Supply Constraint Impacting Customer Order Promising in Outsourced Manufacturing
Continuing from my previous blog, upon delving deeper into the supply constraint aspect, we come upon certain aspects of the high tech industry that prima face indicate to concerns regarding lag or mismatch of information, genuine loss of data (systemic and manual) which I will touch upon briefly.
1) Due to the inherent structure of an outsourced high tech environment, there is no single source of truth (SSOT) for supply data. Each partner/vendor maintains his supply information in different ways. Horizons may vary. Some maintain gross values while others go with Net. Some get hourly updates from suppliers while others may work on the daily model. Consumption patterns may reflect differently. Given these disparities, it is evident that there will always be discrepancies between the actual supply and what is reflected in the system of OEM
2) Down the supply chain, the allocation of these supplies to different classes of customers leads to allocation issues. Some customers cannot be made to wait. Systemic segregation rules may not always allocate enough for such contingencies. In other cases, we are left with excess supply for priority customers while lower priority customers are made to wait. Maintaining a fine balance between customer satisfaction and idle inventory becomes more art but science is quite applicable to an extent.
3) ECO transitions affect supply picture across the supply chain. Variants of a component which can be practically used as alternates but maintained differently lead to a skewed picture around the time frame of transition. Systems may not be able to identify the interchangeable nature of components leading to a higher promise date for the customer while the technician on the shop floor knows he has enough to fulfill the demand on time.
4) When any out of system corrections happen to get around the systemic issues, it further aggravates the problem of supply accuracy. For this reason, it becomes imperative to build systemic checks to ensure any system reflects the ground reality accurately.
Join our session "Reliable and Accurate Customer Promising" to understand how a major High-tech OEM deals with such issues with a combination of process constraints to rein in time lag variations to keep it consistent for all partners (by means of EDI cut off timings) and systemic interventions to combine supplies for different versions of components for planning purposes. In addition, consistent monitoring and manual corrections are done to keep the supply picture as current as possible.