Supply chain

procurement in pharmaceutical industry

Reshaping Procurement within Pharmaceutical Supply Chain

Reshaping Procurement within Pharmaceutical Supply Chain 1920 1080 Xcelpros Team

Procurement in the Pharmaceutical Industry

The procurement of raw materials in any Pharma manufacturing company is the source of inventory. An established method to improve visibility, track and trace product quality is a must, regardless of a manual, electronic, or a hybrid purchase to pay process. With the continued impact of COVID-19, approval criteria for Procurement in the pharmaceutical industry is scrutinized further. Businesses have become more cautious of raw material/services spend. Many companies are evaluating different suppliers who can fulfill their requirements at a lower cost, with attention to overall spend and quality requirements.

A robust supply chain management system is needed to

  • to manage on-hand inventory
  • build a more reliable end-to-end pharmaceutical supply chain 

What are some considerations while revisiting purchasing functions?

This question throws light on companies’ need to organize their buying process, include more visibility for senior management, and increased traceability of purchasing transactions for streamlining pharma procurement. A comprehensive supply chain management solution with low-code and customizable workflows to modernize the pharmaceutical procurement process will be a value add to improve procurement processes.

Figure 1Checklists to Turn Your Supply Chain More Efficient

Businesses can benefit through a supply chain management system with advanced procurement processes to help accomplish the below objectives:

01Ensure Compliance:

Failure in quality compliance can result in hefty penalties and jeopardize customer trust. Especially when activities such as buying from approved vendors or segregation of duties between the buyer and invoicer are compromised. Your procurement management system should provide the ability to perform required audits with controls and enable only authorized users to perform their appropriate functions. Ultimately a pharmaceutical supply chain management system needs to remain 21 CFR part 11 compliant and cutting corners can be extremely risky for a pharma company.

02Support Strategic Vision:

Successful Life-Sciences companies focus on strategic planning and development to boost their bottom line. Any modern supply chain management system should help an organization achieve its strategic goals. Functions like a well-streamlined buying process are possible with spend analytics, derived from multiple dimensions of purchase transactions. Factors such as success rate of higher quality materials from approved suppliers, competitive pricing details, and gauging on-time in-full from preferred suppliers are a few key analytics that can help improve decision-making within the purchasing department and organization to meet their goals.

03Effective Supplier Relationship Management:

Long-lasting supplier relationships are crucial to procuring higher quality products at the lowest prices. A stronger relationship with a familiar supplier is far more effective than continually switching vendors to lower costs. Changing suppliers places an additional burden on the entire ecosystem as suppliers put a lot of effort into understanding your business needs over time, including feedback on the quality of raw materials purchased and the speed of shipments delivered, allowing them to make any necessary corrections to their processes. A supply chain management system that supports collaboration, in such cases, helps integrate suppliers as partners to add value to the overall supply chain process.

Figure 2Agile ERP Solutions in Various Phases of Chemical Manufacturing

04Reduce Operational Costs:

Buyers or purchasing managers should be able to quickly analyze products offered by various suppliers spread across multiple geographical locations to secure the best pricing and reduce expenses.

The right kind of solution should eliminate wasteful spend – a critical factor in calculating the performance of any organization

A detailed view of supplier insights can help make decisions while identifying the best supplier for various materials. Identifying solutions to balance the cost and quality of purchased materials can help significantly reduce operational overhead without compromising on any KPIs of pharma procurement. Result-oriented companies in the Life sciences industry should have a well thought out method in place to manage procurement functions allowing them to maintain highly competitive prices without compromising the quality of a lot.

Figure 3Agile ERP Solutions in Various Phases of Chemical Manufacturing

Improving Organizational Efficiency is Your Key Metric:

Streamlining procurement in the supply chain, as well as identifying all possible failure points in your workflows, can significantly improve your organizational efficiency and increase the overall performance of the business. Every organization requires the ability to identify areas of their business that need improvement. Enhancing procurement in the supply chain directly affects the utilization of materials and labor appropriately, without compromising quality or cost. Optimizing resource time and inventory management together increases efficiency. A well-planned purchasing procedure will make it easy to show incremental results on crucial analytics, such as vendor performance/ spend analysis.

The Ideal System

  • Helps organizations streamline their pharma procurement process and get deep visibility into product inventory.
  • Easily and quickly Identify product/service needs and procure products, post receipts, invoices, and payments through included procurement and sourcing management modules.
  • Define purchasing policies and workflows to configure procurement processes that meet your business needs.
  • Manage product catalogs and procurement channels based on demand and vendor pricing and capabilities.
  • Define spending limits to constrain requisition spending and the purchasing workflow.
  • Protects the privacy of business and customers.

Procurement management 2.0 – Revamping technology

Any advancement in market dynamics has a direct impact on the buyer’s journey. Because of this, the need for procurement department heads to play more strategic and tech-enabled roles increases significantly. Early life-sciences procurement departments had only two primary objectives, cost reduction, and risk mitigation. Now, digital technologies have revolutionized procurement in the supply chain in companies to expand focus into different areas like efficiency, accessibility, sustainability, and metrics for generating better purchasing decisions.

In the five years immediately following the
2008 global financial crisis (GFC), total return to shareholders (TRS) for companies with top-quartile procurement capabilities was 42 percent higher than for companies whose procurement operations were in the bottom quartile.
Source: Mckinsey

To stay on top, companies must move out of the traditional buyer mindset and deliver value to businesses by keeping their procurement teams collaborative with their suppliers, both internally, driving productivity and increasing savings, and externally to maintain better supplier relationships and reduce unnecessary supply chain risks.

As technology continues to advance, the new-age applications have added strengths within the pharmaceutical supply chain that can promote business functioning.

01Cloud-Based Platforms:

Moving Procurement to the cloud enables life-science organizations to operate with more agility, with benefits including enhanced collaboration, security, and data privacy. A growing number of traditional enterprises are already embracing the cloud capabilities to accelerate their businesses. Buyers can be a lot more agile at moving materials through the supply chain if they’re managing procurement functions on the cloud. Embracing portals and well-defined workflows allows better engagement with suppliers, allowing the acceleration of tasks and to-dos like Requests for Quote (RFQs).

Gartner reports that the procurement industry has an anticipated growth of up to 3.2 billion dollars by the end of 2020, fueling the cloud-procurement sector.

02Data Analytics:

Adopting an analytically-driven approach might not be revolutionary, but it’s certainly an evolution for pharma procurement management that we know today. The significant challenges that organizations face today are majorly related to a lack of visibility.

A survey by Deloitte Global CPO showed that analytics would play a significant part in shaping the procurement in the supply chain over the next two years. As per the study, the respondents use analytics in different ways.

50%for Cost optimization

45% for Management reporting

48%for process improvement

As procurement departments’ spend-vs-quality goal is often to exceed expectations for their business, turning to integrated analytics can offer innovative solutions to enable efficient resolution of on-going buyer challenges. For best results, these teams need analytics as a core function in their decision-making process instead of treating it like a checklist submission to management. With the right reporting and analytics, Life-Sciences companies should have an easy preview of the quality of raw materials per supplier. Categorizing suppliers into the proper buckets based on supplier evaluation criteria or consuming specific lots based on customer potency/quality requirements helps make better purchasing decisions.

03Enhancing Collaboration:

The previous decade has seen a relatively large shift in procurement-based technology, with solutions moving from on-premise to completely collaborative cloud-platforms. The initial extension of legacy ERP software systems, which included purchasing modules in the 1990s, has now evolved to easily accessible systems with enhanced collaboration and procure-to-pay solutions.

As businesspeople started exploring the pharmaceutical Procurement process further, the focus is moving to niche functions like strategic sourcing, asset acquisition, and others. These standalone technological products did nothing to solve a significant challenge – collaboration. Integrated tools such as Microsoft Flow integrated with Microsoft Teams are providing seamless collaboration between buyers and suppliers.

04 Mobility

The demand for mobile devices continues a steady rise, with the increasing population of millennials entering the workforce. Deloitte predicts that nearly 42% of companies invest in mobile phone technologies to support their procurement strategies, meaning mobile devices should now be considered an integral part of every procurement strategy going forward. With the help of the cloud and mobile-enabled services, companies can better manage their operations and analyze real-time functions and processes, leading to more proactive decision making.

