Managing Automation - March 2009 - (Page 23)

tices, among other things. Now, Raytheon is adding analytics and dashboards that will tell managers the minute something goes wrong. “We are identifying the exceptions and triggers that are most important to our supply chain managers and around which they can build mitigation plans,” Forbes says. Grayling Industries, a maker of plastic container liners, is taking a similar approach. Until recently, the company had little real-time visibility into how much material was available from suppliers or where it was located. Key suppliers typically used third-party warehouses to store material and provided weekly stocking-level reports. As demand fluctuated and transportation costs rose, the lack of upto-date information about material availability and location presented a growing risk. Last year, to cut costs and better coordinate supply with demand, Grayling implemented a new consignment inventor y process. Suppliers now store materials directly in Grayling’s El Paso, TX, warehouse and are paid on a 60-day consignment basis. A min-max system controls stocking levels. Also, an on-demand warehouse management system from SmartTurn Inc. provides suppliers and Grayling with real-time alerts as material levels change. Now, says Grayling Director of Finance and Operations Carlos Rubio, the company can see immediately if a supplier is having problems. PREVENTING PANIC In addition to real-time visibility and earlywarning alerts, manufacturers’ supply chain risk management frameworks must include detailed plans for mitigating and remediating specific risk situations, experts say. Such planning doesn’t necessarily require much technology, but it does require the participation of cross-functional teams that can create a holistic view of the impacts that specific risks might bring and plans for mitigating them. “You need to be able to look at and understand the interdependencies across the entire supply chain before you can start to analyze what risk looks like and the right steps to mitigate it,” says AMR’s Tohamy. Integrated circuit device manufacturer On Semiconductor two years ago put together a cross-functional working group that is called together whenever a major supply chain risk is identified. The group, which includes the heads of operations, planning logistics, channel management, and services, gathers information from plant managers and others on the front lines, and explores various re- sponses to the specific threat. The group also is responsible for communicating mitigation plans both inside and outside the company. “We want to quickly address the risk at hand without inspiring panic,” says Ravi Vancheeswaran, director for global service operations at On Semi. Most recently, On Semi’s risk response team went into action following the devastating earthquakes that hit near Chengdu in China last May. The company has a factor y two hours away from the affected area. The team called on local factory managers to determine, first, whether any employees were directly affected and, second, to what extent logistics breakdowns were likely to create bottlenecks. The team identified alternative transportation options, including the airlift of product, should that become necessary, Vancheeswaran says. While, in most cases, such mitigation planning is mostly about people sharing knowledge and collaborating, technology can help. Increasingly, manufacturers are using simulation and scenario planning software to evaluate the possible costs and other consequences of mitigation options. On Semi, for example, uses a set of scenario planning tools developed by i2 Technologies to plan responses should customer demand for its products suddenly shift up or down. Similarly, lighting manufacturer Hubbell Lighting Inc. uses what-if planning tools from Kinaxis to simulate what the impact would be if demand were to suddenly shift or the company had to switch suppliers. That kind of analysis has proven particularly important recently, says Rick Jeffcoat, Hubbell’s operations analyst, as the recession has frozen housing starts and managingautomation.com significantly reduced demand for RELATED ARTICLES: some of Hubbell’s products. Strategic Sourcing Takes Vigilance The ability to do detailed what-if www.managingautomation.com/sourcing scenario analysis, particularly analyBeating the Odds in Global Supply sis of the financial impact of different www.managingautomation.com/globalsupply mitigation options, will be critical as Orchestrating the Multi-Tier Supply the types of risks continue to change Network rapidly, says AMR’s Tohamy. Risks www.managingautomation.com/orchestrating such as moving production into a Mastering the Demand Tides new market or aligning with a solewww.managingautomation.com/progressive21 source supplier often bring rewards, so they may be worth taking if the COMPANIES MENTIONED: i2 Technologies cost of mitigation is not too high. www.managingautomation.com/i2 “Ultimately what you want is to be able to understand the upside Kinaxis www.managingautomation.com/kinaxis that taking a given risk might introduce and the trade-offs involved,” SmartTurn Inc. www.managingautomation.com/smartturn Tohamy says. “It’s not just about avoiding risk altogether.” ■ maonline 23 March 2009 http://www.managingautomation.com http://www.managingautomation.com/sourcing http://www.managingautomation.com/globalsupply http://www.managingautomation.com/orchestrating http://www.managingautomation.com/progressive21 http://www.managingautomation.com/i2 http://www.managingautomation.com/kinaxis http://www.managingautomation.com/smartturn

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

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