The newsLINK Group - Manufacturing Supply Chains

Editorial Library Category: Manufacturing Topics: Manufacturing, Supply Chains Title: Manufacturing Supply Chains Author: newsLINK Staff Synopsis: Today’s supply chains are complex. They have many integration points across the entire supply-chain infrastructure and as a result can deliver results fast. But although these supply chains can be effective, their complexity has an inherent problem: It’s the nature of things to break. Editorial: Manufacturing Supply Chains 4064 South Highland Drive, Millcreek, Utah 84124 │ thenewslinkgroup.com │ (v) 801.676.9722 │ (tf) 855.747.4003 │ (f) 801.742.5803 Editorial Library | © The newsLINK Group LLC 1 Today’s supply chains are complex. They have many integration points across the entire supply-chain infrastructure and as a result can deliver results fast. But although these supply chains can be effective, their complexity has an inherent problem: It’s the nature of things to break. The more complex something is, the more likely that at some point, something just isn’t going to work right. As a result, many supply chains are easily disrupted, and the disruptions increase both risk and cost. Many companies currently have three goals: becoming more agile, reducing risks and costs, and fostering internal and external collaborations. Unfortunately, though, current supply chain systems and processes are often small and are sometimes even hostile to each other. There’s a name for this kind of problem that dates back to 1919: Balkanization. It would be bad enough just dealing with the office politics aspect of this, but the fact is that Balkanized systems also make it harder to see and understand what is going on. Balkanized supply-chain organization can create a problem in reaching any of the three goals. If you look at when the term “Balkanization” was first used, it is immediately clear that it dates back to a time when paper bureaucracy of the worst kind was still king. Today — with the advent of the Internet and smart phones that surpass entire computer systems from just a few decades ago — it is clear that all kinds of companies now have an opportunity to change their entire business models, even if they are companies that haven’t traditionally been on the forefront of technology. Also, it is equally clear that those solutions will have to involve the new giant on the horizon: the cloud. This isn’t the first time the idea has appeared of Internet- based business-to-business services. You may have seen some of these ideas during the 1990s dot-com boom, which was inevitably followed by a bust at the beginning of the 2000s. Not everyone went out of business, though. Some companies, like GT Nexus, survived. GT Nexus is one of the companies that began the process of moving supply chains to the cloud. Today, the idea has finally come of age and is being adopted on a broader basis within the manufacturing world. Many companies are not just ready for the change; they are eager for it. Bob Heaney, a research director and principal analyst at the Aberdeen Group, released a paper in May 2013 about supply chains. The paper cites a particular survey that was conducted by the Aberdeen Group; 149 companies whose supply chains were predominantly global were asked about how important they thought it was to improve supply- chain visibility. Sixty-three percent of those who responded to the survey said improvement was a high priority; another 28 percent said it was a medium priority. Add the two percentages up, and you get an impressive 91 percent. People at these companies may vary on the question of importance, but they have clearly all drawn the same conclusion, and almost two thirds of them put the problem at the top of their lists: they know they need to improve the way they structure their supply chains. What’s the solution? Gavin Davidson, a blogger and Vertical Lead in Manufacturing at Netsuite, thinks it’s something called an omnichain. The word itself is a term he invented in the fall of 2014. What is Netsuite? It provides cloud-based business management software. The company itself has been around since 1998 and has its headquarters in California’s Silicon Valley. There are also locations in other parts of the U.S., Canada, Europe, Australia, and Asia. Unsurprisingly, considering where Mr. Davidson works, an omnichain is something that involves cloud software. The idea sounds simple, but the implementation of that idea isn’t: making all supply-chain processes part of one system. Mr. Davidson came up with the word as something borrowed from retail. All companies have a way to plan resource allocation for their businesses. The stock phrase for resource allocation is enterprise resource planning (ERP); this is a broad business term that is interpreted differently by every company that uses it, but it essentially consists of those

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