven tools. Intelligent software productivity tools and supporting data services are empowering supply chain professionals to automate the supplier identification process. Automation is freeing up professional’s time from the tactical to enable them to focus on more impactful work such as supplier relationships and strategic sourcing.

  1. Accelerating with Intelligent Software. Cloud-based supplier search intelligent software can provide unified information and inputs to identify suppliers faster, more strategically and with more resilience. These self-service software tools allow professionals to gain access to powerful advanced search tools and vetted existing supplier data. Technology capabilities can include advanced supplier search filtering by countries and artificial intelligence (AI) that make supplier recommendations based on your unique industry supply needs further accelerate results.

Newer software technologies that allow users to add data e.g. suppliers, manufacturing processes and contact information solves the problem of having to document your supplier data in offline manual analysis tools such as Microsoft Excel. Further, intelligent software that tracks your supplier interactions and makes supplier recommendations to you based on your unique requirements can be akin to adding a team member to support you on your path to success.  

  1. Collaborating with Productivity Tools. Identifying suppliers is only part of the bottleneck challenge, once we have our data, we need a place to put it. Typically, we store our supplier lists, capability data and notes in manual note pads or our heads.

Today, leading supply chain professionals are collaborating real-time on the same critical supply needs e.g. identifying suppliers with a specific welding capability, using collaborative software productivity tools. These more agile ways of working allow more work to be done by multiple team members at the same time. Further, software that allows for teams to build supplier lists, add custom data, track supplier statuses, and document interaction notes enables teams to accelerate the supplier identification to sourcing award process.

  1. Enhancing with Data Services. There is no one source for all supplier data. Further, as suppliers are always changing, e.g. financials, capabilities, services, your approach to continuously acquire quality data is just as important as your initial search. Traditionally, we are left to utilize multiple software, website and database tools and aggregate our research into manual analysis tools e.g. Microsoft Excel. This approach can work fine, but it is slow, expensive, and prone to human error.

Select software companies also have service offerings that can quickly acquire, clean and enter ideal data that is tailored to meet your specific needs. Digitizing, consolidating, and acquiring supplier data are key capabilities to enable supplier identification speed. Scanners to convert paper documents to digital records, automation software to upload data and machine learning to quality check data are a few examples of technology tools that can reduce your supplier data management time. Supporting data services should free up your time while saving you money versus acquiring data by throwing people at the challenge.

Preparedness Fosters Greater Agility

We are in the first quarter of a long game as global markets remain volatile and key input variables of the pandemic, recession, and tariffs remain unknown. To combat these headwinds, we must proactively document our supplier lists by spend category, prioritize high-risk suppliers, and identify backup suppliers to foster greater supply chain resiliency. Documenting your supplier lists by supply need and identifying and qualifying backup suppliers is a proven strategy for reducing ongoing supply risk.

We cannot predict specific supplier issues or suppliers we may need to resource. However, we can control the speed at which we address future supply needs and issues by anticipating downstream risks, shifting to a cycle mindset and leveraging technology to be more agile.  

About the Author

William Crane, CSCP, CEO of IndustryStar, an Ann Arbor, Michigan-based on-demand supply chain services and software technology company that partners with leaders to reduce the cost, time, and risk of bringing new product ideas to production and beyond. William is a trusted advisor in supply chain with demonstrated results starting, launching, and enhancing procurement, logistics, supplier quality, and manufacturing organizations.

His work has appeared frequently in the American Production and Inventory Control Society (APICS), Institute for Supply Management (ISM), Council of Supply Chain Management Professionals (CSCMP) and Sourcing Industry Group (SIG), among others. William’s passion for bringing technologies to market that have a positive impact on the world can be found via his blog Supply Chain for Tomorrow’s Technology.

William is also Host of the Supply Chain Innovation podcast where he interviews top industry change-makers to uncover strategies, tactics, and tools to expedite, optimize, and de-risk supply chain operations. William may be contacted at [email protected]

Manufacturers Responses to COVID-19 Disruption

Photo: Lake Shore Park, Milwaukee by Tony Stuczynski on Unsplash

What measures has your company taken in response to the COVID-19 disruption? Are you looking to reshoring suppliers or investing in more automation?  

