Closing the gap between plans and reality

Slick, efficient, flexible and profitable customer service, through better, more interactive and automated production planning, scheduling and execution, are the benefits of a supply chain event/exception management (SCEM) system adopted by Caradon Plumbing. The firm says it can now reliably schedule its manufacturing operations to synchronise with its main customer. There are also less credit notes and less problematic returns, while admin too has been substantially reduced. Caradon designs and manufactures commercial and industrial boilers at its sites in Newcastle, Rotherham, Kingston-upon-Hull, Belgium and Holland. It is a major supplier to building supplies giant Jewson, and it was this key customer that kicked off the project, with Caradon becoming part of a Jewson-driven web-based SCEM pilot scheme, along with some 20 other main Jewson suppliers. One of the most salient points here is that, unlike many who attempt to embark upon supply chain projects, Caradon reports that its experience has been entirely positive. And the reason is that this isn’t about supply chain synchronisation in the sense of attempts to optimise algorithmically actions, transactions, production and the rest driven by the overall customer. It was about adopting a pragmatic system that accepts the realities of life – change, events, chaos – in different businesses, but seeks to reveal those aspects that are relevant to the partners involved through a central, web-based system that’s useful to all involved. It’s low cost and it’s win-win. The difference between that and overarching supply chain management systems couldn’t be greater. Highly tuned supply chain systems, supposedly dealing with long term planning but also programmed to react to short-term changes and events and deliver yet another re-optimised plan, don’t necessarily make the management process better, simply more nervous. Also, most manufacturers are struggling to support their own internal planning and scheduling, never mind take on supply chain partners too. And they can cost a fortune. Exception management is based on entirely different logic: the logic of the fire service – quick location action based on broad rules to support operational decision making, or ‘fire fighting’. If you consider supply chain execution as the realisation of plans through schedules and work in progress, then SCEM is an approach that seeks to close the gap between the plan and reality. Orders, call-offs, stock items, shipments, quality issues, returns and the rest in the chain can be monitored, managed and controlled using alerting software and workflow. What are effectively routine tasks can be automated and the important exceptions identified, routed and reported immediately to the appropriate company, department or individual for actioning, before dramas turn into crises. SCEM also provides multi-way customer/supplier feedback – real time communications and appropriate management – all via the web. As Brian Marsden, CEO of SCEM software supplier Wesupply, puts it: “Most manufacturing companies have a mixture of business systems, including legacy systems, ERP, EDI and planning software. We offer companies a hosted, on-demand web-based solution for a monthly fee.” That’s a far cry from the big ticket supply chain projects of yore. Another salient point here is how this was done. John Glanville, Caradon’s group IT director, explains that the company has a long-standing relationship with Jewson. Last year Caradon’s managing director was invited by Jewson to attend an ‘education and awareness’ seminar at its offices to discuss plans for what would become this web-based SCEM pilot system involving key suppliers. “The objective was to talk about what Jewson was trying to achieve, why, and provide suppliers with an opportunity to give input and help shape the overall system solution.” And that dialogue is key. Glanville, quite rightly, reckons too many companies simply don’t get a chance to get involved at, or anywhere near the outset of these kinds of projects. “Any supply chain or e-commerce software project needs to be a shared vision between the suppliers and the main implementer. You need cross-partnership teams with people involved from all areas of the supply chain.” Words from the wise are that typically this isn’t the case, and is probably the reason why so many supply chain projects only achieve a fraction of the potential benefits. That said, Glanville is enthusiastic about WeSupply’s hosted website SCEM system because it’s user-friendly and entirely flexible. In terms of IT, all the various suppliers need is a PC and a web browser, so anyone can afford to get connected, and there are several formats of data exchange – from ERP integrated web EDI, to email, CSV files and so on. The choice of interchange method is determined by the supplier and the level of sophistication and automation deemed necessary. Looking at it operationally, Glanville explains: “Sales orders are automatically posted to a secure website directly from Jewson’s ERP system. Each order triggers an email to the relevant individual within the supplier company. Suppliers then sign-on [each supplier has its own level of access rights], look at the order placed on them and then fulfil it.” By fulfilment, he means confirming that the order has been received, agreeing it either as is, or with changes to, for example, the delivery date, to reflect capacity and the rest. “On acceptance of the order, the system then automatically sends an advanced shipping note back to Jewson showing them what they’re going to get and when.” The benefits should work for all parties. Before adopting the system, Caradon, like many, used faxes to communicate this kind of information to Jewson. Says Glanville: “We were wasting time and resource sending and locating faxes, printing them off, copying them, then re-keying some of the information from the fax into our SAP ERP system. After all this, we wasted even more time and effort telephoning Jewson to confirm the order.” With the new system in place, all that is history. “We’re slicker, more efficient and more flexible, with better decision-making. We can fine-tune our own manufacturing operation because we have faster, more reliable order schedules coming to us through the system. There are less credit notes and less returns now, and we’ve also been able to switch some of our admin staff from re-keying data to more value-added activities.” What was involved? “We needed help from our EDI consultant Orion Consulting. They’ve helped us take WeSupply’s system to the next level: we needed to change our SAP [ERP] software so that it could accept electronic [purchase orders] from Jewson’s ERP system direct into our own sales and distribution.” Caradon also uses the Wesupply website to check order status and to look at how the firm is performing against Jewson’s key performance indicators (KPIs). So in a sense, it’s a small price to pay; it’s also the cost of keeping that customer – and there’s a lesson for us all there. And there’s another important observation: “The web has really helped us cement better relationships with our partners and has improved our internal efficiencies,” says Glanville. Says Glanville. “As manufacturers, we’ve currently got the balance wrong, with too much emphasis on internal cost cutting. Companies need a supply chain strategy that’s part of the overall business plan and is scalable.” He believes manufacturers need to “steal ideas from the best”, and harnessing SCEM projects to start acting as pragmatically aligned supply chain teams that can turn the vision of the whole being greater than the sum of the parts into reality.