The Role of Microsoft Dynamics 365 Supply Chain

Microsoft Dynamics 365 Supply Chain helps organizations streamline their procurement process and get deep visibility into product inventory –

  • Easily and quickly Identify product/service needs and procure products, post receipts, invoices, and payments through included procurement and sourcing management modules.
  • Define purchasing policies and workflows to configure procurement processes that meet your business needs.
  • Manage product catalogs and procurement channels based on demand and vendor pricing and capabilities.
  • Define spending limits to constrain requisition spending and the purchasing workflow.

Figure 4Agile ERP Solutions in Various Phases of Chemical Manufacturing

Key Takeaways

  • Modern Pharma & Life sciences companies have digitized their operations, and processes within the Procurement department, to help streamline the buying process.
  • Advanced digital approaches such as using Microsoft Dynamics 365 Supply Chain or Automating the pharmaceutical Procurement process can help accomplish the goal of well-stabilized procure-to-pay cycles.
  • A revamp in the Microsoft ecosystem’s overall procurement process enables life-sciences companies to identify and eliminate inefficient, time-intensive aspects.

About XcelPros

XcelPros is a Chicago-based company and delivers transformation through technology. We offer business and technology solutions with deep industry experience in Chemical, Pharma, Life Sciences (including Medical Devices, Bio-Medical & Biotech), Insurance, Discrete Manufacturing, Process Manufacturing, Distribution and Food & Beverage.

XcelPros is a Microsoft Gold Partner, Direct Cloud Solutions Provider (CSP) and a Systems Integrator (SI) offering software licensing, implementation and consulting services for Microsoft Dynamics 365, CRM, Microsoft Dynamics AX, Business Intelligence & Analytics (Power BI), SharePoint, Office 365 and Azure (Cloud, IOT, Microsoft Flow amongst many others).

Our mission is to provide integrated technology solutions that amplify impact and empower our customer’s businesses. We believe technology is the key enabler of exponential growth for us and our customers.

Contact XcelPros today to transform your business.

Call us toll-free – 1.855.411.0585 (or) visit www.xcelpros.com

The role of an ERP System in Handling Hazardous Chemicals

The role of an ERP System in Handling Hazardous Chemicals 1920 1080 Xcelpros Team

At a Glance

  • The chemical manufacturing industry is under severe scrutiny for ecological and environmental reasons. Chemical companies are required to maintain various documents such as safety data sheets and hazard labels with pictograms.
  • The hazardous chemicals produced or used by the industry need to be tracked and managed to meet the rules and regulations set forth by OSHA.
  • The right ERP systems can help companies in collating and systemizing the records of these hazardous chemicals for proper usage and disposal in a responsible manner.

Chemical Manufacturers – Managing Compliance

The chemical manufacturing industry has an expectation and in many cases even a mandate to work with added responsibility when it comes to the usage, transport, and disposal of hazardous chemicals.

Out of the more than 80,000 chemicals currently used in the United States, most haven’t been adequately tested for their effects on human health. Contract Research Organizations Global Market Report

Chemical manufacturers are an integral part of the overall chemical value chain, and the overall supply chain from ‘raw materials to finished products’ needs to be maintained with additional hazard visibility. How would these manufacturers manage compliance and adhere to proper documentation of hazardous chemicals? The answer lies in an ERP software system that can facilitate record maintenance, compliance, and visibility. A reliable ERP system has become the need of the hour for chemical companies – to act proactively and to avoid environmental or human mishaps.

The ‘One Microsoft Ecosystem’ with the embedded ‘Integrated Chemical Management’ solution will provide a comprehensive solution to aid all the needs of a chemical company – Supply Chain, Finance, Manufacturing, Quality, Document Management, or Chemical Data and Documents.

Figure 1Digital Business Transformation with One-Microsoft Ecosystem

Let us look at some of the ways compliance is achievable through the Microsoft ecosystem:

01.Being proactive instead of reactive:

Business processes would be simplified for bulk chemical or toll manufacturers if they could regulate hazardous substances from the point of inventory receipt through a purchase order or a manufacturing production order. Better management of dangerous materials is possible by an integrated chemical management system within ERP software. This unified system can automatically overlook the formulations, spot the hazardous substances, and evaluate them for their further use. This way, manufacturers will get to know the risk levels involved regarding the usage and distribution of chemicals. Identifying these hazardous substances at the beginning stage also allows manufacturers to act proactively rather than working reactively, leading to better safety.

02.Developing a Prototype/ Standard Operating Procedure for Worker Safety

It is important to note that manufacturers have found that even if they have implemented safety procedures in place for the wide range of chemicals used, mishandling and mismanaging the chemicals will jeopardize workers’ safety. Working with hazardous chemicals is inevitable for chemical companies making it business challenge to handle production and distribution of finished products. Microsoft Dynamics 365 integrates natively into Sharepoint and One drive, which are Microsoft’s document management systems. These integrated tools in the Microsoft ecosystem provide the ability to develop a standard operating procedure or prototype process to handle chemicals – avoiding chemical hazard accidents and enhancing workers’ safety on the shop floor. 

03.Facilitating Better Equipment Maintenance

Record maintenance for the equipment used in chemical plants is a tedious task. Microsoft Dynamics 365 helps in keeping a record of equipment maintenance and marking them for preventive/ proactive maintenance. These maintenance call-to-actions are system generated and can be automated, leaving minimal scope for manual errors. Chemical manufacturing companies can thus form a thorough strategy for equipment maintenance, repair, and operation.

Figure 2How an ERP System Helps in Managing Hazardous Chemicals

04.Systemizing Record Maintenance

The vast range of chemicals used by manufacturing companies need to be labeled for their chemical composition, risk factors, expiry dates, safety procedures, and other special instructions. There has to be a consolidated record of all these chemicals, their quantities, distribution, costs, etc. Such a humongous task is prone to different manual errors within legacy systems. Microsoft Dynamics 365 along with Integrated Chemical Management can maintain chemical data (for individual chemicals and on a consolidated level) through easy excel updates or interfaced updates.

Chemical companies can be assured of safely using,
distributing, and disposing of the hazardous chemicals through an automated workflow for adding and editing chemical data.

05.Meeting Compliance Standards

As mentioned earlier in the article, the world over, the laws are getting more stringent regarding compliance and regulations for hazardous chemicals. Chemical companies ideally look for an ERP solution that helps meet the local as well as international requirements, to function with least regulatory hassles.

70%of participants pointed compliance as the single largest priority for their company

80% of them cited monthly obligations to create, print, or affix workplace labels to containers in their inventory as a challenge

Per the 2017 Hazard Communication Survey

Microsoft Dynamics 365 with an embedded chemical management solution that can house chemical data, print GHS compliant labels, and Safety data sheets will be an ideal choice in order to reduce GHS related compliance issues.

To conclude, one could reasonably say that an advanced ERP system such as the Microsoft Dynamics 365 ERPs can become the backbone of record maintenance for hazardous chemicals. The chemical industry can benefit from this sophisticated software system and function seamlessly while also helping with environmental and personnel safety. Microsoft’s Chemical manufacturers Supply Chain solution provides a cutting-edge system to ease record maintenance, streamline the overall chemical supply chain, inventory, and warehouse management processes; and create a platform for productivity and growth.

Key Takeaways

  • An ERP system with chemical data is necessary for the chemical industry to manage OSHA and GHS compliance from within the system.
  • Microsoft’s integrated ERP software in conjunction with integrated chemical management solution is capable of smooth record-keeping of hazardous chemicals, print GHS labels, and safety data sheets.
  • Ultimately Chemical manufacturers need to ensure compliance along with environmental and worker safety with the help of the right ERP system.

Explore our Products page to learn about the different ERP Solutions available to jumpstart your evaluation process.

About XcelPros

XcelPros is a Chicago-based company and delivers transformation through technology. We offer business and technology solutions with deep industry experience in Chemical, Pharma, Life Sciences (including Medical Devices, Bio-Medical & Biotech), Insurance, Discrete Manufacturing, Process Manufacturing, Distribution and Food & Beverage.

XcelPros is a Microsoft Gold Partner, Direct Cloud Solutions Provider (CSP) and a Systems Integrator (SI) offering software licensing, implementation and consulting services for Microsoft Dynamics 365, CRM, Microsoft Dynamics AX, Business Intelligence & Analytics (Power BI), SharePoint, Office 365 and Azure (Cloud, IOT, Microsoft Flow amongst many others).

