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Posts Tagged ‘APICS’

As a recipient of multiple regional Company of the Year awards over the years from APICS (the American Production and Inventory Control Society, frequently known as the association for supply chain management) we are long-time boosters of their educational programs, in particular the series of five lengthy classes that leads to the CPIM (Certified in Production & Inventory Management) designation.  Over the years, many of our employees have taken their classes and earned the CPIM designation.

In the most recent of APICS Magazine, Mallinckrodt Pharmaceuticals is cited for its award-winning responsiveness enabled by improvements it made to its global supply chain.  And in several of the examples given, employees and managers there give proper credit to the CPIM training they utilized to accomplish their goals.

Mallinckrodt, a global specialty pharmaceuticals company that manufactures both generic and specialty drugs across a number of product lines, recently logged tremendous improvements in supply chain transformation through initiatives that were executed by staff with a deep understanding of what it takes to make a supply chain work – knowledge in large part gained through involvement with APICS and completion of their CPIM designation.

In Mallinckrodt’s case (since the full story is too lengthy for this brief post), those changes had a major effect on profitability and customer service.  Inventory turns rose by 52%.  Unit fill rate improved by 14%.  That led to a 92% reduction in backorders, and a 97% reduction in maximum single-day backorders, according to a review of their efforts published in the Jan-Mar 2018 issue of APICS Magazine.

Staff at Mallinckrodt repeatedly credited the training they got in the process of earning their CPIM, and the way it helped them understand the elements of supply chain, and then change the culture, gradually, within their own firm.  As one manager said, “This was an important step in my career because it gave me a foundational knowledge to build from.  The common language facilitated communication.”  This person was a recent college grad, didn’t know yet what he wanted to do, but then set his sights on leading the supply chain at his facility.

At Mallinckrodt, even IT staff have earned CPIM, which the parties say, enabled them to more easily translate IT requirements into a language the supply chain team could use.  “When communication improved, so did our results,” noted the Demand Manager.  “The answers to common questions became more powerful,” he adds.

In the end, the team not only “noticed the improvement in our internal metrics, but also received numerous accolades from customers through both supplier scorecards and formal awards received from our consistent delivery experience.”

And it was all because of CPIM and the desire to learn and grow into their supply chain responsibilities.  What better reason not to look into the APCIS CPIM designation at one’s own firm today?

 

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A recent article in APICS Magazine notes that organizations sometimes fail to leverage the power of their supply chain, despite the fact that effective supply chain management has been shown to improve overall organizational efficiency, heighten effectiveness, reduce costs, streamline material and information flows, boost margins and ROI and improve competitive advantage.

Why?  They suggest maybe it’s because too many believe it to be a “back office function” that is merely a cost center and a necessary evil, thus rendering the results invisible.  But this couldn’t be further from the truth notes Gary Smith, VP of Logistics for New York City Transit, and an APICS certified CFPIM.  Indeed, he notes, the very visible benefits are plainly apparent when you look at a company like Amazon, which you can bet thinks very deeply about its supply chain – so it’s customers don’t have to.

The article goes on to note three barriers that often prevent supply chain management from being seen as valuable:

  • Employees who procure, manage, warehouse and transport materials don’t see themselves as supply chain professionals.
  • Supply chains are far from being optimized tactically, and there continues to be a lack of aware of the value they can bring to organizations.
  • Supply chain management is not considered strategic. In fact, delivery and procurement ought to be a part of every organization’s strategic planning process.  It’s a strategic investment.

The necessary decision support tools including warehouse management, forecasting, advanced planning and scheduling and procurement optimization can actually help automate – and improve —  many of the routine decisions otherwise made (with great fallibility) by humans.

These automation tools in turn enable teams to make choices faster, with better results, so that people can “focus on the issues that can halt operations and add tremendously to costs,” notes Smith.

It’s an investment – in tools, staff, training and the application of best practices.  But it’s an investment with a return that will keep on giving as you automate what can be automated and leave your most important asset – your people – free to work on harvesting the remaining, truly value-laden (and oftentimes, higher-hanging) fruit.

