Breakfast Roundtable Highlights: Setting Correct Inventory Levels

Photo: APICS Milwaukee Breakfast Roundtable March 2020

Does your business deal with products that are difficult to know the right levels of inventory to maintain?

At our breakfast roundtable last week we discussed that when dealing with a lot of engineered to order or assemble to order goods it can be very challenging to know what inventory to carry and how much of it.

One solution was shared that it’s best to stock and forecast for the common parts that get used in many different assemblies.

A related topic we discussed was the issue of not having accurate inventory and how to fix that. Here were a few suggestions to address the lack of inventory accuracy:

  1. Check the BOMs of the assembled parts for accuracy
  2. Do daily cycle counts on items that are always an issue. This helps you find the issue faster and saves a ton of work by eliminating the need to look through hundreds or thousands of transactions at the end of the month or year
  3. Don’t copy and paste BOMs from items to new items because if the original item is setup wrong you now have two items setup wrong.

A lot of companies have battles between sales and production. Sales wants as much inventory as possible on the floor where production does not. Here are a few suggestions for managing this common dilemma:

  1. A good way of having inventory available but not on your books is to put items on consignment. It only hits the books when it is consumed.
  2. Have your suppliers hold inventory through the use of blanket orders.
  3. Don’t buy inventory for your suppliers to use. Either have them buy it or negotiate with the raw materials supplier for your subcontracting supplier so that you know you are getting the best price without having to actually buy the raw goods.

Although we will likely not be meeting in person in the near future due to COVID19 adherence, we are working on ways to keep the discussions going and will be sharing more in the upcoming weeks!

Please visit our website for more supply chain insights and best practices at www.apicsmilw.org.

Coronavirus and Pharmaceutical Supply Chain Risk

 

Has your supply chain been impacted by the coronavirus?

Association for Supply Chain Management (ASCM) CEO Abe Eshkenazi, CSCP, CPA, CAE recently shared an article summarized below on the risks to pharmaceutical supply chains.

APICS Milwaukee is proud to be a premier ASCM partner, serving the local community with supply chain education and information needed to be successful in today’s ever-changing world.

Photo by Free To Use Sounds on Unsplash


Coronavirus Outbreak Amplifies Pharmaceutical Supply Chain Risk

By ASCM CEO Abe Eshkenazi, CSCP, CPA, CAE

The number of reported Coronavirus cases has surged to more than 10,000, with the death toll rising to 213. As the virus extends across China and unnerves the rest of the world, pharmaceutical supply chains seem to be experiencing the greatest impact. According to the FDA, China has 15% of the world’s facilities manufacturing active pharmaceutical ingredients for 370 essential drugs.

Michael Osterholm, director of the Center for Infectious Disease Research at the University of Minnesota, delivered a stern warning to health care and pharmaceutical supply chain organizations on CNBC’s The Exchange: “Many of the critical products we use every day, such as medicines and medical devices, are actually manufactured in China’s areas being shut down. … Every company that has any manufacturing capacity in China right now better be looking very carefully at their supply chains.”

Osterholm emphasized that the outbreak is going to have an impact on the global supply of critical products “within days to weeks.”

A wide range of risks

Reginaldo Montague, CFPIM, CSCP, writes in SCM Now magazine: “The pharmaceutical supply chain stretches around the world like a rubber band wrapped around a ball. The smallest fault in any segment of that rubber band challenges the integrity of the whole and could lead to catastrophic failure of the entire system.”

He explains that, not long ago, the drug supply chain was more localized and therefore far less complex. However, now that active ingredients are sourced from multiple global organizations, the pharmaceutical supply chain contains a wide range of risk profiles.

So what to do? Gartner shared three steps below on how to secure your supply chain from the risks of the coronavirus.

  1. Short-term actions: Do it now. Develop a high risk for supply chain disruption monitoring and response programs for countries impacted by the virus and potential supply chain exposure from tier 1 and below. If lower-tier transparency is missing, start building up the program and prioritize discovery to get a full picture rapidly. It’s also important to assess how customer spending might be affected. The next step is to make sure all inventory is within reach and outside impacted areas and logistical hubs. Additionally, supply chain leaders should work with their legal and HR departments to understand any financial implications of not being able to deliver supply to customers and provide guidance to employees located in the impacted areas.
  2. Midterm actions: Do it this quarter. Focus should be on balancing supply and demand as well as building buffer stock. Assess opportunities to diversify the supplier ecosystem and review or create the organization’s overall risk management approach. Work with internal stakeholders and strategic and critical suppliers to establish a congruent risk management approach to monitor and prepare for potential material and manufacturing capacity shortages.
  3. Long-term actions: Do it this year. Once the initial impacts of the crisis are mitigated, it’s all about foreseeing the next “when.” Supply chain leaders and their teams can, for example, conduct a scenario planning exercise and develop action plans. This is the time to discover or develop alternative sources and diversify value chains. Tackle strategic and concentrated supplies with high value at risk where internal risk capacities to absorb, such as alternative sources, routes, inventory and cash reserves, aren’t sufficient enough to mitigate any major disruption. Being better prepared than the competition might even open new opportunities when the next disruption comes around.

