The challenges with matching capacity to demand
Today’s supply chains are experiencing a generational shift. To overcome disruptions, mitigate risks, and build resilience, there is a big focus on supplier diversity and dual (sometimes even triple) sourcing, rather than relying on sole providers.
With the increasing possibility of an economic downturn due to rising interest rates, there is also a push to make supply chains more efficient and lean. Supply-chain and procurement leaders are looking to cut bloated inventory and operations to increase profitability. All of this change and mounting pressure is hard for supply-chain leaders—the more distributed and reliant the supply chain, the less efficient and lean they usually are.
For some industries that receive government incentives like renewable energy, electrification, space, and robotics, there is also the pressure to push out new products as quickly as possible, which makes all of the above even more challenging.
Matching capacity to demand requires visibility and predictability
The biggest problem for a supply chain, procurement, or operations team is to have less capacity than you planned to have, otherwise known as not clear to build. Alternatively, another problem is having too much capacity, such that your costs outweigh your revenue. So what can you do to solve these problems and drive more supply-chain efficiency?
Whether you’re trying to ramp production to expand capacity or you’re looking for supply-chain efficiency, the key is precisely matching supply to demand. The only way to successfully do this is with visibility and predictability.
Ensuring you have the right levels of equipment, staff, materials, and most importantly, at the right time, is crucial. For example, if you have 50 factories full of equipment and all the materials in the world, but just one person to put the materials together, you’ll have low capacity. If you have all the equipment, staff, and materials in the world but the materials don’t arrive until next year, you’ll have zero capacity this year.
Get a holistic view of your build planning and capacity
Procurement, supply chain, manufacturing, and operations teams traditionally do all purchase order (PO) tracking, outreach, follow-up, and data entry manually to ensure they have the inventory they need on hand. Following up with these suppliers across numerous POs and various timelines is very cumbersome, and important information critical for production continuity is often lost in emails or missed phone calls.
Updated delivery dates are critical for mitigating potential shortages proactively, such as by finding alternate suppliers to ensure there is enough inventory on hand to meet production goals. However, for producers of complex products, it’s typically physically impossible to precisely track POs due to limited bandwidth and the sheer volume of suppliers and parts. Even if you are tracking POs and getting timely updates, a lot of this information can get lost in emails, or attachments, or is not communicated to the right people. To be successful and ensure better decision-making, you need a holistic view of your inventory and build capacity.
How Factor can help supply chain teams with visibility
With Factor’s Track product, customers can accurately understand when materials will arrive and gain more visibility into the supply chain. With updates on delivery dates for every purchase, you can accurately forecast incoming deliveries and understand the impact of delivery schedule changes on production.
Factor helps proactively mitigate order delay risks by sending exception notifications, tracking historical supplier performance, and updating delivery projections. This visibility empowers you to act quickly if crucial inventory is not going to arrive on time.
Track also helps to automate outreach to suppliers to get timely updates. Our outreach sequences are designed to collect pertinent information from your suppliers at the right times so you can free up your team’s time to focus on more strategic initiatives.
Factor customers can benefit from the power of new AI capabilities as well. Our AI solution allows users to automatically get the data sitting in their email parsed and entered into their ERP. For example, let’s say a supplier reaches out via email to communicate a delivery delay or provide an advance shipping notice. With Factor, those messages can be read and the order record in your ERP is updated accordingly.
Going forward, we are not only developing AI solutions to read and parse emails, but also attachments. This could be a PO confirmation PDF, a failed inspection report in Excel, and more.
Lastly, Track helps optimize your supplier base. You’ll learn which suppliers are providing on-time deliveries, and those that are consistently delayed, and have the data to communicate your suppliers’ performance to all key stakeholders. Teams can grow their supplier base (i.e. dual sourcing, adding localization) without having to double or triple the size of their teams. It also enables the team to spend more time on strategic goals like relationship development, forecast accuracy, and more.
Karl Stark, Purchasing Manager at All Safe Global said that “Factor easily saves me 15 hours per week by providing real-time order updates. Now I can focus more on bigger strategic initiatives like negotiating better pricing and delivery terms.”
How Factor can help supply chain teams with predictability
To run a clear-to-build analysis, supply chain, manufacturing, operations, and procurement teams traditionally use an enterprise resource planning system (ERP) or spreadsheets. The issue with both of these processes is that they operate using outdated and inaccurate data.
Buyers and suppliers often have different ERP systems that don’t communicate with one another, and creating a custom integration can take months and be very costly to set up and maintain. ERP systems are also outdated and clunky, making them difficult to update and manage. On the other hand, spreadsheets are not scalable, break often, are hard to share and collaborate on both internally and externally, and are prone to human error.
Instead of wasting time manually updating static spreadsheets and ERP systems, Factor’s Plan helps teams focus on visibility into current, and future, inventory supply and demand. Based on your BOM and build goals, you can proactively identify gaps in your inventory, highlight shortages to right-size accordingly, and ensure you have what you need to keep building.
Plan also helps you manage your build forecast with ease—no more manually updating spreadsheets and pivot tables. Factor ingests your BOM, on-hand inventory, open purchase orders, and demand plan to automatically calculate your future clear-to-build values.
Lastly, you can react quickly to changes in customer demand. Simulate “what if” build scenarios without modifying your parent planning data to identify ways to make your manufacturing process more efficient.
David Akman, Director of Manufacturing at Vecna Robotics said “Factor has changed the way we manage our supply chain from reactive to proactive by enabling us to manage by exception. This has freed my team up to focus on strengthening vendor relationships and sourcing new vendors.”
Ready to gain more visibility and predictability into your supply chain? Click here to learn more or request a demo today to see how Factor can transform your operations and help you get better data from your suppliers to save money and time. Our supply chain experts are ready to provide a tailored walkthrough focused on your specific challenges and goals.