 

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Manufacturers are increasingly pursuing direct online sales to end users these days, and with that comes the challenge of more, but smaller, shipments.  When you’re built for pallets and cases and you’re shipping onesies, you face new challenges.  The rise of e-commerce has made the integration of logistics and distribution a integral part of operational competency.

Moving from a manufacturing and wholesale environment to a direct sales model for e-commerce may require more employees, fixtures or space.  Instead of loading pallets into trucks, you may be staging small shipments in boxes.  Documentation and labels multiply, and new types of equipment may be needed along with everything from tape and packing materials to racks and printers.

Is it worth it?  Dave Turbide, a New Hampshire based consultant and APICS certified CPIM makes the point in a recent article in APICS Magazine that, in fact, you may not have much of a choice.  E-commerce is growing so quickly that some manufacturers have found they have no choice but to direct-ship to customers.  The question becomes one of whether to do it yourself, or engage a third party.

Turbide suggests a few questions, taken from APICS’s CPIM body of knowledge, to ask if you’re facing that question yourself:

  • Is the activity strategically important?
  • Does the company have specialized knowledge?
  • Is the company’s operations performance superior?
  • Is significant operations performance likely?

If you answer yes to one or more of these questions, Turbide suggests careful exploration and to consider the cost-service trade-offs involved either way.  If you can answer no to most or all, then outsourcing may be the way to go.  Just remember that e-commerce is not going away, and only likely to grow.  It can become a vital link in your customer relationship experiences.  You may want to “cultivate positive workings relationships with package delivery services” like UPS, FedEx and others.

It’s worth noting the following survey statistics recently produced by PwC.  When asked “Which of the following channels are companies using to generate sales,” respondents indicated:

  • 79% – Store
  • 73% – Website
  • 25% – Mobile app
  • 24% – Catalogue
  • 21% – Third party provider

As to the reasons people say they shop online:

  • 38% – Convenience
  • 25% – Bargains
  • 18%- Speed

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About twenty years ago American manufacturers began changing the face of the supply chain when they began “offshoring” — moving production to cheaper sources in foreign nations, expanding a national supply chain into a global one.  Fast forward 15 years or so, and a fair portion of that production has been seen returning home once again due largely to quality issues, but also to the increasing cost of much of that foreign manufacturing, once things like travel, shipping, duty fees, vendor due diligence, theft and piracy and a host of other issues are factored in.

Today, the opportunities and challenges afforded by 3D printing are beginning to create still another new form of “reshoring” that is poised to challenge everything we know about manufacturing.  Since its first patent was issued over 30 years ago, 3D printing is quickly becoming ubiquitous.  Its capabilities are now way beyond the prototype state, and the variety of materials that can be used has grown exponentially, notes John Collins, an APICS CFPIM, and Erick Jack dean of the Collat School of Business in a recent article for APICS Magazine.

Then there’s the recent article in The Economist (“A Third Industrial Revolution”), noting that the digitization of manufacturing is as significant as the mechanization of the textile industry and the introduction of mass production in the automotive sector.  “The ability to produce smaller batches of items tailored to specific customer needs at significantly lower costs could make the factory of the future look more like the weaver’s cottage than Ford’s assembly line.”  And that’s not to mention what this development implies for the changing skill sets of today factory workers as design and programming grow in emphasis.

Some are predicting that global logistics efforts will be reduced as manufacturers shift more of the capabilities and production back to their home shores to take advantage of customer and market proximity.  According to the PLS Logistics Blog, “part of the supply chain will become superfluous.”

When you think about, it makes sense if manufacturers can deliver small batches of customized products and prototypes.  It makes for leaner inventories, for one.  It increases the ability to respond more quickly to customer requests.  Manufacturers may be able to respond to orders directly from factories, thus eliminating some distribution elements.  Locations of stock might be consolidated, and transportation routes are likely to contract as smaller manufacturing locations provide more local 3D printing.