At APICS Milwaukee, our mission is to help supply chain professionals and their companies manage their supply chains in the most effective manner, planning for disruptions like the coronavirus.

We are excited to announce a new workshop for healthcare professionals,  Intro to Continuous Improvement for Healthcare scheduled for next week Tuesday 3/17.

Participants can participate in person or via webinar and will learn the implementation of many of the “lean” manufacturing techniques and tools used for:

  • Reducing costs, delivery and process time
  • Eliminating waste
  • Reducing unnecessary inventory
  • Improving performance quality
  • Increasing overall internal customer and patient satisfaction
  • Improving employee involvement, morale and the organizational culture
  • Helping to transform Healthcare organizations

 

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. 

Wisconsin High School Innovative Approach to Closing the Talent Gap

Photo Source: https://www.cardinalmanufacturing.org/about-us/our-story

Is your company struggling to find skilled workers? One Wisconsin High School took the initiative to develop an innovative solution to addressing the talent gap. We share their story below.

A high school in a remote area of Northwest Wisconsin started a “metal lab” in 2008 with big dreams.  Established in 2008 by Craig Cegielski as an in-school manufacturing class, Cardinal Manufacturing, had the ultimate vision to create a manufacturing business run by students. The goal was also to find customers who needed metal products that could be made by students with existing equipment.  Today, all of their products, made by the students, are sold to businesses near and far. 

Per their website, Cardinal Manufacturing has gone from its infant stages to a company with significant annual sales and national notoriety. The growth of the program has attracted national and international attention and Cardinal Manufacturing has attended national tradeshows and hosted celebrity guests including Wisconsin's Governor, Scott Walker.

Cardinal Manufacturing has served hundreds of customers from private individuals to clients throughout the state of Wisconsin and other parts of the country. A number of students have gone directly to skilled employment positions after high school, but most choose to go on to post-secondary education through technical college or the university system. Chippewa Valley Technical College and UW-Stout have taken a particular interest in the program. Cardinal Manufacturing has also built strong relationships with a number of private companies and professional organizations which have been supportive through donations, advice, publicity opportunities, and projects.

In-school programs such as Cardinal Manufacturing serve as a grassroots economic development effort. Not only do these programs expose students to career opportunities in manufacturing and teach students soft skills for future employment, but they also work toward changing the attitudes of counselors and parents to be more open to the idea of encouraging students to look at manufacturing careers.

Students get hands-on opportunities to try out these roles before making an expensive decision in choosing a post-secondary program. In other words, kids get the chance to try welding, machining, construction, production management, accounting, office management, and marketing prior to committing to a major or area of study.

The services provided through the program are worthwhile and valuable to the customers who pay for the service. Since the very beginning, Cardinal Manufacturing has been self-sufficient meaning that they have not ever requested a special budget from the school district.

Learn more about this innovative approach and collaborative effort between the high school and business community at: https://www.cardinalmanufacturing.org/.


At APICS Milwaukee, our mission is to provide education and networking opportunities to help supply chain professionals and their companies find skilled workers. Considering innovative approaches such as the great work being done by Cardinal Manufacturing outlined above often come out of continuous improvement considerations.

If you’d like more information on implementing continuous improvement approaches at your company you may be interested in joining us next week Tuesday (March 10th) for our Continuous Improvement in Manufacturing Workshop. Participants will learn the following:

  1. Principles of the Lean Supply Chain, including the importance of the “continuous improvement” company culture, what is value and non-value added and the identification and elimination of waste
  2. Tools of the Lean Supply Chain, including value stream mapping, 5S and cellular manufacturing
  3. Lean Supply Chain Assessment & Auditing

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. 

UW-Whitewater APICS Student Supply Chain Chapter Update

Looking to connect with future supply chain leaders? The University Wisconsin-Whitewater has a wonderful APICS Supply Chain Student Chapter for you to get to know!

We recently heard from Ryan Prinsen, the current President of the UW-Whitewater APICS Supply Chain Student Chapter. Ryan is a fourth-year Supply Chain & Operations Management undergraduate student with an interest in production, inventory and materials control. He is also currently a Buyer at Trachte Building Systems.

