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 improving delivery, stock and production efficiencies while enhancing customer service? Richard House (pictured), 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 & 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 & 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 & 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.

Pictured: Richard House, Managing Director, FuturMaster