Thanks to the Internet, demands for real-time supply chain management are being heard from the smallest customers to the most influential seats in the boardroom. This has brought increased attention on the demands of integrating and synchronizing inventory availability with supply chain execution systems, ERP and CRM. But many companies are discovering that the ability to provide instant availability and real-time visibility to supply chain data does not in itself reduce costs.
In a down economy, executives are looking to reduce costs while keeping their customers happy. The answer is to implement supply chain execution optimization. Supply chain execution optimization is an emerging practice that strives to get the most from an organizations overall processes rather than processing individual steps.
But optimizing logistics processes is hard work, and it involves the implementation of supply chain execution systems before optimization can be achieved. Once youve automated operations, then you can begin to look at optimizing operations. Optimizing operations through supply chain execution optimization allows companies to identify profitable behavior in the distribution process.
Today, an effective optimization tool can be used as a competitive weapon. The struggle to provide value-added services and execute more and smaller orders takes place inside the distribution center. And the limitation of many current, traditional supply chain execution tools is this: Even an integrated suite of applications executes in sequence. Optimization can effectively coordinate processes and deliver the combination of lowest logistics cost and highest customer satisfaction. The low cost comes from having to carry less inventory and use fewer workers yet accomplish as much or more. Customer satisfaction comes from increased order accuracy and flexibility of your supply chain.
For instance, if a batch of orders is sent to the warehouse, the transportation management system creates an ideal shipping schedule; the yard management system creates a plan to handle trailers in the yard, and the warehouse management system assigns lift trucks, equipment and order pickers to efficiently fill the orders. However, the most affordable shipping plan may actually increase the cost of processing the orders through the distribution center.
With supply chain execution optimization, you would have a more holistic view of all those operations including the constraints on the facility. Few companies can look at the orders in their systems and determine the optimal sequence to release orders to the floor to maximize the total utilization of their resources and still meet the customers delivery date.
Historically, the best companies have intuitively solved that problem by studying the order waves before they are released to the distribution center and then factoring in the nuances of the facility to figure out the constraints. Usually that involves teams or order planners who work to plan orders effectively. An integrated supply chain execution system is part of the solution, but even in an integrated suite, the applications dont have a holistic view of the constraints that impact order fulfillment.
Supply chain execution optimization complements or can take the place of an order planning department by automating the scheduling of warehouse operations and labor by optimizing within this complex set of constraints. Complex operations are constrained by variable operational capabilities, work center capacity, floor space and available labor.
These operations are similarly constrained by shipping forecasts, inventory availability, transportation times and customer delivery requirements. Execution optimization combines traditional warehousing features with advanced assembly and constraint-based scheduling to optimize the order fulfillment process by scheduling orders in the optimal sequence to take advantage of available labor and warehouse capacity while managing customer-defined constraints.
Supply chain execution optimization is about rapid, efficient execution based on the resources that are available. The engine looks at orders that will be filled and then builds the best plan to get the work done based on the available resources. Think of it as performance-driven execution calculating the best way to execute in order to optimize the performance of your facility.
John Clark is with Provia Software. For more information, you can contact John at john.clark@provia.com.Or you can visit Provia at www.provia.com.
