Cloud-based supply chain solutions offer opportunities for large manufacturing companies with globally dispersed manufacturing facilities and supply bases to actively engage with their suppliers to streamline manufacturing procurement and purchasing functions.
Project-centric Engineered-to-Order Products
At the other end of the high-volume, repetitive manufacturing spectrum is the one-off project that is engineered-to-order for a specific use. A European company was servicing an oil exploration project by delivering large project-specific valves and gears. Typically these projects took years to complete with high potency of constant delays. This company ended up manufacturing gears and having to hold them in stock as the project timeline slipped.
Given the nature of these projects, raw material and components were sourced from a long lead time (six to nine months) supply base. This compounded their problem of having to carry raw material and finished goods when the projects went out of sync. This company was also interested in doing just-in-time inventory—not driven by consumption, but by project/production schedule. Clearly the basic problem in this case was disconnected communication as well.
The company deployed a collaborative cloud-based solution where the replenishment was controlled by a workflow. When the company won a new project, the engineering department designed and developed the specifications. Suppliers were provided with specifications and an expected timeline, and received orders electronically. The suppliers then manufactured their goods based on the specifications within their stated lead time. When they were ready, a flag was set which told their customers that the specified elements were ready to ship.
With all the suppliers collaborating in this process the manufacturer was made fully aware of the component readiness prior to scheduling production. The manufacturer then collaborated with customers on the project status and scheduled their production. Once the production schedule was set, the cloud-based solution automatically notified the suppliers with a ship date using their transit time. This ensured that the material arrived at the factory floor right in time for production.
Implementing the solution eliminated the two key problems – high inventory and lack of space. The unintended benefit was some inventory reduction on the supplier side through schedule visibility, clear ship dates and a standardized shipping process.
