Matching supply and demand

By exploiting electronic communication and management in both the supply and demand chains, manufacturers can handle more orders with the same or fewer people and, more importantly, improve efficiency and productivity essentially by removing wasted time. Although UK manufacturing has made great progress in the past two decades, and productivity is still growing, the gap with firms in areas such as the USA, France and south east Asia is widening. The secret: better use of technology. "We've done our headcount reductions and our business process re-engineering," says Jim Gibney, UK general manager of Fujitsu Glovia. "Now that the factory is running more efficiently it's time to look at the supply chain and demand chain." Gibney believes that UK manufacturers should be aiming for an entirely demand-driven model – making products with no guesswork. "While for many companies it's unrealistic for them to go fully demand-driven, at least by having this goal the company will be given a focus – a strategic vision behind which the entire company can rally. That will drive initiatives such as APS [advanced planning and scheduling] and SFDC [shop floor data collection] – rather than talking endlessly about lean manufacturing, something which is not analytic or prescriptive on its own," he says. Less people, more service One company, Fujitsu Telecommunications Europe, is already experiencing the benefits of this approach. A manufacturer of exchange equipment to large telecoms firms, it has introduced electronic trading with key suppliers and, as a result, already reduced purchasing department headcount by 50%. In addition, says Julie Wilks, business application manager with Fujitsu Telecom: "We are getting much more accurate information on purchase orders and deliveries because the information is updated electronically." Crucially, Fujitsu Telecom also has the supplier prompt information that's vital for more accurate factory planning and scheduling. "After placing the order, we are getting immediate electronic feedback as to when we can expect to receive the materials," she says. Fujitsu Telecom is now also looking in the other direction – at the benefits of electronic communication with its customers. "We have just started a project that will handle order management. We provide both equipment and services to customers such as BT, and the process will handle not only the delivery of goods but the management of jobs, so we can feed back progress on those jobs to our customers," explains Wilks. "The benefits on the sales side are that we expect to be able to handle an increase in the number of orders but with fewer people," she continues. "We are also looking at getting advance planning information from our customers, before they place orders." Now that is encouraging. But there are two linked aspects of IT. The benefits from this kind of supply chain initiative are amplified when companies make maximum use of the information flow – through APS software, and by extracting the latest and most accurate information from the factory using SFDC. Gibney makes the point that although APS and SFDC come into their own when they're receiving live data from suppliers and customers, it's not necessary to take a 'big bang' approach. "A modular approach is certainly much more practical," he says. Also, while conventional wisdom dictates that the starting point is APS and SFDC within the factory walls before looking outside, Fujitsu Telecom is an example of how benefits start flowing immediately even if you work the other way round. APS and SFDC are just starting to be rolled out there, but once they're in place, the information they'll provide will yield further savings: suppliers will deliver right to the production lines. Standards such as XML and Rosettanet, as well as web hubs, mean that electronic communication should no longer be the province of only the largest. And although software pricing has yet to move to the point where SMEs can jump in, that time is coming soon.