Our mission is to provide integrated technology solutions that amplify impact and empower our customer’s businesses. We believe technology is the key enabler of exponential growth for us and our customers.

Contact XcelPros today to transform your business.

Call us toll-free – 1.855.411.0585 (or) visit www.xcelpros.com

Agility in daily operations using the Power Platform

Agility in daily operations using the Power Platform 1500 800 Xcelpros Team

Introduction

COVID-19 is testing the supply chain and manufacturing operations around the world. Companies have their hands full dealing with workers who have become ill or those who are required to be home due to lack of raw materials delivery and limited work hours. Now more than ever, businesses are evaluating how to improve efficiency, lower cost, and increase operational performance. The immediate question on everyone’s mind is, “how are we coming out of this crisis”?

94%

of Fortune 1000 companies are seeing supply chain disruptions from COVID-19

Fortune , February 21 2020

While employees’ safety is a top priority during this pandemic, mitigating the impact on the day-to-day operations is top of mind. CEOs and CFOs are facing the unprecedented challenge of pivoting product demands and preserving cash flow that has grown over the last few weeks. Implementing a do more with less attitude while gaining a few quick wins in the process can build the momentum needed to keep companies moving forward.

FIGURE 1 The Ecosystem of an Integrated Supply Chain

Pivoting the Plan

The role of the CIO is critical in risk mitigation strategies in numerous ways. First, drafting a plan to determine how the COVID crisis is affecting the infrastructure short term and keeping operations running as smoothly as possible but also long term as projects and roadmap budgets will most definitely be affected. We’ve seen in the last 30 days, moving as many employees to remote work without disruption has been at the center of many organizations. Tools like Microsoft Teams and Skype have allowed organizations to continue communication, and their integration with Office 365 is allowing familiar tools to ease the transition.

Keeping the Lines Open

Not all employees of production and distribution companies are working from home. Due to increased demand for products, thousands of workers have been deemed essential, many having to operate on a 24/7 model. These facilities are finding themselves adding shifts, ramping up capacity, and working to keep warehouses stocked with both raw materials and finished products. Service providers for equipment maintenance and repair are another industry with workers ensuring that machines stay online and working correctly.

FIGURE 2 Microsoft Power Platform: An Integrated Solution

It is during this time that having tools in place can help to expedite communication between facilities and these providers. The Microsoft Power Platform is a creative solution; this low code-no-code platform can be implemented in a matter of hours to generate a quick win. A no-code solution can be valuable when needing to make rapid or immediate decisions while maintaining critical operations.

65%

of all App Development will be low code by 2024 as estimated

Source: Gartner

By using PowerApps, workers can get access and insights into machines that may be headed for trouble before they experience downtime, or even be alerted to scheduled downtime for cleaning to comply with the CDC’s Expected Business Response Plan. Power Apps can connect to hundreds of business systems and databases, making it easy to connect workers with the existing processes and data are easily integrated with Microsoft Outlook to keep those within the supply chain informed.

Increased development agility

Automate and simplify repetitive and time-consuming processes to launch faster and reduce errors across your organization.

01

Speed and savings

Reduce time & cost building web and mobile applications, enabling you to get through your development backlog.

02

Do less but achieve more

Fully managed, with preset data models and common entities, out of the box business logic and rules, that is fully customizable to your business needs.

03

Meeting the Demand

Using forecast planning during normal operations helps to predict the flow of material through the supply chain. However, in times of crisis, using a demand planning model is essential. By conducting a daily “What-if analysis,” scenario planning, and Sales and Operations Planning (S&OP) using a Consumption Driven Model along with industry and customer knowledge, companies mitigate as much risk as possible. As we have seen in the past few weeks, carmakers like Tesla, Ford, and General Motors have been able to quickly adjust their production lines from automotive parts to assist with the shortage of ventilator parts.

Executives are continually evaluating sales and budget plans. Power Automate can help to reduce the number of tedious manual processes when decisions cannot wait for lots of analysis and provide a creative, cost-effective strategy for businesses to connect their existing legacy systems. A perfect example would be the workflows for approvals that are activated in a matter of hours instead of days. As the workforce is becoming a hybrid of remote and on-site team members, this can reduce the time spent tracking down approvals and keep things moving. For managers who are used to adjusting production lines and need to approve adjustments on the fly, all while staying compliant, getting the right notifications is critical. Using Power Bi for current and future analysis will also lend a hand when developing future emergency response plans.

Staying Ahead

In addition to machine maintenance, keeping facilities clean and informed based on CDC guidelines is critical to keep operations running and employees safe. The Power Platform has deployed several new tools ahead of the April release.

  • Crisis Communication – It is a solution that combines Microsoft Power Apps, Microsoft Power Automate, Microsoft Teams, and SharePoint to coordinate information sharing and team collaboration in response to evolving conditions. Employees can report work status and make requests, and admins can use the app to push updates and news including RSS feeds from the World Health Organization (WHO), The Centers for Disease Control and Prevention (CDC) or local authorities, or emergency contacts to different locations—all accessible on the web, mobile, or in Teams.
  • Power Virtual Agents Crisis Response Bot – the Power Virtual Agents team has released instructions to build a Virtual Agent Crisis Response FAQ Bot that helps people get to the information they need quickly in a chat interface you can embed on your company website.

Power Apps Drives Business Transformation

The recent study conducted by Forrester Consulting shows how businesses reduced development costs and increased overall efficiency using Power Apps. Results are for a composite organization based on interviewed customers.

362%ROI over three years

70% Reduction in app development costs

3.2 hrsLine-of-business employee productivity improvement per week

Source: The Total Economic Impact of Power Apps commissioned study, March 2020

Extraordinary Challenge

The COVID-19 crisis may have unknown long term implications, so taking the time to plan is essential. Understand that putting out today’s fires is the most critical task, re-evaluating the existing roadmap and gaining a few quick wins in the process will help relieve some of the anxiety. Over the next few weeks, as we hope to get back to a more stabilized business environment, having tools in place to watch markets and consumer behavior and report that data back to your teams will help companies to move forward with more confidence. Tools like the Microsoft Power Platform will allow the runway of significant gains with little cost to get started.

We are all grateful for those companies that are quick to rise to the call to keep America moving forward. We extend a ‘Thank You’ to the countless pharmaceutical, chemical, and distribution companies who are working despite risks to keep us supplied with the essentials.

About XcelPros

XcelPros is a Chicago-based company and delivers transformation through technology. We offer business and technology solutions with deep industry experience in Chemical, Pharma, Life Sciences (including Medical Devices, Bio-Medical & Biotech), Insurance, Discrete Manufacturing, Process Manufacturing, Distribution and Food & Beverage.

XcelPros is a Microsoft Gold Partner, Direct Cloud Solutions Provider (CSP) and a Systems Integrator (SI) offering software licensing, implementation and consulting services for Microsoft Dynamics 365, CRM, Microsoft Dynamics AX, Business Intelligence & Analytics (Power BI), SharePoint, Office 365 and Azure (Cloud, IOT, Microsoft Flow amongst many others).

Our mission is to provide integrated technology solutions that amplify impact and empower our customer’s businesses. We believe technology is the key enabler of exponential growth for us and our customers.

Contact XcelPros today to transform your business.

Call us toll-free – 1.855.411.0585 (or) visit www.xcelpros.com

Enhance Supply Chain Planning within Pharmaceutical operations

Enhance Supply Chain Planning within Pharmaceutical operations 1600 1000 Xcelpros Team

Introduction

The COVID-19 pandemic has created significant changes in market dynamics, forever changing the face of the global economy. Along with the pandemic’s impact on our daily lives, there has been a ripple effect in the day-to-day operations of Pharmaceutical manufacturing. As industries around the world continue to adjust to changes, Pharmaceutical manufacturers in specific, are noticing technology, process, and infrastructure gaps that are impeding growth and sustainability. Additionally, businesses that were forced to slowdown production during the initial stages of COVID-19 and are now getting back to full momentum, are finding it difficult to manage end-to-end operations.

Pharmaceutical companies cater to a customer base that is dependent on their products to manage patient health. This requires additional efficiency in everything they do, especially for planning supply-demand. The primary objective is to not halt manufacturing, as the dependencies can impact the entire Pharma value chain. Since pharma companies are quality controlled, there is an additional time factor that comes into the picture while determining the right deadlines to produce finished product and deliver to end customers. The entire process from drug discovery to packaging for delivery is a series of collaborations within the supply chain before the final product reaches the end customer.

