Ryder Wp Demandmanagement 092313

8/11/2019 Ryder Wp Demandmanagement 092313

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Sponsored by: Conducted by: On behalf of:

Demand Management:

Customize Products through theUse of Product Completion Centers

August 2013


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Demand Management:

Customize Products through the Use of Product Completion Centers

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Manufacturers and shippers are facing increasing difculty in their ability to

bring product to market in a speedy and cost-effective manner. Companiesare driven to reduce inventory levels as the cost of carrying any excessive

nished goods is becoming prohibitive.

To aid in their ability to get product to market in a timely, cost-efcientmanner, as well as to better leverage demand forecasts, supply chain

managers are turning to an array of non-traditional solutions. One suchprogram is product customization which allows for tasks such as lightassembly, kitting, as well as other value-added services to be postponed

right up until nal distribution. This exibility reduces the risk of carryingsurplus inventory and enables manufacturers and product distributors to

modify the base product to fully satisfy customer demands.

The motivating force behind the demand for these capabilities is to helpmanufacturers and shippers have better control over inventory, helpcompanies better leverage their supply chains to improve protability, and

be able to meet customer demands in an efcient and expeditious manner.

A recent survey conducted by Peerless Research Group validated theoverwhelming desire for manufacturers and shippers to reduce supply chain

costs, lower inventory levels, build more exible supply chains, be moreresponsive to customers, and create more efcient ways of getting productto market.

Yet, curiously, while supply chain managers admit that long lead times,

rising inventory costs, inventory optimization and operational efcienciesare problematic and are in need of improvement, product customization

capabilities (12%), a potential solution to these challenges, ranked near thebottom of the list when respondents were asked about the specic supplychain goals their organizations are looking to address.

The following reveals the details of our research.


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Demand Management:


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Our greatest frustration inmanaging our supply chainis forecasting and keepinginventory in balance acrossour warehouses.

Supply ChainManagement; Wholesale

$100M - $250M in revenues

Matching productioncycle lead times withtransportation lead times iscausing unnecessary delays.

Supply ChainManagement; Computers

$500M - $1Bin revenues

Organizations Supply Chain Operations

Issues such as greater inventory optimization, reduced lead times andcutting costs associated with inventory management were most often cited

as critical aspects of supply chain operations that organizations need toimprove. Upgrading overall supply chain efciencies and creating supply

chains with greater exibility are also high priorities.

More specically, shippers and manufacturers are looking to improveinventory management competencies, initiatives related to improvingvisibility and communication with suppliers and customers. They are

further seeking solutions to better predict customer demand and alignthose requirements with production, streamline inventory and distribution

operational efciencies, contain costs and operate leaner, eliminate inventoryerrors and waste, improve inventory turns, and rene planning and demand

sensing capabilities. When all these functions can be done under oneroof with one system, efciencies are even greater. Curiously, imperativessuch as product customization capabilities and kitting rank low, these are

processes likely to improve lead times, lower costs, better optimize on-hand

inventory and advance overall supply chain efciencies!

Aspects of the supply chain thatorganizations are looking to improve

Reduce lead times

Lower inventory costs

Greater inventory optimization

Overall supply chain efficiencies

Create a more flexible supply chainBecome more customer-focused/More responsive

Supply chain visibility

Leverage supply chain to grow profits

Streamline sourcing procedures

Shorten production cycles

Product customization capabilities

Assembly/Kitting procedures

51%

50%

43%

42%

35%

35%

34%

29%

27%

23%

12%

12%


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Demand Management:


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We are moving toward acollaborative supply chainwhere each level was set upin a pull environment withmaterials ready to produce

and ship once the pull wastriggered.

Supply Chain ManagementIndustrial Machinery

$10M - $50M in revenues

On the whole, however, these organizations appear divided in their abilities

to manage inventory levels. While one-third fully assert their supply chain ishighly effective in controlling inventory levels similar percentages feel they

are average (39%) or less than effectual (27%) at managing on-hand stock.