Per Thomas Industrial April 2020 Survey, 25% of U.S. manufacturers are considering expanding industrial automation as a result of COVID-19, while one in five already has automated systems in place. Additionally, 64% of manufacturers reported they were likely to bring manufacturing production and sourcing back to North America.

Highlights from the Thomas Industrial Survey on the impact of COVID-19 on North American Manufacturing included:

  • Manufacturers Report Significant Jump in COVID-19-Related Impacts: 89% of our respondents reported they felt impacts from COVID-19 in April, compared to only 45% in March. 41% of surveyed manufacturers expect a decrease in demand for their products and services.

  • Two Biggest Concerns Are Reduced Market Demand and Disrupted Cash Flow: Many reported staffing issues due to challenges in maintaining social distancing and PPE supply, as well.

  • Manufacturers Restructure: 44% have already experienced or are planning layoffs, but 31% are hiring. One in seven companies pivoted to COVID-19-related manufacturing.

  • Stronger Reshoring Interest Compared to March: Two-thirds of the companies stated they are likely to reshore; of those companies, 20% stated they are extremely likely to reshore, compared to only 9% in March.

  • Companies Remain Optimistic About the Future: 91% of respondents believe that North American manufacturing can recover from this pandemic.

  • Shifts in Talent Needs: 56% of manufacturing companies have not laid off employees due to COVID-19 and 30% of companies are actively hiring.

  • Non-essential Business Shutdown Impacts Demand: 64% of manufacturers report their business is affected by the shutdown orders impacting other non-essential businesses, with the transportation (77%), automotive (75%), construction (70%), and agricultural (69%) sectors most drastically affected. 

  • Relief Efforts: 15% of the companies surveyed report they shifted to produce supplies related to COVID-19 relief efforts; medical and healthcare, agricultural, and automotive manufacturers are leading the charge to produce PPE.

  • In-demand Materials: In order to stabilize supply and keep production on schedule, manufacturers reported the most vital items to be personal protective equipment (42%), metals (37%), fabricated materials (29%), and machining tools and parts (27%).

Click here to view the full report of the "Thomas Industrial Survey: COVID-19’s Impact on North American Manufacturers."

Looking for more information on managing risk within your supply chains? Join us next week Tuesday, May 26th, for Supply Chain Risk Management Workshop taught by Chuck Nemer, CSCP, a supply chain management expert providing world-class training for corporations seeking supply chain training to better improve their supply chain performance, and students in APICS programs.

In this introduction to risk management, Chuck will cover the basics of risk management including how to identify, assess and mitigate risks. We'll also review how to manage in an environment of risk. This workshop is based on the work and advice of Greg Schlegel of the Supply Chain Risk Management Consortium.

APICS Milwaukee is the premier professional association for supply chain management, helping over 180 Milwaukee area companies represented by our members, with educational and networking opportunities. 

Three Tips for Master Production Scheduling

Do you have a difficult time balancing supply and demand per your production plan?

We hosted a workshop this week on Sales and Operations Planning. Dan Marino, CPIM, and Senior Consultant shared his expertise on what master production scheduling (MPS) is, the goals, objectives, and key challenges. We’ve summarized these below, including three tips Dan will be sharing in more detail next week for how to make your scheduling efforts more efficient. 

What is Master Production Scheduling? Per APICS, it’s an anticipated build schedule for those items assigned to a master scheduler.

What are the goals of Master Scheduling?

  • Balance Supply and Demand per the Production Plan

  • Plan efficient use of company resources

  • Determine End Item Priorities

  • Drives MRP

The key objectives of MPS are to:

  • Create a build schedule for specific end items, quantities and due dates

  • Show when items are expected to be available

  • Enable Sales and Customer Service to promise delivery dates to Customers

  • Provide the Basis for Trade Off’s

  • Assist Sales and Operations in Providing Superior Customer Service

What are some MPS challenges?