Roughly 66% of the surveyed were concerned that COVID-19 could result in a possible supply chain disruption for pharmaceutical products. The statistic illustrates concern levels on possible drug supply chain disruptions due to the COVID-19 pandemic as of April 7, 2020. Matej Mikulic | Statista

The Planner’s Panorama

Due to the rapid changes in the global supply chains, production planners at pharmaceutical manufacturing are now tasked with surveying inventory and operations with a new set of eyes. Organizations need to be more watchful of new safety standards related to inventory storage, retrieval, usage of material, and equipment maintenance. Tools like Visual Gantt Charts are becoming invaluable for planning and managing inventory. The ability to depict a weekly schedule of operations for different production jobs and a clear picture of resource capacity is a core requirement for any good production planner. The production planner’s prime focus is to ensure there are enough raw materials and resources (equipment or human resources) to ensure a near-to-perfect supply-demand ratio. An additional element that supports a planner is to have inventory visibility within their current warehouse and plan transfers of inventory from overflow warehouses.

Simple visual planning methods are no longer adequate to correctly manage all inventory-supply-demand processes and ensure proper movement of transactions across the company’s supply chain.

What planners need is a robust system that can track supply – demand by including a complex set of parameters such as lead times, working calendars, the capacity of equipment and capability of vendors to ship materials on a timely manner. Planners also need the ability to alert different departments of the next steps based on plans made for upcoming weeks or months. Any modern system should be able to offer required insights including the current state of batches manufactured and available equipment for future work orders.

A production planner often prefers handling the supply chain proactively rather than reactively by responding to the demands. The planner needs visibility of when the finished product will be ready, tested, and released for shipment. This type of planning helps overcome downtime and shortages in raw materials, which is a common issue in most companies. Responding quickly to changing inventory is one way for planners to be more proactive.

Even today, many small and medium-sized pharmaceutical companies continue to use a combination of excel sheets, inventory reports, and some old school methods when managing their supply chain. As industries continue to face changes related to the COVID-19 pandemic, only companies that have thought ahead and have invested in an automated AI-based planning system that can assess and predict future demand as well projected resource plans will be best equipped to handle their product delivery on time and in full. Companies now need a quicker and more streamlined process to take their products to market.

The Role of a Master Planning and Scheduling System

01. MPS Driven by Demand

The goal of a Master Planning and Scheduling (MPS) system is to provide suggestions to meet material requirements. If set up correctly, MPS systems respond to demand and plan supply accordingly. Demand usually comes from sales orders recorded in the Order Management system. Master planning ties Planned orders for Production or Procurement to corresponding sales orders. The supply requirements are then calculated based on settings for each item that is included in the Finished Goods Bill Of Material(BOM). The coverage settings of an item show precisely how and when to send feedback with a view of current stock levels or foreseen changes in stock levels from existing planned orders in place.

02. Planned Supply

MPS systems use algorithms for tracking the demand from sales orders, customer forecasts, safety stock levels, and calculating net-requirements for purchase and manufacturing. MPS also pulls together independent or groups of demands that trace back to the production of intermediate and raw materials to be consumed in different Manufacturing and Packout processes.

Determining the quantities required would depend on the inventory quantity setup of any single item. The requirement could be specific for a static batch size or dynamic quantities based on the demand needs. MPS systems provide planners the capability to either consolidate supplies across multiple demand orders, offering a comprehensive supply and demand management experience, or consider only the net change from the start of a full production run.

03. Lead Times

The ability to define lead times is critical to a master scheduling system. For instance, if a user enters a purchase lead time the system should account for the time it takes to receive raw materials after placing a purchase order.

I. Purchase Lead Times

Purchase lead times for a supplier can be set up based on different factors including

  • Pricing agreements
  • Time in days that a supplier can accommodate
  • Transportation time, and
  • Any other unforeseen coverage settings

Within Dynamics 365 Finance and Supply Chain, a purchase lead time found for a specific supplier and item combinations takes precedence over general settings of an item. This applies when (1) no vendor is assigned to the item, and (2) the Find trade agreements checkbox is selected via Master planning parameters form > Planned orders tab.

II. Production Lead Times

Production lead times are the details that can be configured in coverage settings; however, these values are disregarded when items are produced via routes. Routes, defined in the modern Production control modules, consider available resources (people or equipment) and their working schedule. In this situation, production lead times needed to create finished goods do not have to be specified by a user, as they are calculated automatically.

Planning for the Unknown

There are still unknowns within pharmaceutical production and operations. Without the right system, planners will struggle to retrieve the data needed to better streamline the manufacturing process. To help with this, Production Planners can benefit from valuable information like –

  • Batch production history and patterns of user behavior that show actual production lead times
  • Quality standards of work-in-process production run based on raw materials that are procured from specific suppliers
  • Quantity yields of past batches, actual scrap percentages based on changes in production routes and resources
  • Accurate actual batch costings in comparison with estimates

These additional details provide supplementary insights to help improve production, downtime planning, maintenance, and most importantly, promise dates to customers. Production planners need to be equipped with a system that presents elaborate sets of insights and actionable suggestions on how to plan/schedule production operations. A well reliable tool empowers a company to drive efficiency and growth.

An AI-ML & Analytics Centric Approach

Eventually, and soon, a standard planning system will no longer be capable for the Pharmaceutical supply chain to operate efficiently. Systems that reduce human effort, learn from history, and improve daily operations will become necessary to overcome inefficiencies. At the same time reporting possible issues and roadblocks that impact orders as well as deliveries, improves the overall plan vs actual picture. Production planners are proving to be more efficient when they have real-time and historical analytics available during the planning process to make better decisions while managing inventory and orders. A guided method of operating and reporting through actionable data can make your company a powerhouse within the industry. An intelligent and optimized planning system can help eliminate guesswork for the production planners in build a competitive edge in the market.

Final Thoughts

The supply chain within a pharmaceutical company is only as efficient as the ability of a planner to proactively coordinate supply, demand, and inventory. A robust planning system with an emphasis on analytics and guided user behavior can play a key role in building efficiency and moving shipments out the door, along with meeting the required quality standards.

Xcelpros has designed Microsoft’s offerings to enhance planning for Pharmaceutical, Chemical, or Biotech industries. For more information on Production planning and Scheduling tools within Microsoft – Contact us!

About XcelPros

XcelPros is a Chicago-based company and delivers transformation through technology. We offer business and technology solutions with deep industry experience in Chemical, Pharma, Life Sciences (including Medical Devices, Bio-Medical & Biotech), Insurance, Discrete Manufacturing, Process Manufacturing, Distribution and Food & Beverage.

XcelPros is a Microsoft Gold Partner, Direct Cloud Solutions Provider (CSP) and a Systems Integrator (SI) offering software licensing, implementation and consulting services for Microsoft Dynamics 365, CRM, Microsoft Dynamics AX, Business Intelligence & Analytics (Power BI), SharePoint, Office 365 and Azure (Cloud, IOT, Microsoft Flow amongst many others).

Our mission is to provide integrated technology solutions that amplify impact and empower our customer’s businesses. We believe technology is the key enabler of exponential growth for us and our customers.

Contact XcelPros today to transform your business.

Call us toll-free – 1.855.411.0585 (or) visit www.xcelpros.com

Maintaining an Integrated Supply Chain: Key Solutions

Maintaining an Integrated Supply Chain: Key Solutions 1280 720 Xcelpros Team

At a Glance

  • Many organizations that fail to recognize supply chain as a strategic business function, tend to not move to a digital supply chain and lose out on the benefits that come with the transformation.
  • Traditionally, manufacturing companies have treated supply chain as a transactional function, a bargaining chip to reduce price and secure on-time delivery of raw materials. The modern supply chain is viewed as a strategic asset to the organization, integrated deeply with other business functions, aimed to increase customer satisfaction.
  • Companies unable to track hidden costs across the supply chain lose track of actual costs, damaging their bottom line. Proper supply chain monitoring can save anywhere from 20-30% of distribution costs.

The Supply Chain Challenge

Supply chain management is one of the most critical elements of success for any business in today’s global market. However, its application is undermined by many companies as business leaders face challenges to control the cost of a supply chain without compromising on its efficiency. Since COVID-19 we have witnessed drastic changes in methods and methodologies for streamlining supply chain operations. It, however, doesn’t take away some key fundamentals required for healthy functioning of a company’s supply chain and inventory management.