Companys ability to control inventory levels

Good39%

Fair24%

Poor

3%

Excellent7%

Very good27%


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Demand Management:


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We need to identify levelsof need and changesin demand and adjustinventory levels necessaryto have an effect on the

optimum effectivenesslevels throughout theorganization.

VP Procurement, Retail


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Demand Management:


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Supply chains ability to manage customer demand

Understanding distribution channel

Understand market potential

Ability to recognize customer buying patterns

Understand demand at point-of-purchase

Product category buying patterns/Market shifts

40% 41% 19%

38% 38% 24%

34% 36% 30%

31% 39% 30%

30% 41% 29%

Excellent/Very good Good Fair/Poor

Managing Demand

Shippers and manufacturers varied in the assessment of their supply chainsability to predict customer demand. Overall, roughly one out of three rated

their supply chain either very good to excellent or, conversely, fair to poor onits ability to recognize customer buying patterns, evaluate demand at point-

of-purchase locales, or to forecast buying trends by product category.


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Demand Management:


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We ship factory directto the consumer with theonly middle stop being forpostponement activities,packaging, customization,

etc.Director, Warehousing

Operations; Food & Beverage$1B - $2.5B in revenues

In particular, the demand management issue rated as most important is the

ability to provide more timely alerts of demand changes that subsequentlyimpact operations (60%). In addition, integration of line of business supply

chain needs with their overall supply chain planning and logistics execution(47%), collaboration within the enterprise and with trading partners (44%),

and the ability to predict the impact of marketing promotions or otherirregular activities (42%) sales activity are also considered important

aspects.

Slightly fewer than one out of ve (18%) said they have a postponement

strategy in place to help manage demand. Reducing fulllment errors,minimizing risk across the supply chain and enabling greater control overinventory levels are seen as favorable results. Those who are not operating

this type of program cited cost as the main barrier for adoption.

Key demand management capabilities

Providing more timely alerts of demandchanges impacting operations

Integrating line of business supply chainneeds with my overall supply chain

planning and logistics execution

Enabling collaboration within theenterprise and with trading partners

Predicting sales impact of marketingpromotions, or othe irregular activities

60%

47%

44%

42%


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Demand Management:


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We put demand forecastingin close alignment withproduction, inventory, anddistribution operationscapable of efficient low cost

customization of customerrequests.

Director/Manager ofDistribution; Food & Beverage

$2.5B+ in revenues

We repackage currentinventory to meet thesituation. We are wastinglabor and packaging

materials.Director/Manager ofLogistics; Chemicals; $100M -

$250M in revenues

Product Customization

In describing what they consider as the ideal supply chain, shippers citedimproved inventory management and fulllment processes, streamlined

operations, better integration across systems and platforms, greater levels ofautomation and increased visibility across suppliers and customers. Clearly

what shippers want is what product customization services can provide.

With that, a product customization capability is perceived as a highlyimportant function for many. Almost one-half (46%) expressed the needto make changes to a product just prior to sending it off to distributors or

channel partners; one in four (27%) dont require this capability.

Product Completion Centers

Desires for having the right product at the right time at the right place at the

right cost all point to increased use of a product completion center conceptor model. Shippers and manufacturers are reaching for leaner supplychains, yet need the ability to be exible to support demand as it ebbs and

ows. This requires a coordinated product manufacturing and distributionnetwork that assures that some product is always at the supplier, some in the

warehouse, and some in manufacturing centers, all owing seamlessly.

The concept of a product completion center was described to respondents

as . . .

Having a need for product customization

Sometimes28%

Not very often33%

Never13%

Almost always6%

Often19%


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Demand Management:


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A unique distribution solution to postpone nal product customization

closer to the point-of-sale. This approach consolidates multiple vendors

and services into a single facility from break-bulk to packaging to retail

delivery.