  • Improve customer service

  • Increase productivity

  • Lower inventory

  • Be responsive to changes in the market place

Here are three tips to improving your MPS:

  1. The management and policies surrounding Time Fence Zones are critical. First, your time frame horizon should be at least as long as your longest cumulative lead time plus perhaps some safety time. Each time frame must be strictly adhered to for example if you use the analogy of Frozen, Slush, and Water as the time frames, the frozen time frame needs to be managed and needs to have little or no volatility. If your MPS is moving in and out daily your capacity and material plans will not be in alignment. 

  2. The Master Scheduler plays a critical Traffic Cop job, not allowing Sales to booked orders inside your cumulative lead time, not overstating the MPS, and turning into a HOT list. At the same time the Master Scheduler has to work with Operations to adhere to the ship dates that are booked with the proper lead time. (Tough Job) this is a place that if not managed well will make the Master Schedule unusable. 

  3. Establishing a customer lead time matrix by family or end items is important. This should be a coordination of efforts between Sales, Operations and the Master Scheduler. This is the guideline line Sales and anyone else who promises customer delivery can use. This is also the benchmark for operations to ensure material and capacity are available. 

At APICS Milwaukee we’ve been supporting supply chain professionals for over 40 years with the education and information they need to be successful in ever-changing times. We will continue to support our members and the community during the coronavirus pandemic.

If you found these insights useful, consider signing up for our FREE VIRTUAL Workshop next week Tuesday (5/19), Sales & Operations Planning Advanced, taught by Anthony Zampello (Z), ASCM S&OP Master Instructor, S&OP Consultant and Adjunct Instructor at Bentley University and Daniel A. Marino, Senior Partner of Marino,LLC. This two-hour session will take you beyond the basics and delve into the detail of S&OP and Master Scheduling. It will cover a multitude of practices including how a company decides on the time horizon for each; how it decides on which resources are critical; how forecasts are used.

Daniel A. Marino is a Senior Partner of Marino, LLC a manufacturing consulting firm specializing in ERP/MRP II, Lean/Agile Manufacturing, JIT, Six Sigma, and related consulting and education. Prior to establishing his own firm Mr. Marino was a Senior Consultant with Robert Abair Associates. Mr. Marino has more than thirty years in materials and manufacturing with experience in ERP, Lean/Agile Manufacturing process, JIT, MRP II, Capacity Planning, Lean Supply Chain Management, and Global Procurement. Mr. Marino has planned, structured, developed, and directed company-wide training and education programs. Mr. Marino has implemented SAP’s R3 ERP system in a global environment, Oracle’s ERP system, Microsoft NAV and EPICOR.

Prepare for Supply Chain Recovery - Optimize Production and Distribution Capacity

Are you looking for actions you can take now to prepare your supply chain for COVID-19 recovery? 

Recently McKinsey & Company shared in their special Coronavirus collection, how you can prepare for supply chain recovery with the tactic of optimizing production and distribution capacity. We've summarized below their suggestions. 

Per McKinsey, after creating transparency with suppliers, estimating available inventory along the value chain and assessing realistic final-customer demand, the next step is to focus on production and distribution capacity. 

Optimize production and distribution capacity

"Armed with a demand forecast, the S&OP process should next optimize production and distribution capacity. Scenario analysis can be used to test different capacity and production scenarios to understand their financial and operational implications.

Optimizing production begins with ensuring employee safety. This includes sourcing and engaging with crisis-communication teams to communicate clearly with employees about infection-risk concerns and options for remote and home working.

The next step is to conduct scenario planning to project the financial and operational implications of a prolonged shutdown, assessing impact based on available capacity (including inventory already in the system). To plan on how to use available capacity, the S&OP process should determine which products offer the highest strategic value, considering the importance to health and human safety and the earnings potential, both today and during the future recovery.

The analysis will draw on a cross-functional team that includes marketing and sales, operations, and strategy staff, including individuals who can tailor updated macroeconomic forecasts to the expected impact on the business. Where possible, a digital, end-to-end S&OP platform can better match production and supply-chain planning with the expected demand in a variety of circumstances."

