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A STRATEGIC IMPERATIVE FOR MANUFACTURERS
Develop an Assurance of Supply StrategyCollaborate with Suppliers to Ensure Reliable, Agile Delivery to Consumers
Volatility in supply chains makes it hard for companies
to profitably meet demand. Sourcing is complex,
involving hundreds of partners around the world.
Suppliers often don’t have access to adequate capital,
causing instability in the supply base. The majority
of inventory, cost, and risk is outside of a single
enterprise’s control — and with a growing percentage
of manufacturing being outsourced, the problem
won’t solve itself.
Inbound Outbound
Tier-n Tier-1
Enterprise
Customers
Multi-Tier Constraints
GlobalSupply
VolatileDemand
OutsourcedManufacturing
The biggest challenge: having exactly the right amount of supply to
meet volatile global demand.
Impact of Uncertainty in Supply Channels
Lack of visibility and control over supply leads to excess
costs and wasteful processes in the manufacturing
supply chain. Companies hold inventory to guard
against risk, but it’s expensive — and the extra costs
eventually get passed on to customers.
Without a strong assurance of supply program,
manufacturers find themselves with:
• Too much buffered inventory
• Inability to predict accurate lead times
• Poor WIP visibility at the supplier level
• Limited control over in-transit inventory
• Longer lead times throughout the supply chain
The Root of the Problem
The systems manufacturers have used for years no
longer solve global supply chain problems. Some
companies are juggling multiple ERP systems — ones
that are prohibitively expensive, don’t share partner
data well, and cannot connect many entities to a single,
real-time source of information.
Too many siloed systems and not enough shared
data make it impossible to reliably meet customer
demands. Companies, with only a few pieces of the
puzzle, must scramble to track inventory and provide
accurate ETAs.
1. Fundamentally different supply chains with little
enterprise control
When supply chains were shorter and constrained
to nearby regions, managing risk and cost was
much easier. Today, up to 80% of data lies outside
the enterprise, leading to:
• More blind spots and lower levels of control
over data and activity in the supply chain
• Global markets and sourcing with long,
variable lead times
• ERP ineffective for managing distributed
manufacturing networks
2. A shift in focus on planning vs. execution
To regain control of their extended supply chains,
companies turn to planning and forecasting. But
with new markets, more frequent product launches,
and shorter product life cycles, incremental gains in
planning accuracy will not meet the drastic demand
swings that are common today. Focusing solely on
forecasting leads to:
• Blind spots where accurate, real-time data is
unavailable
• Near-term horizon problems
• Partner knowledge excluded during
decision-making
• Money wasted on planning systems that cannot
accurately predict demand
3. Financial uncertainty and stress on the
supply chain
Extended payment terms and late remittance put
unnecessary stress on suppliers. Outdated processes
like manual three-way match slow down the payment
process, and relationships with suppliers are put at
risk. The results are:
• Suppliers lack enough capital to fund production
• Quality is negatively affected as suppliers fight to
protect margins
• Supply base is unstable, with poor relationships
and little trust
The Challenge
Manufacturers struggle to ensure a reliable flow of supply through the pro-duction cycle.
To execute on a strong assurance of supply program,
manufacturers must be in control. They need to make
informed decisions using a system that allows for
visibility and management by exception.
As inventory moves through the supply chain, managers
can use a networked platform to adapt to demand or
disruption. They ensure the order will be filled on
time by understanding financial viability of suppliers,
collaborating with n-tiers on parts, and using WIP data.
Later, they use transportation data to ensure on-time
delivery. Bookings, rates, and compliance are handled
from a central location. Finally, goods are managed
by exception to allow dynamic ETAs and accurate
availability projections.
Connect every trading partner on single, cloud-based
supply chain network:
• Shift to execution and tighter integration to provide
“rapid re-planning”
• Procure-to-pay that manages the end-to-end financial
supply chain
• Fusion of the physical and financial supply chains,
monitoring flows from factory to customer
• Visibility into inventory and WIP
How to use this technology to build a strong
assurance of supply program:
1. Collaborate on orders and supplier commitments
2. Manage order, receipt, and WIP status by exception,
automatically
3. Track inventory with visibility into goods from point
of manufacture to customer receipt
4. Replace manual 3-way match with automated supplier
payment programs that show status throughout
Value Propositions
A healthy supply assurance program adds value to all
of a company’s trading partners. The manufacturer
sees a drop in inventory-related costs, while partners
benefit from financial stability and easier communication
on production, cycle times, and shipment of parts and
final products. Execution is synchronized across all
partners, complex workflows managed without extra
manpower, and the physical and financial supply
chains are viewed from a single source.
1. Find and allocate the right supply when it’s needed
• Move inventory easily from one place to another
with higher agility
• Increase customer satisfaction with reliable
deliveries
2. Decrease transportation and inventory costs
through better visibility
• Expediting only parts effected by disruption, not
the whole shipment
• Gain visibility into in-transit inventory and WIP
• Lower costs associated with excess buffer stock
3. Improved supplier performance and relationships
• Better supplier financial health leads to reliable
production
• Reduced DSO for suppliers through supply chain
finance programs
Assurance of Supply and the Networked Company
To uphold a strong assurance of supply program,
companies must transform themselves from silo-based,
inward-facing corporate operators to interconnected,
highly agile business network orchestrators.
NetworkConnectivity
Agility
B
A
Sense more accurately
Operate more e�ciently
Respond faster
Make better decisions
What’s the point of all the planning?
The real power lies in being able to
make changes along the way.
The Solution