Manufacturing companies have tried desperately to improve their customer service through better forecasting, increased inventory levels and optimized production. But E2E pull will allow them to collaborate and engage with their customers to sense the changes in demand while reducing the customer lead times.
Many companies carry substantial amount of finished goods inventory to satisfy their customer’s fluctuating demands or bad forecasts. The problem with this approach is it becomes unwieldy when the number of FG SKUs dramatically increases. So instead of just carrying days on hand (DOH) inventory E2E Pull allows you to carry the right mix inventory
The fluctuations in customer demand typically forces the schedulers to constantly pull and push orders at the shop floor. This not only causes operational instability but also increases the cost through expediting, increased set up costs and employee over times. By moving to E2E Pull, the shop floor production can be level loaded while moving towards a demand driven manufacturing model
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Typical S&IP (Sales & Inventory Planning) is normally driven by customer and sales forecast. The existing ERP/MRP data feeds historical orders but not customer consumption or inventory holding patterns for the planning exercise. Since the FG inventory planning drives raw material and components planning, any errors get carried forward and may get aggregated. E2E Pull will provide consumption patterns, the inventory being used to service the customer’s consumption and the trend analysis to determine customer’s future requirements.
Gartner research normally describes the Design, Optimize and Execute as the planning cycle. Most of the focus they mention is currently on Optimize and very little on Design and Execution. Given that focus, manufacturing companies are trying to come up with better forecasting algorithms without changing the quality of inputs. E2E pull will allow companies to design their supply chain and feed forecasting inputs with execution level granular data.
Ultriva Blog Post: Find out the minimal requirements for a solution to establish the E2E Pull process
The common problem faced by the suppliers is the exceptions generated during every MRP run. These exceptions alert the buyers to expedite, defer or cancel the outstanding orders. The exceptions unfortunately are the result of changes in forecasts and planned orders fed in to MRP. This constant push, pull and cancellation of orders leads to bull-whip effect on suppliers which ultimately results in short shipments, late shipments and stock outs. By deploying E2E pull and involving the suppliers, it will standardize lead times, lot sizes and provide visibility in to the extended supply chain.
We hear manufacturing companies constantly complaining about lack of visibility. Typically the requests come from different silos – planning, purchasing, supply chain, sales, manufacturing, logistics and executives. Each of these try departments either procure or build tools to satisfy their individual needs. Unfortunately this leads to more confusion rather than resolution. E2E pull allows manufacturing companies to build a strong foundation for the material flows across these departments. The pull can start with customers flowing through the distribution channels, production locations, contract manufacturers, raw material warehouses and multi-tier suppliers.