Collins and Jack ask whether it “might even be possible that 3D printing will supersede the concepts of nearshoring and reshoring.  After all,” they state, “where a manufacturing facility is located won’t matter much if customers can ‘deliver’ the products they purchase at home via a personal 3D printer.”

The supply chain of manufacturing has long been all about “speed, cost, quality and flexibility.”  3D printing provides both challenges and opportunities in all these.  Creating ways to incorporate new technologies like 3D printing into our processes provides plenty of both – including the opportunity to be an innovator while remaining competitive in a changing supply chain landscape.

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APICS (The American Production and Inventory Control Society, “the premier professional association for supply chain management”) provides a wealth of information both practical and theoretical about how companies (especially manufacturers and distributors, but applicable beyond) can manage for results and continuously improve their operations through lean initiatives and supply chain excellence.

In the Mar/Apr issue of their magazine, in an article entitled “Targeting Continuous Improvement with Laser Focus,” APICS member Iris Nielsen points out four factors essential to successful continuous improvement which “when implemented properly, can help professionals reach near-perfect results:”

  1. The support of an organization’s executive team. Arguably the number one requirement.  Executives need to demonstrate support for the initiative and model behaviors they want employees to emulate.
  2. The time and mental capacity required must be present and available. Too often, companies work harder instead of smarter.  Problems in need of fixing are often a series of small failures that distract teams from identifying root causes of the real issue at hand.  Be aware of those who cut corners or cause chaos, as you search out root causes.
  3. Constancy of purpose. This was the first of W. Edwards Deming’s 14 key principles for significantly improving business effectiveness.  It relates to an unwavering focus on improvement, which is critical to maintaining and sustaining forward momentum.  Progress here is not so much an initiative as “a long-term practice that permeates the core of the organization.”
  4. Consider the long-lasting effects of the work. Sometimes managers get so focused on monthly or quarterly targets that it “becomes counterintuitive to prioritize improvements” that don’t have an immediate impact.  But continuous improvement is as much a mind-set as it is about action.  Sometimes you have to take a step backwards in order to take two steps forward.

Remember too, Nielsen adds, to celebrate the “tiny triumphs.”  They lie at the heart of continuous improvement, and their celebration will incentivize the types of forward momentum that will keep your own improvement initiatives on track.

Clearly communicate expectations, design processes to meet customer needs and “give them what they value.”  While perfection may never be achieved, striving for it is key.  Know what to look for, what to adjust or fix, and when to act when a process is not creating the optimal product or service.  Only then, notes Nielsen, will real innovation be realized.

 

 

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As we began in our prior post to look at a new technology called “blockchain,” we posed the question: What if you could document and preserve all the data associated with a product’s life cycle from the origin of the raw materials to the final sale of the finished good as it travels along the supply chain, with 100% certainty?

In today’s concluding post, we start with a supply chain counterpoint: Even if you could, is it worth it?

An analyst at Aberdeen Group, Bryan Hall, is quoted in a recent article in the Mar/Apr 2017 issue of APICS Magazine pointing out that supply chains are full of unexpected events and disruptions, ranging from damaged goods to carrier capacity issues, not to mention customs delays, clogged ports, theft and other issues.  The key to adjusting and correcting often lies in what Hall calls the “occasional heroics” that keep plans on track – and none of these actions are possible without visibility.

According to Aberdeen, fewer than 60% of companies had online visibility into in-transit shipment status.  The percentages were even lower for visibility into data to make decisions, or to view supplier quality and manufacturing processes – in other words, traceability.

Other studies have generally confirmed that most companies lack full visibility into their supply chains, and most experience supply chain disruptions periodically.  Often, the source is not even analyzed, and all come at a cost.

And as Business Insider reports, according to APICS, the growth of IoT (Internet of Things – i.e., internet connected devices and machines) will generate yet more massive amounts of data.  Writes Crandall, “Blockchains have the potential to provide security and accountability that traditional databases don’t.”

As examples he cites IBM using a blockchain in the diamond industry… PwC using blockchain to deliver on-stop solution for financial service firms… Wal-Mart testing blockchain’s abilities to track the flow of certain food items to quickly identify items that may be tainted and subject to recall.  The downstream implications of that one – the ability to possibly prevent foodborne illnesses which cause 3,000 people per year and hospitalize more than 100,000 – quickly become clear.

