Trade Extensions – where supply chain meets production planning (part 2)

We described yesterday the mind-bogglingly difficult sourcing optimisation/ production planning problem that Trade Extensions addressed for a client recently.  ( As a reminder; supply over 500 components to any one of over 30 manufacturing plants to meet a demand plan for finished goods, with multiple constraints around capacity, cost parameters, supplier qualification periods, shipping, etc).

Here’s Garry Mansell, their CEO. "Previously, the client was using their demand planning information to in effect plan the lines of its component suppliers' based upon multiple and at times, conflicting criteria. The solution the client required had to allow them  to tighten or relax one or many of these criteria simultaneously and run to an optimized solution in minutes rather than hours, in order to maximize the numbers of scenarios under evaluation".

Trade Extensions built a multi-user platform (with rules on user access) and once all the necessary data was collected and input, the application created  views such as capacity utilization and spend, or capacity demand ratios by supplier and by production line.  Users could also drill down into the progress of the pre-qualification processes. That enabled the client to understand the planning horizon for when new capacity or lower total costs could be expected. Different constraints and “what if” scenarios could be created and the total cost of different solutions easily compared.

Here’s Garry again. "The final application was then connected to the client's preferred choice of data visualization tool to produce user-driven control dashboards. In this case TIBCO Spotfire was selected, but many other tools could just as easily have been integrated. This gave the client's staff the ability to visualize, drill down into and report on multiple criteria."

The benefits here undoubtedly suggest “the value of tearing down the supply chain design, demand planning and sourcing walls once and for all” as Jason commented.   “The intersection of data gathering, scenario creation, optimization and graphical reporting is critical to enable ideal production and supplier award decisions in the most effective and efficient approach possible. Spend Matters believes that the value of technology in this case is not only the added horsepower it provides on the analytical front, but just as important, the ability to get all cross-functional team members (e.g., supply chain, procurement, plant managers) on the same page from the start”.

I’m still not sure I absolutely understand the full detail of what was achieved here but it was certainly impressive and a great example of how to bring procurement, supply chain and manufacturing processes together and look at the big picture as something to be optimized and improved.  More scope, it would seem, for switched-on procurement leaders to use the power of the most advanced sourcing technology in wider areas (beyond traditional procurement), and bring competitive advantage to their organisations.

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