This concept, as described, was foreign to many of those we surveyed.

While roughly one out of ve (21%) said they are quite familiar with thisconcept, one-half (50%) claim they are unfamiliar with this strategy.

Familiarity with the concept ofa product completion center

Somewhatfamiliar29%

Not very familiar31%

Not atall familiar

19%

Extremelyfamiliar6%

Very familiar15%


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Demand Management:


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It would be difficult becauseof federal regulationsand approvals need tobe procured prior to anyalterations (Pharma

Products). Lead times wouldbe an issue, impacting ourspeed to market.

Director, ManageWarehouse/Distribution

Chemicals$2.5B+ in revenues

It is not on the packagingside we have customizationissues, its more of theproduct configuration sideof things.

Supply ChainManager; Chemicals

$2.5B+ in revenues

Shippers and manufacturers were also equally split on how a product

completion center would benet their supply chain operation. Just over half(52%) contend that a product completion center strategy would be of great

value to their supply chain while those who dont believe this approachwould be as useful attribute this to either a perceived lack of need or a low

level of awareness.

Value of a product completion center

Somewhatuseful33%

Not very useful32%

Not atall useful

15%

Extremelyuseful5%

Very useful14%


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Demand Management:


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Benefits of a product completion center

Improves overall customer service

Reduced order cycle times

Can quickly customize orders per client specifications

Increased supply chain flexibility for special orders

Increased responsiveness to unstable customer demand

Increased speed to market

Greater inventory optimization

Optimize inventory/Lower inventory costs

Improved cash flow

Improve product customization capabilities

Kitting customization flexibility

Streamlined assembly processes

Streamline sourcing procedures

41%

37%

36%

34%

34%

33%

32%

31%

26%

26%

25%

19%

17%

A multitude of benets are acknowledged as a result of employing a product

completion center strategy. Critical factors such as improving customerservice (41%), having the ability to quickly customize orders per client

specications (36%), increased supply chain exibility (34%), greaterresponsiveness to variable customer demands (34%), and speed to market

(33%) were all features that supply chain managers are looking to improveand were listed among the top advantages.


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Demand Management:


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We outsource some of thein-house assembly workand fabrication as well asshortening the lead times inorder to turn inventory over

more quickly.VP, Procurement and

Sourcing; Automotives


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Demand Management:


Methodology

This research was conducted by Peerless Research Groupon behalfof Logistics Managementmagazine for Ryder Supply Chain Solutions.

This study was executed in December 2012, and was administered overthe Internet among subscribers of LogisticsManagement.

Respondents were qualied for being involved in decisions related to supply

chain operations and applications such as demand management, riskmanagement, product development, network optimization, etc.

The ndings are based on information collected among 366 topmanagers holding job titles in logistics and operations (25%), supply

chain management (20%), and executive management (13%). A range ofmanufacturing industries are represented and include food and beverage,

chemicals and pharmaceuticals, computers and electronics, and automotiveand transportation. Wholesalers and retailers are also included in the study.Companies of all sizes are also well-covered.

About Ryder Supply Chain Solutions

Ryder Supply Chain Solutions is an end-to-end supply chain partner with

nearly 80 years of experience helping companies in North America, theUK and Asia transform their supply chains. Ryder provides a full range of

services, from optimizing day-to-day logistics operations to synchronizingthe supply of parts and nished goods with customer demand. As supply

chains become more complex, Ryder leverages ve strengths to deliver thebest in supply chain execution: know-how, lean methodologies, a proventrack record, deep expertise in key industries and a breadth of resources.

At Ryder, we understand that when it comes to logistics, Execution isEverything. To learn more about Ryders state-of-the-art Product Completion

Centers, visit us at www.RyderSCS.com or call us at 1-888-887-9337.

Ryder Supply Chain Solutions

www.RyderSCS.com

1-888-887-9337

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Ryder Wp Demandmanagement 092313