TechCrunch contributor Ben Dickson has written of how blockchains will “enable companies to register information about a product transfer and the product’s price, location, quality and any other information that is relevant to managing it.”

And by its very nature, a public blockchain will ensure that all users have equal and common visibility into everyone’s supply chain.  The decentralized and open nature of blockchains inherently restricts withholding or manipulating information to gain advantage, while built-in encryption will help to ensure data integrity.

In the end, blockchains in the supply chain will eventually assure better regulation compliance, product integrity, customer satisfaction and confidence in product knowledge and movement for the entire family of producers, distributors and consumers.  According to APICS, The World Economic Forum has said that 10 percent of all global domestic product will be stored in a blockchain by 2025.

While still in its infancy, this new technology will present supply chain professionals with both opportunities and challenges.  But as noted business guru Peter Drucker observed long ago, the best executives focus on opportunities, not problems.

 

In our next post, we’ll take one final look (for now) at the newest wrinkle in blockchain, called Ethereum.  A lot of very big companies are getting on board with it as you’ll see.  We’ll tell you more in our very next post.  Stay tuned…

 

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What if you could document and preserve all the data associated with a product’s life cycle from the origin of the raw materials to the final sale of the finished good as it travels along the supply chain, with 100% certainty?

That could be a reality in the not too distant future, thanks to a fast-growing technology we’ve written about several times here before, called “blockchain.”  We thought today we’d take you through a few of the basics of this important new technology, which you’ll be hearing more about in the future.

Some of our source material here comes from APICS and APICS Magazine (Mar/Arp 2017 issue, and others), and other publications.  APICS is an organization devoted to improving the skills of supply chain professionals everywhere through teaching and training in principles of supply chain excellence.  We are a long-time supporter of the organization and its efforts, and recommend their programs often to our clients.  As disclaimer, we are in no way affiliated with APICS other than as longstanding members, benefiting over the years from their training programs, most notably the CPIM (Certified in Production and Inventory Management) certification program.  PSSI also holds multiple “Company of the Year” award designations from our local chapter.  Learn more about the local chapter here.

Blockchain is basically a ledger system built on a peer-to-peer network (think: database) used to record and track transactions on computers.  The first blockchain was developed by Satoshi Nakamoto in 2008 and was implemented in 2009 as a ledger for a new kind of currency called “bitcoin.”

One of block chain’s appealing characteristics is that it does not require a “central authority” or a trusted third party, such as a bank.  Instead, a blockchain relies on three components: a transaction, a record of that transaction, and a system that verifies and stores the record.  Once stored, it is said to be difficult (though as the remedy to a recent Ethereum blockchain hack has demonstrated, not necessarily impossible) to delete.

According to an APICS Magazine article by Dr. Richard Crandall of Appalachian State University (referencing an article in The Economist in 2015), blockchain has “… a mixture of mechanical subtlety and computational brute force built into its ‘consensus mechanism,’ the process by which the parties involved agree on how to update the blockchain to reflect the transfer of [records or] bitcoins from one person to another.”

When someone wants to add to a blockchain, the other participants run an algorithm to evaluate and verify the proposed transaction.  If approved (a process too complex to describe here), the new transaction is added to the blockchain.  Or, in the case of the bitcoin currency, a new coin is added.

Marc Andreessen, a highly successful venture capitalist and inventor of the first popular web browser, Mosaic, describes the importance: “The practical consequence is that for the first time… one internet user can transfer a unique piece of digital property to another [that] is guaranteed safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer.  The consequences of this breakthrough are hard to overstate.”

Ultimately, say blockchain advocates, if chains can be used to transfer and track bitcoins, companies can use blockchains as public ledgers to track product attributes including ingredients and history of production.

And that will usher in the next generation of supply chain innovation.  We’ll take a look at some of the implication of blockchains on supply chains in our concluding post next.  Stay tuned…

 

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