Ryan shares below what the UW-Whitewater APICS Supply Chain Student chapter has been up to so far this year and what they are planning for the next few months.

  1. Hosted guest speakers from Provisur Technologies Inc., TMC Transportation and Direct Supply.
  2. Visited Provisur Technologies Inc., Target Corporation and Direct Supply.
  3. Created a Fall 19/Spring 20 resume book
  4. Hosted our biannual Adopt-A-Highway clean up volunteer event (pictured above)
  5. Hosted a career fair preparation event that consisted of resume reviews and company research.
  6. Hosted a simulation which taught us typical coordination problems of a supply chain process and potential solutions to those problems.

What’s next: This coming spring they are planning to host more speakers from Schneider National, C.H. Robinson, and other firms within the greater Madison/Milwaukee area, along with touring the Amazon Distribution Center. They will also be assisting the UW-Whitewater Supply Chain department in hosting our annual Supply Chain day which will bring high school students to campus and expose them to the supply chain major.

APICS Milwaukee is the premier professional association for supply chain management and proudly supports professionals at all stages of their careers. We offer FREE membership and event passes to Supply Chain students. 

We are excited about the great work being led by Ryan and others at the UW-Whitewater Supply Chain Student Chapter. More information on the UW-Whitewater APICS Student chapter and UWM Supply Chain Association can be found on the APICS Milwaukee website

APICS Milwaukee helps over 180 Milwaukee area companies represented by our members, with educational and networking opportunities.

Want to learn more? Join us in March 2020 for a Supply Chain Workshop and for APICS globally recognized supply chain certification instructor-led courses for CPIM, CSCP and CLTD.

For additional information, contact us via our website at: http://apicsmilw.org or via email at: [email protected]

Procurement Trends to Consider in 2020

Is your procurement strategy being impacted by global uncertainties such as tariff changes or other supply chain disruptors?

Futureofsourcing.com recently shared four major procurement trends to consider in 2020 summarized below.

  1. Increased Volatility: With shifting trade tariffs and barriers, the unpredictability of Brexit and fluctuating commodity prices, market volatility could be at an all-time high over the next 12 months.

As already complex global supply chains become even more unpredictable, finding ways to manage this risk should be at the top of your 2020 agenda. What does this mean in practice? At a bare minimum it means having processes in place to track suppliers, pre-empt problems and manage commodity-related volatility.

  1. Ongoing Digital Transformation: There’s a strong chance that we’ll be talking about digital transformation for many years to come. That’s because true digital transformation is an ongoing process.

Digital has fast become an imperative for top-performing procurement functions. Those who find themselves behind the times will need to play catchup this year, especially as the wider organization is likely to be on its own digital transformation journey.

  1. Building Deeper Supplier Relationships: At some point, you’ve almost certainly had a conversation within your department about building better supplier relationships. Everyone agrees that it’s a strategic priority for procurement organizations. However, actually putting plans into practice is easier said than done.

We often see procurement organizations implement manual processes that are inconsistent across both categories and supplier segments. In 2020, however, we expect to see a more structured and successful approach adopted by the most forward-thinking and progressive departments.

  1. Delivering Value Beyond Savings: Driving savings will always be a primary goal of procurement. It’s increasingly understood that procurement organizations can deliver value that goes way beyond cost savings, cost containment and cost avoidance.

The sophistication of the procurement function, and the available talent within the space, has increased dramatically over the last few years. There have also been greater expectations placed on SG&A functions in general. With C-level strategies demanding greater growth, faster innovation, tighter budgets and increased competitiveness, 2020 is the time for procurement to really show how it can contribute to wider strategic goals.

While these aren’t the only trends set to impact procurement over the next 12 months, Futureofsourcing.com suggests they are the most important ones for CPOs to prioritize.

At APICS Milwaukee, our mission is to help supply chain professionals and their companies establish procurement strategies that will enable them to continue to grow and reduce costs.  

Are you responsible for purchasing functions in support of your company’s broader procurement efforts? If so, you may be interested in joining us next week Tuesday (2/25) for our Purchasing Workshop. Participants will learn the following:

  • Learn about the role of Purchasing within the organization
  • Understand Purchasing’s roles with contracts
  • Explain sourcing best practices
  • Illustrate the purchasing cycle
  • Describe the process for conducting a supplier visit
  • Explain the reasons for outsourcing
  • Understand how to manage supplier relations
  • Learn how to implement product development programs
  • Explain Purchasing’s roles with sustainability and regulatory compliance

 


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. Read more articles at https://apicsmilw.org/articles/