The current component shortage in the manufacturing industry highlights the need for connected data and planning to eliminate risk and bolster supplier base reliability.
When supplier shortages occur, whether due to actual scarcity (mines running out, crop failure, wartime infrastructure damage, etc.) or self-inflicted obstructions (sanctions, vendor practice requirements, poor supplier relations), there’s no such thing as too much supply chain visibility. The ability to see the supply chain at a macro level while seamlessly drilling down to the nth degree is critical to navigating changing market trends because as we know, it only takes one component, one supplier, or one product line to wreak havoc on a supply chain.
But how do manufacturers achieve this level of visibility?
Common component supply shortage problems and solutions
Some common issues with component supply and visibility are addressed by existing solutions. Companies simply need to identify their problem areas and apply the right solution.
For instance, visibility into supplier capacity and inventory and how that translates to your order being filled allows you to line up a backup supplier for when your primary one falls short. With advanced insight into your supply network’s capacity, you can spot the shortage ahead of schedule and pivot to another supplier to still make delivery times. Anaplan solves this issue by allowing suppliers collaborative access to the organization’s platform, allowing them to update their capacity and delivery data. It requires cooperation from your supply network, but the more information you have, the better prepared you are to nimbly implement contingencies.
Another common issue stems from not connecting the dots between components and how they are used. Three fully completed orders are better than a dozen orders that are incomplete because a limited supply of a necessary component was allocated equally among them, fulfilling none of their requirements. There’s so much scrambling to get the next order out the door, the “rob Peter to pay Paul” adage carries out and the vicious cycle continues.
Instead, let’s use Anaplan and Spaulding Ridge’s intelligent allocation tool to get out of the cycle. The tool can allocate simplistically by static prioritization – ship date, revenue, margin, etc. It can also take those attributes, learn from them over time, and output optimal allocation strategy based on those learnings. Matching supplier OTD performance against components that impact the most revenue and against a strategic customer set leads to proactive prioritization of the most important finished goods, while accounting for the most likely supply scenarios.
Barriers to component visibility solutions
While the case is clear for component-level visibility to address supplier base reliability, we’ve listed out some common pitfalls below.
One of the most common issues is, unsurprisingly, supplier connectivity and cooperation. You can only collect so much data on supplier capacity, inventory, and delivery timelines without the supplier’s consent and help. You can build retroactive reports on historical inventory levels and delivery timeliness and use that to set your expectations, but doing so manually is tedious and error-prone.
And when it comes to forecasting or scenario planning, the biggest constraint is often time. The time it takes to complete scenario modeling is directly related to the complexity of the bill of materials (BOM). A more complex BOM means more components for which you need to maintain data and supplier records. The more comprehensive your component-level data, the better chance you have at speeding up modeling with automation. Anaplan leverages AI and machine learning to automate the integration and analysis of historical data to better predict demand.
Even the most advanced visibility is rendered useless if it’s built on a poor demand plan. A demand planning solution that provides insights into what components are needed for each project or product allows you a more accurate picture of the supply you really need, and where you need it. This allows you to triage projects in order of profitability or strategic importance if supply of a component runs short.
Of course, the root of all these solutions is data. If you have a connected planning system but lack the data processing power to leverage it, you’re not gaining full visibility of your supply chain.
Proven solutions, expert execution
It may sound daunting, but difficult is not impossible. Spaulding Ridge recently completed a project that provided a robotics automation manufacturer with a data platform to run complex BOM aggregation and inventory collection. By integrating the platform with Anaplan, it leveraged Anaplan’s planning, visibility, and reporting capabilities. The solution also enabled the company to analyze different order-build scenarios to determine the best routes to completion and understand customer impact.
Multi-technology solutions like this one address the unique needs of each organization’s supply chain and fulfillment processes. They require precise, expert understanding of both the technology and the industry. Spaulding Ridge offers this expert partnership and is ready to talk to you about expanding visibility and data-driven decision making within your supply chain. Contact Joe Kontak to learn more.
Director, Spaulding Ridge
About the Author
Joe Kontak is a Spaulding Ridge Director focused on supply chain initiatives for Anaplan and Coupa. Prior to joining the firm, he spent 9 years leading supply chain operations and digitization efforts in the Food & Bev, CPG, and Chemicals industries. His functional experience spans from plant-level manufacturing to E2E logistics network design.