Of course it’s happened again.
Your new “next big thing” is ready to launch, and the supply chain planning team spent inordinate amounts of time over the past few months refining a forecast and collaborating with suppliers and contract manufacturers. All components were purchased, and most were even delivered at the assembly houses when they were supposed to be.
But now your most important customer needs twice as much product this week than they had previously forecast. No apologies – only demands. How do you reallocate components and finished goods inventory to your new high-priority order without missing dates you’ve already promised to other customers? Is it even possible? What components might you need to resolve the shortage?
We have seen such issues with just about any successful product launch in recent history, from smartphones and tablets to gaming systems and even integrated circuits or components. End-to-end planning and order promising in high-tech is all about facing these kinds of dynamic situations. With the proliferation of the digital economy, the good news is that you have more data points than ever to help you plan and respond. The challenge is that you need to find a way to manage all that data and put it in a meaningful business context. Therefore, it cannot be done in a silo; these new plans and customer allocations must be integrated into your core operations to be effective.
This is where a digital supply chain and modern tools enable a different way of integrated execution.
Plans can now consider production constraints and supplier commitments. This enables, for example, the modelling of assembly house capacity from production line to complete packaging of finished goods.
When you consider the entire value chain and the entire planning horizon, the magnitude of data that needs to be processed increases exponentially. Planning systems need to work through these massive amounts of data quickly to support a data model that includes demand, supply, and financial factors. To be effective, these plans must be supported by strong collaboration between both internal stakeholders and external business partners. And of course, these tools need to be easy to use. No matter how powerful, a system that is not user-friendly will be passed over in favor of spreadsheets and guesswork.
How can a modern high-tech organization use these new tools to meet their goals of lower inventory levels and reduced time to market? Sales and operations planning can now consider demand, supply, and financial factors and simultaneously optimize inventory carrying costs. The limitations identified in strategic planning can now be used to drive customer inventory allocations, considering priorities that you set. Order promising can be more than a simple check against stock on hand; it can now include what-if scenarios to solve problems, like that new large customer order. Collaboration with suppliers and contract manufacturers is made easier with business networks rather than traditional EDI and supplier portal onboarding. All of this can now be monitored by a central control tower, which oversees the entire value chain and alerts planners when things need fixing.
So what about your favorite customer with that big order—how do we resolve the shortage? With effective internal and external collaboration, planning across demand, supply, and financial factors, and fast what-if response scenarios, we will be able to quickly identify gating parts, adjust plans and component orders, and meet the new customer deadline without impacting existing customer commitments.
This blog is the first in a series. Upcoming blogs will provide a more in-depth look at OEMs and how they can use digitalization to help plan and determine when to send clear-to-build signals. We will also look at semiconductor organizations and how they can plan, for example, wafer starts and optimize diebank stocks.
For more on how digital transformation is impacting all aspects of high-tech business, please visit here.