Managing Automation - March 2009 - (Page 22)

DEEPDIVE SupplyChains–MarketOverview into managing supply chain risk. While 72% of to dig into things like whether they are in respondents said they have mitigated some good financial shape, whether they have acsupply chain risk, only 20% said their compacess to the tooling we need, and whether they nies have developed formal, enterprise-wide have alternative sources of supply.” processes for understanding and mitigating North Carolina State’s McCormack has risk. Most said they are either now in the gone further, creating an analytical model process of formulating enterprise risk strateand a set of 38 qualitative questions that mangies or pursuing risk strategies on a business ufacturers require suppliers to answer in orunit-by-business unit basis. der to predict whether a potential supplier A good starting point would be to rethink will introduce too much risk into the supply the supplier selection process with risk in chain. McCormack compares the analytical mind, experts say. tool and questions to eHarmony.com, the pop“The most critical thing that suppliers should ular matchmaking Web site. “We figured if pay attention to is who their “Since then, much more of our focus suppliers are,” says Jim West, a senior managing dihas been on risk avoidance and mitirector at PwC. That means gation. It’s become an unavoidable you know that your supplier’s interests are aligned reality.” — Adtran’s Tom Dadmun with yours, that your supplier is capable of performing to the level you they can predict the success of a marriage, we expect, and that you have structured a relashould be able to predict the success of a tionship in which accountability is explicit. supply relationship,” he says. Electronics manufacturing ser vices McCormack’s questions probe things like provider Celestica Inc. has developed a comthe degree of alignment between the suppliprehensive, risk-based supplier selection ers’ and manufacturers’ interests, supplier process that it calls BOM (Bill of Materials) performance variability, the level of turbuRisk Analysis. The $2.2 billion maker of eleclence in the supplier’s environment, and the tronic components starts by conducting a supplier’s perception of its customers. Mcdetailed analysis of the BOM its OEM cusCormack’s team has worked with large mantomers provide prior to production. Celestica ufacturers for the past two years to validate looks at potential red flags such as the perthe model. It turns out, he says, that suppliers’ centage of parts that are single-sourced, the low opinion of their customers has the highest percentage of parts with cycle times longer correlation with bad supplier performance. than eight weeks, and the percentage of comBesides taking care in selecting suppliers, ponents that are of an older design and may manufacturers should closely monitor supplibe hard to replace. er and supply network performance, putting in In a second level of analysis, Celestica place processes and systems that improve vislooks at suppliers’ financial health and ibility and deliver early warnings at the first security. The company gathers from sign of a breakdown, experts say. suppliers and third-party sources “It’s much easier to take early corrective such as Dun & Bradstreet inaction than it is to have to replace a supplier afformation on suppliers’ financial ter something has gone terribly wrong,” PwC’s condition and whether they have proWest says. “If you have to act after the fact, cesses in place to quickly replace their you’re looking at removing your [intellectual suppliers if that became necessary. For BOMs property] from one supplier and moving it to that carry a high level of risk, Celestica recanother, and that’s where it gets expensive.” ommends replacing specific suppliers. Raytheon, for one, is combining real-time This type of analysis — particularly the fosupply network performance visibility with cus on supplier financial health — has bedashboards that alert buyers and supply chain come particularly important, says Celestica managers when a supplier appears to be runVice President of Supply Base Solutions ning into problems. Over the past few years, Harvinder Sembhi, as the recession has begun the defense contractor has been moving routo threaten smaller suppliers. “In some cases, tine transactions that flow between it and its as manufacturing has shifted to Asia, a lot of suppliers to a secure network operated by Exthe suppliers we are dealing with are not the ostar LLC. On the network, suppliers exchange global powerhouses that we have used in the MRP schedules with Raytheon, change propast,” Sembhi says. “So increasingly we have duction plans, and send advance shipping no- ma March 22 2009 http://www.eHarmony.com

Table of Contents Feed for the Digital Edition of Managing Automation - March 2009

Managing Automation - March 2009 Contents Take 1 Sober Outlook, Cost-Cutting Techniques Dominate at Automation Conference Sale Canceled, i2 Searches for Its Focus Accenture Unveils a Service for the Factory Floor Solar Is Bright Spot for MES Player Eyelit Other Industries Outspent Auto on Robots in 2008 Integrators to Play a Bigger Role at ILS Technology Notes Deep Dive Supply Chains Reader Poll Technology Directions Expert Q&A User Resources Special Report Transformation Product Scan Advertiser Index Next

Managing Automation - March 2009

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.