Supply Chain Management Amid Dim Economic Conditions

Aug. 11, 2009
A look at how Hubbell Lighting mitigates its risks.

Most businesses have been affected one way or another by this current recession, particularly those companies operating a globally distributed, multi-enterprise supply chain. With all the moving parts and constantly changing markets, these organizations are now facing even more volatility than ever before, coupled with an urgent need for responsiveness. As a result, many are taking a closer look at their supply chain management strategies and determining how to manage their inventory positions at all times.

Once such company is Hubbell Lighting Inc., (a division of Hubbell Inc.). Hubbell Lighting provides a full range of indoor and outdoor lighting products for commercial, industrial, institutional and residential markets. And while its headquarters are located in Greenville, S.C., given the nature of its business it operates a highly complex and global supply chain. Some components include:

  • a diverse product portfolio with varying product life cycles (longer cycles for commercial products, much shorter for residential),
  • differing supply models (make-to-stock, make-to-order),
  • multiple sales channels (direct and distributors),
  • multiple plants (in the U.S. and overseas) and
  • considerable outsourcing.

As the recession began to take hold of the economy, Hubbell Lighting was faced with the decline of housing starts. The precipitous drop made demand planning based on historical trends irrelevant or impossible. Heavily dependent on foreign entities, which yields increasing lead times, Hubbell needed to cut out as much as possible in the supply chain to decrease lead times. Operating in a 'just-in-time' environment with a leaner, demand-driven supply chain is no easy feat and inventory risks in this environment are high, so Hubbell had to stay as close to the demand signal as possible, having as much visibility into near-term demand.

With such volatility of forecasts and orders, Hubbell needed to quickly understand the impact of unexpected change, determine the action alternatives and then execute to minimize or avoid any financial and customer service losses. It looked to Kinaxis' RapidResponse to dynamically align its supply and demand. The software solution helped the company assess and mitigate its risk and respond to unplanned supply chain events -- a daily occurrence these days.

Hubbell greatly improved its ability to manage risk, as risk was more visible through its extended supply network and enabled supply chain teams throughout the organization to act swiftly and confidently in response to the ever-changing landscape. Visibility was key to Hubbell's risk management strategy as its global supply chain partners relied on visibility of contingency plans to respond to change rapidly.

Because Hubbell operates a modern, globally distributed, multi-enterprise supply chain, successfully managing this level of complexity was always challenging. But, despite a considerably more volatile environment, Hubbell's inventory management also became significantly more effective.

Hubbell now responds to fluctuating demand by:

  • completing daily supply chain runs (to continually reconcile demand plans to reality)
  • instantly calculating and re-calculating "what-if" supply scenarios (in close collaboration with suppliers)
  • creating structured scorecards to understand operational impact of changes and to compare action alternatives against set KPIs

Unplanned events and increased volatility are realities of today's economy and can wreak havoc on a global supply chain. With the precipitous drop in housing starts, Hubbell Lighting was forced to look at demand differently, however, Hubbell Lighting improved its management of demand volatility, helped front line staff make profitable (or least costly) decisions quickly and improved its risk management strategy, thereby positioning itself to weather the economic storm and come out on top.

Rick Jeffcoat is an Applications Analyst at Hubbell Lighting, which provides indoor and outdoor lighting products for commercial, industrial, institutional and residential markets.

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