According to the Logistics Bureau, for companies running global operations, their supply chain cost could rise as high as 90% of their total expenditure.

The Supply Chain Slowdown

The problem lies in poor strategic management. Supply chain managers are focusing on cost minimization, most of them without having detailed field knowledge of how the system works, and the result is it is impacting other areas of the process such as inventory optimization, ‘on-time delivery in full (OTDIF)’ and customer satisfaction. Trying to improve one KPI is resulting in a cost spike in other areas of operations, which can have a long-term impact on revenue.

FIGURE 1 Where Business Leaders are Falling Short

A robust supply chain needs strategic alignment and planning in line with the overall business functioning. For example, in order to control cost, you need to first understand the key drivers of cost in the supply chain and most importantly how to measure the supply chain cost. While the strategy is important, establishing an integrated supply chain requires a synchronized approach to planning, execution, and application of technologies in order to create an end-to-end unified system across the entire organization.

FIGURE 2 Key Elements of an Integrated Supply Chain

In this article, we will touch upon some interesting facts that make an appealing case as to why the Supply Chain strategy needs to be digitally enhanced and properly integrated with other parts of the business.

Switching from Traditional to Next-Gen Digital Supply Chain

The rapidly evolving business landscape is disrupting the way companies function. Moreover, the advent of the latest technologies and growing competitive markets are driving companies to push their limits and redefine supply chain operations.

Is your business ready to embrace a digital supply chain as a key distinguishing factor for its competitive advantage?

Most SMBs are holding back the transformation due to the fear of possible risks that could surface. Per our industry experience, it’s due to the age-old perspective in which company leadership is analyzing their supply chain. In most of the cases, we found that they are way behind the entire purview and don’t realize the true potential of a well-integrated, technologically advanced supply chain.

Traditionally, business leaders focused on pricing and product quality, but priorities today have completely shifted. Major Objectives and Key results of organizations are geared towards optimized supply chain and operations to boost businesses forward. With Industry 4.0, advanced analytics, and robotic process automation rising, companies are realizing the need for an integrated supply chain. This has become even more true as the Covid-19 crisis continues. Demand planning and fulfillment, supplier-customer relationship, customer retention, on-time delivery are some of the major expenses of a company. An efficient supply chain not only helps with cost reduction in these segments but also ensures growth, profitability, and customer satisfaction.

Top Reasons to Upgrade Your Operations with a Next-Gen Digital Supply Chain:

Shifting from a plant-level production planning to a demand-driven focus with customer-centric mindset but not compromising with the product quality

Getting rid of outdated processes and technology to match the transforming global business landscape

Reducing cost to formulate a more efficient value chain to remain cost-competitive in the market

Ability to outsource parts of your supply chain process in order to reap economic benefits and superior supply chain network design

Achieving more efficient product lifecycle management

Collaboration with stakeholders to integrate business processes for increasing visibility throughout the value chain

The Impact of Supply Chains

An integrated supply chain influences the overall functioning and improves profitability of the business. Going digital and increasing interoperability across these functions sets a business up to accelerated growth. Let us discuss a couple of key areas that are impacted by a well designed supply chain.

FIGURE 3 Upgrading the supply chain will improve your bottom line

01. Supply Chain and its Impact on Customer-Centricity

When business leaders discuss improving their supply chain, their main focus is usually related to accelerating growth by cutting down costs, achieving better lead time, and ensuring on-time delivery; as all these factors contribute towards business development. What slips from their mind is what customers really care about. It all starts and ends with customer satisfaction. Delivering the right product at the right time improves your organization’s brand value and credibility to customers.

What the customer cares about is receiving quality products on the promised delivery date without having to spend too much time or effort. This can be seen in Amazon’s announcement of one-day delivery. Late and inaccurate deliveries bear a significant impact on customer loyalty.

70%

of industry professionals predict that their supply chain is going to be a key driver of improved customer satisfaction by the end of the year.

Source: Accenture

Your procurement division must understand the importance of cost-saving, but they need to be in line with the expectations of the customers and procure quality raw material for manufacturing the items. If expectations on raw material quality is not set, you could save money purchasing raw materials upfront, but end up spending more in the long run.

Let’s take a look at Kimberly-Clark’s journey to understand this better:

Kimberly-Clark is a manufacturing-focused organization that up to a few years ago did not have a supply chain division. Sandra MacQuillan, their first Supply Chain Officer, built a solid team to ensure the supply chain was focused on customer satisfaction. In the process, she integrated various functions such as procurement, quality (know more on quality management by clicking here), logistics, manufacturing, safety, etc. that are interconnected and delivered for one common goal – that is customer satisfaction.

Kimberly-Clark was able to achieve 25-30% cost savings by interconnecting various aspects of the Supply Chain, focused on better customer service, resulting in improved efficiency.

If you connect with the issues faced by Kimberly-Clark, or your supply chain is functioning in silos, it could be the best time to make a change. You can take this opportunity to update and integrate your supply chain with overall business functions and work towards a common goal like customer Satisfaction. A strongly integrated application will have the ability to incorporate holistic business functions including analytics, collaboration with notification, secure information sharing, control-based decision making using Artificial Intelligence, and more.

FIGURE 4 KPIs that are critical for supply chain monitoring

02. The Role of supply chain in sustaining business long term

According to the Logistics Bureau, nearly 50% of companies shut down within the first five years of operation. One critical factor contributing to these failures is an inefficient and poorly conceived supply chain. Supply chains in most organizations have evolved as a practice, rather than a well-designed process.

79%

of companies with robust and high-performing supply chains are able to outperform their average peers in terms of higher revenue growth. This fact signifies the positive implication of a connected supply chain for a business.

Source: Deloitte

5 Steps to Integrate your Supply Chain

Break down organizational silos

For an effective, integrated approach to Supply Chain Management (SCM) the organization must operate end-to-end as a unified entity.

01

Define organizational objectives

Move beyond basic business and functional unit design and metrics. Look at the organization holistically and define the objectives as a complete entity.

02

Align business processes

Take a cross-functional approach to business process design. Start at a high level and map out the supply-chain flow with the goal of creating an end-to-end mapping of the business process.

03

Design the IT architecture to support an integrated approach

Leverage a cross-functional approach to IT systems design. As much as possible, standardize the organization in terms of the applications that are used. Seek to eliminate as many disparate applications as possible in favor of a common set of applications across the business.

04

Reshape leadership and culture

For most organizations, the major roadblock in delivering an integrated approach to supply-chain management is culture change. Change of this magnitude must be driven by solid leadership. There should be strong collaboration to drive the effort to deliver an integrated supply-chain organization.

05

Final Thoughts

There is no way the importance of an integrated Supply Chain should be overstated or undermined. If you or your organization have not prioritized your supply chain efforts, it’s never too late to take the first step.

An intelligent ERP software comes with a holistic supply chain module along with advanced analytics to support the following functionality.

  • A manufacturing execution system
  • Financial and cost accounting
  • Inventory and warehouse management
  • Purchasing and planning of materials
  • Product information management
  • Sales and marketing of the products
  • Transportation and logistics management

In order to push a company forward especially post-COVID-19, a sound digital supply chain strategy would be needed.

Do not let operational inefficiencies limit
your business, long-term goals

About XcelPros

XcelPros is a Chicago-based company and delivers transformation through technology. We offer business and technology solutions with deep industry experience in Chemical, Pharma, Life Sciences (including Medical Devices, Bio-Medical & Biotech), Insurance, Discrete Manufacturing, Process Manufacturing, Distribution and Food & Beverage.

XcelPros is a Microsoft Gold Partner, Direct Cloud Solutions Provider (CSP) and a Systems Integrator (SI) offering software licensing, implementation and consulting services for Microsoft Dynamics 365, CRM, Microsoft Dynamics AX, Business Intelligence & Analytics (Power BI), SharePoint, Office 365 and Azure (Cloud, IOT, Microsoft Flow amongst many others).

Our mission is to provide integrated technology solutions that amplify impact and empower our customer’s businesses. We believe technology is the key enabler of exponential growth for us and our customers.

Contact XcelPros today to transform your business.