Taking steps now can help ensure your supply chain is ready for COVID-19 recovery. 

Another resource for you is a FREE webinar being hosted by TOCICO & ASCM scheduled for tomorrow (5/8) at 8:00 am CDT. They have put together an expert panel to offer significant forward-thinking insights on how the world’s supply chains have been significantly impacted by the COVID-19 pandemic. They will be sharing Best Practices: What to do and, as important, what NOT to do. The goal of their Webinar is HOW to restart global supply chains as soon as possible and make them stronger and more resilient in the future. This 2 Hour Webinar will conclude with a live Chat enabled Q&A session, including offering suggestions on next steps to get more information. Registration is FREE! Please help us to Spread the Word by inviting others to join this Webinar

At APICS Milwaukee we’ve been supporting supply chain professionals for over 40 years with the education and information they need to be successful in ever-changing times. We will continue to support our members and the community during the coronavirus pandemic.

Also, if you are looking for more information on sales and operation planning techniques, consider signing up for our FREE VIRTUAL Workshop next week Tuesday (5/12), Sales & Operations Planning introduction. Taught by Anthony Zampello (Z), ASCM S&OP Master Instructor, S&OP Consultant and Adjunct Instructor at Bentley University and Daniel A. Marino, Senior Partner of Marino,LLC. This two-hour session will first introduce you to the overall hierarchy that businesses run by.  It will show you where different levels of planning exist and how they differ even though they may have similar objectives at times. The first hour will concentrate on S&OP while the second will focus on Master Scheduling. 

Three Strategies to Keep Remote Workers Engaged

Has your team recently moved to working virtually? Could you use help ensuring they are engaged?

Per Gallup, the first half of April finds that 62% of U.S. workers have worked from home because of concern about the coronavirus.

Of those new to working virtually, a new survey from Society of Human Resource Management (SHRM) says that more than 7 out of 10 employers, or 71 percent, reported that they are struggling to adapt to remote work.

Remote work is not new, even though many companies are leveraging it for the first time due to the pandemic.

Gallup provides three strategies summarized below known to work with virtual teams.

  1. Communication yields engagement. Scholars and practitioners have been telling remote managers the same thing since employees went remote in early March: communicate. It's good advice, but it's missing an important piece: frequency. Gallup research finds that frequent conversations yield the biggest improvements in engagement. And remote workers are three times more likely to be engaged if they receive feedback from their manager at least a few times per month. So, communicate -- ask what their preference is. Don't make it a guessing game, make it a conversation.

  2. Accountability comes from expectations. Remote or not, employees can only be accountable for what's expected of them. And to hold remote workers accountable, managers must provide clear and collaborative expectations -- but 26% of employees strongly agree their manager is good at helping them clarify priorities, and six in 10 employees know what is expected of them at work.

  3. Individualize to optimize. Managers should identify the conditions that allow individual people to do what they do best to set them up to succeed at home. That could mean a daily team video conference so socially motivated workers can see the rest of the team as they work. Or managers can set up an opt-in reminder system: "It's 8 a.m. and time to do great things!" and, "10 a.m. and time for a break," And, "It's 4 p.m. -- what's left on your to-do list?" Some employees don't need or want that level of attention -- they'll find it intrusive -- but others do. As a manager you need to study your team, ask what they need and provide individual support to optimize performance.

At APICS Milwaukee we’ve been supporting supply chain professionals for over 40 years with the education and information they need to be successful in ever changing times. We will continue to support our members and the community during the coronavirus pandemic.

If you found these insights useful on managing remote teams, consider signing up for our new VIRTUAL Workshop next week Tuesday (5/5), Employee Engagement Tactics for Remote Workers. Participants will learn strategies and skills that managers can use to foster greater engagement among their employees who, perhaps for the first time, are working remotely. Teri Giannetti, MBA, has extensive experience leading teams and working remotely. As the Founder of "It's All About the How Consulting," she will share practical insights on how you can manage and lead remote workers during this unique moment in time.