Distribution and the wider supply chain

With tighter deadlines, higher freight costs and increased demand unpredictability, how can manufacturers and distributors ensure their extended supply chain network is best geared to improvements.

With tighter deadlines, higher freight costs and increased demand unpredictability, how can manufacturers and distributors ensure their extended supply chain network is best geared to improving delivery, stock and production efficiencies while enhancing customer service? Richard House, managing director, FuturMaster suggests the optimum solution.

With increasing market unpredictability and growing pressure from the end customer for ever shorter delivery dates, there has never been a more critical time for distributors and manufacturers to focus their attention on increased efficiency within the supply chain network.

Historically, many companies have relied on disparate pockets of sales/ordering, inventory and logistics data even though they are just one component within what is often an extensive network of distributors, suppliers and warehousing organisations.

But the price to pay for such a fragmented communications infrastructure can be high.

Fast changing ordering and distribution requirements can prove a logistical disaster if each member of the partner network hasn't immediate access to up-to-the-minute data.

After all, it only takes one ineffective link to affect the whole chain.

So how can this most effectively be achieved? The key phrase here is 'visibility through connectivity'.

Each partner organisation should be able to utilise and benefit from seamless, collaborative communication throughout the supply chain.

And the manufacturer and its distribution network should be capable of planning fleet availability and timelines to a high degree of accuracy by building schedules around precise production completion dates.

Manufacturers should also be able to estimate and monitor distribution costs for deliveries to the end customer or warehouse, as well as costs concerning incoming parts/component from suppliers.

So what kind of solution is capable of delivering these benefits? Modern supply chain planning solutions enable companies to gain visibility of current distribution, stock and production needs as well as secure the means to anticipate future demand based on historical demand patterns.

This puts both the manufacturer and distributor in the best possible position to ensure the customer's specified lead times can be met.

A reputable demand forecasting and planning solution can prove invaluable when planning distibution, production, inventory requirements over a period of days, weeks, months or even years.

Using data from the central ERP system, the software automatically calculates likely demand patterns over a specified period and the required replenishments to achieve optimal stock levels.

This can be a boon for the manufacturer in terms of ensuring, for example, their raw materials or component suppliers, together with their distribution partners, have time to prepare for forecast demand.

The best demand forecasting and planning software solutions are able to dynamically analyse sales history to calculate the seasonal (and other) trends, creating a base forecast of underlying sales during a specified period.

A critical part of the forecasting process is to identify and calculate requirements based around a customer's promotional activity (for example, two-for-one offers) or non-standard events in the sales history.

Accurate management of this activity is fundamental to the creation of a reliable final forecast of demand regarding distribution, production and stock requirements.

In terms of flexibility, the system should be geared to serving the end user as an individual organisation as well as part of the wider network.

In this regard, the software must be customisable to the user's particular industry, his operations, priorities and the supply chain of which he is a key component.

It is also advisable that the software provider of choice has the right specialist consultancy expertise to ensure the end solution is a perfect fit for the end user's current operations, as well as being ready to change and adapt to future needs.

More sophisticated planning software functionality may be required to take into account the constraints of capacity, labour, vehicle capacities and other factors that influence the total cost of supply.

Therefore, the demand forecasting and planning software provider should be able to offer a range of advanced planning modules to suit situations of differing complexity.

The modern supply chain requires seamless visibility over its entire network in order for each partner organisation to quickly react to immediate tasks, while preparing for future demand.

In achieving this successfully, production and distribution costs will fall and customer and supply chain partner relations will remain uncompromised.

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