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Synchronized
production means producing products at the rate required to
fulfill customer demand. By moving towards shorter lead
times, manufacturers can reduce their dependency on longer
range forecast data that is frequently wrong and therefore
results in unnecessary costs and inventory. This improvement
concept requires manufacturers to shift the top 80% of their
volume from a 'fixed-volume, variable-sequence' to a
'variable-volume', 'fixed-sequence' production schedule so
as to minimize change over-times.
As change
over time and costs are driven down, the frequency of the
cycle is increased. Most improvements can be done without
major investments. The role of suppliers is substantial
since ingredients and packaging often account for 30-50 % of
total costs and frequently dictate downstream service
levels.
Two primary
elements:
-
consolidation of key suppliers
-
implementation of ECR concepts by these suppliers
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The extent of
the impact of ECR on raw material costs depends on the type
of material under consideration:
-
Commodity ingredients: zero
- Other
ingredients: little
-
Packaging material: high
ECR places
a high priority on joint efforts that address the supply
considerations of CRP, Synchronized Production, Operational
Excellence and EDI. It is critically important to involve
suppliers in the demand management activities so they can
plan for variations in demand due to:
-
promotions
- new
products
-
assortment changes
-
seasonal effects
This leads
to reduced cycle teams and improved demand visibility.
Emphasis is placed on the supplier reliability of both
deliveries and production processes. |
