Part 3 of the “State of the Mill Industry” series
A standard growth strategy across mill products companies, as well as many other industries, is setting up a future of increasing complexity. Through a series of mergers and acquisitions, most manufacturers are quickly moving from an operation with one plant to dozens – creating an ecosystem of different ERP systems that may or not speak with each other.
For an industry traditionally known to be operationally opaque, this challenge can be burdensome and inefficient. Finance, supply chain, and manufacturing dedicate considerable time to split out costs in their historical ledgers to forensically understand how much their operations cost and why. Lack of visibility into supply and demand makes it difficult to buffer inventory. Organizational inconsistencies and disconnectedness lead to misaligned lead times and costs.
Even more detrimental is the absence of an internal barometer necessary to plan production and design delivery processes as a single, cohesive unit. In fact, according to SAP performance benchmarking, 36% of companies have operations teams that never or rarely discuss supply chain tensions with their sales and marketing teams. Essentially, they are leaving behind any potential profit gained from optimizing freight fees, reducing costs of raw materials, and pursuing effective expansion strategies.
Unifying the give-and-take nature of supply-chain diversity
Every supply chain is affected by two diametrically opposed forces: fluctuating demand changes the capacity to deliver on customer expectations, while operational elements further back in the supply chain capitalize on long production times. But balancing the two halves requires much more than hedging bets on whether an item should be overproduced and inventoried to handle a potential surge in demand.
Mill products companies require intelligent insight that only comes from consolidating data and integrating IT systems from every manufacturing location with the open architecture of cloud ERP technology. Doing so allows the entire supply chain to track each widget coming off the line in nearly real-time and at a very granular level. Managers can determine the individual cost; the fraction of energy, labor, and time used to manufacture that item; and the amount of scrap left behind. And out of this information, decision-makers can compare the performance and efficiency of every plant in the network.
The reason this approach works so well is quite simple: The cloud provides a flexible planning platform that can be readily plugged and played into a wide variety of existing systems on a shop floor at a mill, a customer site, or distribution center. By pooling all of this data into a single source of intelligence, businesses can gain transparency and knowledge about the end-to-end supply chain. They can simulate scenarios and forecast outcomes with predictive analytics – all while considering internal and external factors that can impact the production process and supply quality.
For example, a mill product businesses can derive interesting insight from this kind of information when assessing their fleet of manufacturing assets. They may see labor costs in one plant rising faster than another operation. The cause may seem to be poor workforce training, but digging into the data may reveal that the real issue is the layout of the production floor.
By adopting cloud ERP technology, mill products companies can remove their experiential biases to ask the right questions and answer them in an insightful manner that helps move the business forward with greater consistency, efficiency, and cost savings.
Running supply chains that are living, breathing, and evolving
Supply chain planning should never be a one and done; it should be a living breathing part of the entire business. Manufacturers, as well as supply chain leaders, should plan, replan, and plan again to ensure operations are always aligned and readjust in unison.
With the right technology to support the proper infrastructure and capabilities, mill product companies can achieve such an ideal model. By aggregating and connecting their scattered islands of siloed data of information in meaningful ways, they can create a living, breathing manufacturing and supply chain ecosystem that truly moves with the business as needs evolve.
Read Part 2 of this series, “New Lead-t0-Cash Mindset Renews Growth For Mill Products Companies.”