Call us toll-free – 1.855.411.0585 (or) visit www.xcelpros.com

man over machine ready for the integration

Automating your Supply Chain: Manage the new normal

Automating your Supply Chain: Manage the new normal 1440 810 Xcelpros Team

Words can be like X-rays, if you use them properly—they’ll go through anything. You read and you’re pierced. -Albert Einstein

At a Glance

  • The outbreak of an epidemic has brought the global supply chain to a halt, pushing major global economies towards a crash of financial markets and recession.The focus at this time should be safety, recovery and cure instead of worrying about lack of essentials due to stunted supply chains.
  • There is a need to create an ecosystem of businesses that are collaborating through a well coordinated and integrated supply chain to allow more stability even in a crisis.
  • Many factors that are well thought out can contribute to a better global technological footprint where businesses across the globe can facilitate more growth and well-being of economies.

Introduction

During difficult times the world requires better ways to function without taking the entire economy down. One such event is the Coronavirus outbreak that caused a ‘slow down to shut down’ of all businesses due to the pandemic. Since the 90s when the computer technology revolution happened, we have seen various situations of slump and recession that gave rise to newer ways to function and advent of disruptive technologies changing the face of the world. Increased globalization and interdependence on different economies made the world a better place with enhanced living conditions and more opportunities to easily navigate through the world.

FIGURE 1: Automated supply chain and distribution using bots, drones connected via cloud technology controlled remotely by people

Many disruptive technologies came to life during the last 3 decades that are now in every man’s pocket. We all know what they are. Smartphones, Internet, Direct to consumer tools, Search portals, AI, ML, BOTS, IOT,…..and the list goes on. This coronavirus pandemic however is showing us that we are not fully integrated yet. Why has the world slowed down when we have so many technological advancements and tools out there that were created to never face this situation? As such countries need to focus on safety, recovery and cure instead of worrying about not being able to supply essentials due to social distancing. This is not a case of a tsunami that has destroyed road infrastructure, it is merely a need for people to work remotely and avoid exposure, and an inability to control movement of the supply chain from the comfort of your home.

By 2023, over 30% of operational warehouse workers will be supplemented by collaborative robots.Source: Gartner, 2020 report

With this statistic, you would never really expect to see businesses or trades freeze, as operations would run smoothly with a proper collaboration.

A major blind spot has surfaced. A lack of being able to control the global supply chain seamlessly from a remote location with the press of a button. This lack is causing millions to lose their life savings in 401K plus other investments, driving to a bad economic situation. By the time the world has recovered from the pandemic, you are now dealing with an unplanned financial mess.

Added to that is an unfortunate imbalance in prices of all commodities as they are unable to handle the reaction of the slowdown impacting life of an average consumer and creating a downward spiral in the market sentiment as well as lowering the morale of people. Natural course of life is always towards moving upwards until a huge obstacle surfaces due to such incidents. The blind spot here is:

  • not being able to foresee a situation that could force us to stay isolated and is not enabling us to move things around without any hindrance.
  • of a holistic system that does not have enough integration between all the isolated systems that are in place.

We have seen glimpses of hightech warehouses with inventory arranged on pallets, controlled by bots that receive an order and move them to packaging areas. But taking the vision further, imagine the following scenario:

FIGURE 2: Fully integrated warehouse operations monitored and managed via off site operators

A hightech warehouse with functions such as inventory management, packaging and shipping, fully handled by bots controlled through a device by a warehouse operator, shipment load planning done through a bot, and shipment automatically scheduled once the transportation planner firms the plan. A truck that is in-transit can be monitored by the planner. All of this is achievable through integrated technology that can manage the supply chain at every point of operation.

By 2022, application integrations delivered with robotic process automation (RPA) will grow by 40% year over year.Source: Gartner, 2020 report

FIGURE 3: Moving supply chain through various touch points without a breakdown

This is just one use case of moving material from one point to another. There is a lot more importance given now than ever to automate operations within the warehouse. During an unforeseen situation, operations should still run without jeapordizing customer orders.

Where is the integrated technology?

With all the advancements in technology, a larger number of people still saw the required changes in digitization as a total unnecessary spend. Very few players would have foreseen the need to automate their business operations and integrate them into an overall supply chain. You would often see technologically advanced companies thrive even in difficult market conditions.

What are the success factors to build a strong ecosystem that can lower the possibility of a breakdown in supply chains?

  • Thought leadership that encourages adaptability and technology centricity. This is a repeated message given to businesses through many sources that educate leaders, helping them to make the correct decision. A general shift in thought process would help companies move the economy along with their own well-being towards a greater picture of a business process revolution.
  • A smart supply chain and end consumer planning mechanism to suggest the right actions. Businesses at different levels of the value chain need to quickly make business decisions to move their operations forward.
  • A unified platform that can track operations and notify the status of an operation to relevant personnel at various touch points in the overall supply chain, ensuring continuity in the process and avoiding a breakdown.
  • Connected devices through IOT that can pass on signals to automatically perform the next step in the process via a controlled signal from the warehouse operator or supervisor.
  • Indicators set for different thresholds on the devices that are automated to gather information early on and proactively handle any issues or problems that could surface.
  • Advanced analytics that are more geared towards how the individual business is trending in comparison to how the entire value chain is functioning, basically a business that is part of the value chain has to be in sync with the overall supply chain.
  • Integrated technology that enhances the ability to understand the market situation, assess and recommend the business users to make various business decisions such as stocking up inventory, optimizing spend and scale up or scale down of business initiatives.

If larger and midsize companies are progressing towards adopting versatile technologies, smaller businesses that want to emulate the larger market leaders would need adoption of similar platforms.

FIGURE 4: Two planners controlling the movement of product remotely using connected technologies.

Obviously the 7 points listed above are not the only factors that can boost trends to the next generation supply chain, but emphasising and being aware of the above can definitely help you decide if you have invested in the right tools that will propel your business forward. The trend would be geared towards better integration of all technological elements, be it collaboration, process automation, connectivity, analytics and recommendations through artificial intelligence ultimately controlled by a person. This infrastructure should cater to small businesses who especially are more spend conscious and may hesitate to do the right thing due to a fear of draining cash.

Intelligent process is not a buzzword, but a necessity to move your business forward and help the world economy be more stable.

Key Takeaways

  • It is high time that life is controlled through a remote set of connected devices under the control of real people.
  • Man is still the master of a fully connected and well integrated technology that enhances the ability to collaborate and communicate with each other.
  • The objective is to make it easy on the individual or business encouraging them to make the decision in favor of business continuity and overall economic development.

About XcelPros

XcelPros is a Chicago-based company and delivers transformation through technology. We offer business and technology solutions with deep industry experience in Chemical, Pharma, Life Sciences (including Medical Devices, Bio-Medical & Biotech), Insurance, Discrete Manufacturing, Process Manufacturing, Distribution and Food & Beverage.

XcelPros is a Microsoft Gold Partner, Direct Cloud Solutions Provider (CSP) and a Systems Integrator (SI) offering software licensing, implementation and consulting services for Microsoft Dynamics 365, CRM, Microsoft Dynamics AX, Business Intelligence & Analytics (Power BI), SharePoint, Office 365 and Azure (Cloud, IOT, Microsoft Flow amongst many others).

Our mission is to provide integrated technology solutions that amplify impact and empower our customer’s businesses. We believe technology is the key enabler of exponential growth for us and our customers.

Contact XcelPros today to transform your business.

Call us toll-free – 1.855.411.0585 (or) visit www.xcelpros.com

the power of integrated material requirements planning

The Power of Integrated Material Requirements Planning (MRP)

The Power of Integrated Material Requirements Planning (MRP) 1100 644 Xcelpros Team

At a Glance

  • The need for integrated Material Requirements Planning (MRP) in growing companies
  • Gain perspective on MRP and Supply Chain Planning as essential drivers for growth
  • Managing customer expectations & reality behind the scenes
  • Real-life pain points
  • A planner’s day-in-the-life and what matters while planning production campaigns
  • Workforce resistance and solutions in adapting to newer efficient ways of planning
  • What can an integrated materials requirement planning and forecasting system do for you?
  • Key Takeaways

Are good supply chain planning methods only for larger corporations?

Whether you are a bakery or a pharmaceutical manufacturing company, planning is happening everyday to balance your supply and demand. If a bakery does not order enough flour, yeast, or eggs – they cannot fulfill their customer demand. Order too much, and they could easily face hundreds of dollars of wastage.

In chemical companies, wastage is not like throwing away a loaf of bread. There are far more repercussions to unplanned operations in highly regulated industries. Bad batches of extremely hazardous or volatile chemicals and constantly yielding unplanned co-products or by-products add additional need to store or dispose based on quality testing done to the batches.

