Managing Automation - November 2008 - (Page 25)

[ COVER STORY ] Consumer products makers, on the other hand, need to approach inventory positioning from a finished goods standpoint. “Because they’re dealing with consumable products, there’s not a lot of opportunity for postponement in the manufacturing phase,” Wilwerding says. “Where the benefit for optimization comes for CPG companies is to be able to look at their products and see what stuff is moving in high volumes and say, ‘That’s the stuff that I need to have deployed close to my customers.’ ” And in the automotive parts industries, such as tire manufacturing, companies are primarily concerned with producing the best mix of low, medium, and high-end products to optimize profit margins, Wilwerding says. “It’s not so much buying behavior in this case as using their manufacturing capacity to get the biggest bang for the buck.” In this environment, an inventory planning tool can help companies instruct their factories on the right volume and sequence of work. Balancing Act From a technology standpoint, products that enable inventory visibility across the networked manufacturing environment are key to remaining agile when changes arise. Similarly, the need to balance supply and demand more nimbly calls for collaborative technologies, SAP’s Howells says, “where instead of dealing with the paper and telephone trail, you can utilize the Internet to gauge inventory levels at your suppliers or see where your contract manufacturers are at in the production process with a particular order.” Companies are manufacturing products via multiple partners and hierarchies, so it’s especially imperative for the brand manager to have visibility across the entire network, says Vivek Bapat, SAP’s vice president of solutions marketing. “I expect companies will be making a lot of investments in visibility and analytics products, which give them instantaneous insight into what is happening in real time in terms of how the supply chain is operating,” he says. And then there is the need to anticipate the effects of broader market changes. Customers increasingly are using supply chain planning applications to create contingency plans, Optiant’s Lizza says. “They’re saying, ‘What if diesel hits $8 a gallon? What if shipboard transportation rises to X per container? How is that going to change my supply chain?’ A lot of things require long lead times, like relocating facilities, so they’re looking for that scenario forecasting before building their plans.” Once they are able to gain that analytic insight, experts say, companies want to be able to take action quickly based on what they find. As a result, Bapat says, more companies are investing in technology that allows them to connect their business processes with those of other participants in the network. They are also looking for ways to easily convert the decisions they make into practice in their manufacturing facilities. “Historically, you had someone running these simulations, but the translation of that into reality was where the ball was getting dropped,” Oracle’s Syed says. Companies are also starting to consider supply chain planning during their sales and operations planning (S&OP) processes, Syed adds, so that they can make more informed decisions based on a holistic picture of costs, capacity, and risk. As the need for increased agility further blurs the traditional boundaries among business processes, both Oracle and SAP are taking steps to address the need for end-to-end functionality, the companies say, by more closely integrating their application sets. “The technology has evolved so that it’s not just a planning engine, but more of a closed loop workflow, where you plan your inventory levels based on various inputs and cost factors,” says Razat Gaurav, senior vice president of transportation at i2. “As you execute, you’re continually checking your performance based on differmanagingautomation.com ent metrics, and making adjustments RELATED ARTICLES: to the next invenOrchestrating the Multi-Tier tory planning cycle Supply Network www.managingautomation.com/orchestrating based on what’s maonline changed on the ground and what you learned during the last cycle.” Managing Outsourcing: Ensuring Quality Across Oceans www.managingautomation.com/managing outsourcing Boeing’s Big Supply Chain Wager www.managingautomation.com/boeing Caught Between Supply and Demand www.managingautomation.com/supplydemand — Diane Himes for cost reasons. We did it for overall supply chain efficiency and cycle time improvement. Everything we do is to drive as much flexibility and agility as possible.” For some manufacturing companies, including IBM, outsourcing production to China and other locations makes solid economic sense, even now. For others, it doesn’t. The idea is to make more intelligent choices, rather than just running to the location du jour. For every manufacturer that is working hard to mitigate risks associated with high-cost oil, there are 100 sitting on the fence, waiting for a return to the good old days. “Oil might still be below $100 by the end of the year, or it might creep up again,” Aimi says. “This is so volatile, companies can’t afford to sit back. This issue is not going to go away. Good companies are doing something now.” After all, the world can change overnight. To Cequent, the China equation today surely doesn’t look like it did two years ago when the company first made its move. “We hoped to get three to seven years of benefits from low labor costs. Some of that didn’t even last a year and a half,” Mills says. “We got into China a little later than some companies did. We held out as long as we could. But I didn’t expect to see the cost benefits evaporate in less than two years. I don’t think anyone of us saw that coming.” ■ Mastering the Demand Tides www.managingautomation.com/progressive21 COMPANIES MENTIONED: i2Technologies www.managingautomation.com/i2 ILOG www.managingautomation.com/ilog iThink www.managingautomation.com/ithink Optiant www.managingautomation.com/optiant Oracle www.managingautomation.com/oracle3 Rockwell Automation www.managingautomation.com/rockwell3 SAP www.managingautomation.com/sap3 25 November 2008 http://www.managingautomation.com http://www.managingautomation.com/orchestrating http://www.managingautomation.com/managingoutsourcing http://www.managingautomation.com/managingoutsourcing http://www.managingautomation.com/boeing http://www.managingautomation.com/supplydemand http://www.managingautomation.com/progressive2 http://www.managingautomation.com/i2 http://www.managingautomation.com/ilog http://www.managingautomation.com/ithink http://www.managingautomation.com/optiant http://www.managingautomation.com/oracle3 http://www.managingautomation.com/rockwell3 http://www.managingautomation.com/sap3

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Managing Automation - November 2008 Contents Take 1 At One-Year Mark, Wonderware President Focuses on Empowering Plant Operators Oracle Demos Fusio Apps, Reveals Delays Baan Founder Says BPM Will Replace ERP Emerson Talks Wireless at Annual User Group Event Merger Complete, Intercim Focuses on Collaboration Notes Cover Story: The New Supply Chain Reality Special Report: Keep Out Integration: The On-Demand Interchange Industries: Ending the Endless Waves of Paper Product Scan Advertiser Index Next

Managing Automation - November 2008

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