In a pharmaceutical company, the production of batches with lower-than-planned batch attributes, potency for example, can result in an over extended campaign, over consumption of raw materials, and a lower production yield. If a batch is planned for a certain potency, the production process is not complete until quality passes the tests per specification. After reworking the batch a few times the batch may be reclassified to a lower potency not yielding the desired results.

While the concept of Material Requirements Planning (MRP) was originally only intended for manufacturing companies, it now extends itself into all industries, including Service. The role of MRP becomes even more critical in small-to-medium manufacturing companies. In fact, if you are a smaller company, materials and resources need to be planned with precision. Your planners and buyers need clear and precise signals that allow them to make informed decisions on when to buy, and when to produce. The availability of materials and capacity of resources is everything in optimizing and streamlining the supply chain within your plant.

MRP software was siloed and standalone during the initial years of its inception. In the later years, Material Requirements Planning has been included in Enterprise Resource Planning (ERP) software as an integrated module. This integration turned a new leaf in planning allowing companies to serve their customers better with lower cost of inventory.

Let’s explore real-life..

Your ‘A’ customer calls you requesting a quote for a specific product with an aggressive shipping date. You know that your customer has already reached out to secondary vendors for quotes.

To be successful in meeting your customer demand, especially when there is stiff competition, you need to be able to evaluate what your current inventory situation is and how fast you can meet the demand.

Without a proper system in place for MRP you will be forced to build complex spreadsheets with sales orders, supply and demand forecasts and production schedules and manually superimpose inventory availability and resource capacities into the same excel sheet. Sounds complicated? It sure is..

Quite a few of our customers maintain many such spreadsheets on a daily basis and sometimes take 2-3 days to just give a promise date to a customer. This is not sustainable as it puts tremendous pressure on planners, alienates customers and impairs organization growth. Meanwhile, your competition is able to quickly and easily provide a realistic promise date and close the sale, leaving you high and dry.

In order to meet customer demand by their request date, you need a minimum of three inputs –

  • Planned supply
  • On-hand availability (after all allocations / reservations) &
  • Resource capacity

If you are unable to quickly provide an available-to-promise (ATP) date, your customer will work with suppliers who are able to provide a reliable promise date and deliver on time.

What happens on the ground?

Preparing a production schedule can be challenging if there is no view into inventory levels or the availability of labor and machine resources needed to meet customer demand. Even with a forecast in place, it could be quite hard to schedule production if you are constantly facing capacity issues – be it machine or labor. If you have read my blog –“Standard Costing in Pharmaceutical Manufacturing – Industry Challenges & Solutions”, I have described an example of batch manufacturing process and the kinds of data inaccuracies that can occur while consuming inventory during a lot production process. Now add to it the lack of proper resource capacity during a week. Production planning and scheduling becomes a critical function in any manufacturing or distribution company to streamline operations.

“Not only do customers often expect 99+ percent service levels within 24 to 48 hours, but supply reliability is also becoming more tenuous as once local supply chains now extend around the world. Source – McKinsey & Company

You will need to up your game if you want to stay ahead of the curve especially with growing competition where customer loyalty is related to the value that you as a company can provide.

How would your planner be able to handle the signals to produce and purchase without a system that can do that very same thing by virtue of an algorithm in minutes? They need to pull together information such as:

  • Overall Customer demand
  • Worker availability
  • Machine capacity
  • Raw material availability
  • Stocked supplies
  • Quality requirements
  • Batch potency requirements

Dumping data into excel sheets from different sources and in turn creating a plan for your supply chain by creating a manual schedule is at the very least a basic requirement. I have often heard companies say we don’t need a plan or schedule end up in a very reactive production management that results in waste of material and chaotic operations.

Even with basic planning, a company operating in a reactive mode would face loss of inventory and suffocated resource availability resulting in a wastage of company’s time and money.

Lack of capacity – waiting for a machine operation to complete one job before the next job starts. This capacity information is crucial in providing a reliable promise date.

Do you have high customer demand and need to plan your fast moving items?

You are operating in a competitive market, if you are not able to fulfill on-time-in-full and in some situations prior to promise date you lose edge over your peers in the market. Companies that lack proper supply chain planning and that carry extreme resistance to change stunt their own growth as they constantly talk themselves out of proactively planning through an appropriate planning and scheduling tool. This is an issue within any manufacturing company be it discrete or process industry.

Real-life that you can connect to

Your planner is proactively planning out the work orders in most cases weekly and creates a schedule for the upcoming week. Lack of a proper visual capacity planning tool that provides the material availability and resource availability based on requirements is forcing the planner to create a calendar schedule and is manually tracking the production plan.

The plan involves production of a batch and a packout operation to meet the customer’s demand. There was an assumption that there is enough inventory available in stock as per your system but the containers are actually empty due to a misrepresentation of inventory. Now, the planner needs to look for alternatives or push out scheduled start on operations. The ripple effect is that customer service now has to go back to the customer with a new promise date. An additional situation occurred when couple of operators who were supposed to work on a certain job had to be repurposed because a certain high priority lot failed quality testing pushing out the jobs that they were scheduled to work on. A certain equipment broke down due to a lack of proper scheduled maintenance in place adding a new variable that is altering production schedules.

In this situation, a well-integrated mobile supply chain and planning system would feed data into each area along with frequent cycle counts on those fast moving products and a good capacity schedule that can predict labor and machine capacities with a secondary backup in place would help your planner proactively plan. A set of resources with the same capability to produce or understanding and planning for an alternative route of operations will alleviate some of the issues that were mentioned in this example.

How will an integrated materials requirement planning and forecasting system help you?It ploughs through the system based on the coverage settings such as lead times and time fences on the product that requires planning and creates production signals based on material availability and resource capacity/ capability. The algorithm looks at the full set of products that require planning and share the same raw materials/ resources and shows the planner schedules for all material requirements to meet supply and demand based on the calendar with working time. The planner sees the same visual schedule similar to the excel sheet and makes informed decisions on how the reprioritization needs to happen and which lot production runs need to be scheduled first. Holidays and weekends automatically can be excluded from the MRP run along with any sales orders/ quotes that are blocked from requirements to be planned.

The algorithm empowers the user to proactively plan and keep a tab on raw material and resource allocations. A stringent production floor standard operating procedure with stop gaps will control any uncontrolled activities that can alter inventory projections.

Role of People

Workforce that has been with you for a long time is your biggest strength as they were able to stick with you through your difficult times and pull your company through when you needed help. They may not be willing to adopt new planning mechanisms to streamline your supply chain.

But how do you bring about a change in attitude especially when your experienced workforce is change averse, risk averse and want life to continue the way it is?

A few proven ways would be –

  • Educating your workforce on the pros of adapting to newer methods and tools to increase supply chain optimization
  • Providing assurance to them that the new age tools are actually simpler to use and often follow standard methods of execution
  • Helping them gently cross the hurdle through a proper change management process
  • Having them involved in the overall transformation from no planning or manual planning to a systematised planning and scheduling tool
  • Teaming your workforce with newer team members who may have seen other tools and can be change agents during the process

Key takeaways to proactively plan your supply chain

  • Look at your current cycle count procedures and re-categorize the ABC items for better visibility.
  • Engage in proper clock-in/ clock-out and time management procedures through production floor and job management systems to allocate operators optimally for the right jobs.
  • Provide proper handoffs from one step in the operation to the other to relieve operators and resources appropriately.
  • Schedule jobs proactively and set good methods in place to operate efficiently.

Finally, do you think your company is able to handle competition well in these markets? How accurately and quickly are you able to provide a promise date that can out run your competition?

This article was written by Bindu Chunduru, Head of Delivery & Solutions Architect at XcelPros. She has extensive hands-on experience in Finance, Costing and Manufacturing functions in conjunction with industry leading ERP systems like SAP, Microsoft Dynamics and building industry specific products. She has been an advocate of transformation through technology and a change agent helping companies grow by improving business processes & practices. If you have any questions or need help in anyway, you can reach out to the author at bindu@xcelpros.com.

About XcelPros

XcelPros is a Chicago-based company and delivers transformation through technology. We offer business and technology solutions with deep industry experience in Chemical, Pharma, Life Sciences (including Medical Devices, Bio-Medical & Biotech), Insurance, Discrete Manufacturing, Process Manufacturing, Distribution and Food & Beverage.

XcelPros is a Microsoft Gold Partner, Direct Cloud Solutions Provider (CSP) and a Systems Integrator (SI) offering software licensing, implementation and consulting services for Microsoft Dynamics 365, CRM, Microsoft Dynamics AX, Business Intelligence & Analytics (Power BI), SharePoint, Office 365 and Azure (Cloud, IOT, Microsoft Flow amongst many others).

Our mission is to provide integrated technology solutions that amplify impact and empower our customer’s businesses. We believe technology is the key enabler of exponential growth for us and our customers.

Contact XcelPros today to transform your business.

Call us toll-free – 1.855.411.0585 (or) visit www.xcelpros.com

on time delivery in operations part 2

On-Time Delivery (OTD) KPI Your Most Important Metric In Operations Management

On-Time Delivery (OTD) KPI Your Most Important Metric In Operations Management 1400 820 Xcelpros Team

At a Glance

  • Per Harvard Business Review, US corporations lose half of their customers every five years on an average, unable to meet their demands and needs on-time.
  • An industry report* showed that on-time delivery motivates 72% of customers to repeat purchase from the same seller.
  • The most important step towards achieving optimal on-time delivery metrics involves solving operational issues at the grass root level.
  • Organizing a well-structured Daily Operational Meeting (DOM) not only increases productivity but also improves customer service.
  • 61% customers in the United States reported that they would even prefer paying to receive their purchases on the day they order, per Logistics Bureau.
  • Implementing a modern ERP solution will streamline your business processes, meet customer requirements and ensure on-time delivery.

In Part 1 of this series, we brought out the challenges like lack of communication across departments and inefficient business processes that hinder the on-time delivery of products.

As discussed in the prior blog, a few Key Performance Indicators (KPIs) that are critical in measuring delivery performance in logistics and supply chain operations are:

  • On-Time Delivery (OTD) or On-Time Performance (OTP)
  • Delivery in Full (DIF)
  • Delivery in Full On-Time (DIFOT), On-Time Delivery in Full (OTDIF) or even On-Time in Full (OTIF)
  • Cost as a percentage of sales
  • Inventory Turns (days)

Consistent problems with OTD not only affect your business and its reputation, but also customer relations and company’s supply chain. On-Time Delivery in Full (OTDIF) can be impacted due to a variety of reasons. To name a few:

  • Bad forecasts
  • Supplier delays
  • Quality delays
  • Product rejections
  • Other technical and operational issues such as ineffective Material Resource Planning (MRP) system and outdated ERP system.

Per McKinsey, poor service levels cost the US CPG industry a staggering $24 billion dollars a year. -McKinsey, 2018

Steps like identifying the root cause of late deliveries and prioritizing to avoid them coupled with an effective plan to get rid of such problems help your organization increase your on-time delivery metrics and productivity.

    • Kroger, the grocery giant, is known to fine suppliers $500 for each order that is delayed by 2 days or more.
    • Walmart has been very stringent on its delayed receipts from its suppliers. It has charged suppliers upto 3% of the purchase price for every order delivered that has not been delivered on time – early, late or partial.

-McKinsey & Company

In this part, we will highlight the remedial measures that need to be taken to enhance DIFOT metrics.

Since bringing in a crop always starts with harvesting the “low-hanging fruit”, I decided to get my team together to discuss the challenges that we faced to know where to begin. In considering the lack of solid processes, planning and communication challenges, I instituted daily operations meetings. What followed wasn’t rocket science, but pure magic.

What is Daily Operations Meeting (DOM)?

An operations meeting is conducted to discuss and review the process, progress and performance of the team, evaluate the pre-defined goals in key performance indicator, identify and analyze the issues and come up with a corrective plan to improve the overall operational performance.

01. Organizing the Daily Operations Meeting

You might think, “It’s just a meeting – how complicated could organizing it be?” Who should attend, who should document the meetings, what are the ground rules, what will be the structure/flow of the meetings, and what will be the frequency? These questions must be answered and you will only get one chance to encourage buy-in from the team.

Organizing a daily operations meeting can be quite tricky and complicated. You need to plan in advance the following factors:

  • Plan the target audience/attendees for the meeting and clearly define who will attend the meeting.
  • Plan the documentation process and define who will maintain the minutes of the meeting.
  • Define the ground rules.
  • Organize the structure / flow of the meeting and its frequency.

I decided to start with a core team that consisted of the Customer Service Manager, Supply Chain/Procurement Manager, Director of Operations, Quality Manager and Engineering/Maintenance Manager and added Operations Supervisors and VP; sales later.

I scheduled these recurring daily meetings and asked my Customer Service Manager to document the meetings with minutes that would be placed on a shared directory. I established some ground rules intended to get everyone to participate with one common goal: an improved OTD percentage.

02. Structured Operations Meeting

An effective operations meeting must have a properly organized predefined structure to achieve the purpose of the meeting – an improved OTD percentage. We should plan the agenda of the meeting in advance, prioritize the problems as to which issue to be addressed first, what comes next and must strictly adhere to the structured agenda.

There had not been an Operations Meeting in more than two years and the team was skeptical that this would provide value. Instead, they saw it as another thing to steal the valuable time. I began with expressing the ground rules:

  • Be professional;
  • Recognize we have a common goal;
  • Recognize that passion drives energy that can be perceived as hostile, but that is intended to drive positive change and comes from an honest place;
  • Trust each other;
  • It’s not a blame game; and
  • No finger-pointing.

The structure of our meeting started with an analysis of past due orders and expected receipt dates. We evaluated and came up with solutions to control past due orders and to accelerate receipt.

Then we looked at open work orders for the day/week and discussed any quality and maintenance needs that would create bottlenecks or delays. We discussed solutions to challenges that were brought to light and immediately determined that we needed to revise some processes and SOPs and, most importantly, work together.

03. How Our Team Improved – The Rapid Result

When the first major problem was brought to light in one of our meetings, the finger-pointing started (old habits are hard to break). But, over time the team realized that we were in this together, learned to be honest with each other and, most importantly, to be accountable for our own actions.

Within 90-days, our TEAM improved OTD from 76% to 98%. The biggest driver for this positive change was improved COMMUNICATION.

Insights to quickly help you improve your On-Time Delivery plan

Having discussed the challenges faced during OTD and the solutions to overcome such challenges, we will be taking it a step further and provide a winning a formula for actualization of our organizational goals.

Sharing success and acknowledgment of failure is motivational when success and continuous improvement are realized throughout an organization. It’s amazing what simple recurring operations meeting can produce.

01. Reliance on Systems and Team Members (Trust)

Improved demand forecasts and a systematic approach to surveying suppliers so that lead times can be updated to reflect current realities, along with a meticulous review of demand history and ongoing updates of safety stock levels, is the first step to convincing a team to increase its reliance on technology planning tools. This reliance will enable on-hand material availability and provide clear vision of customer requirements for improved production planning, including optimized machine utilization and labor resource availability. The more we rely on our systems, the more we improve and isolate opportunities for further improvement. As we gained more and more reliance on our systems and processes, we saw our OTD percentage increasing rapidly.

02. Improved Training Programs (Communication & Goal Congruence)

Heightened communication within the environment brought training deficiencies bubbling to the surface quickly. They were countered with focused training programs- ones that promoted improved safety, quality, operational efficiency and productivity. As issues were vetted in our operations meetings, we worked with our Human Resources team to implement improved training and saw an immediate correlation to reduced scrap and safety-related instances.

03. Updated Processes and SOPs (Goal Congruence)

With predictability and consistency as key goals, we moved beyond “form over substance” and updated our processes to reflect our true intentions. The new processes were streamlined and optimized which eliminated costly effort that our customers were not willing to pay for. Perhaps, the most significant contribution was the update of Standard Operating Procedures (“SOPS”). Improved operator training and accurate SOPs allowed us to reduce errors and produce product with high quality & purities and improved stability and consistency, which provided a roadmap for identifying issues in a real-time fashion so that immediate actions could be taken to rectify issues, delivering consistent results.

While harvesting low-hanging fruit is rewarding, true achievement comes to those that can stretch for the real treasure in the higher branches.

Make your product easier to buy than your competition, or you will find your customers buying from them, not you.” -Mark Cuban

ERP Helps You Achieve On-Time Delivery (OTD) KPI

If you are using spreadsheets to keep track of your supply chain, it’s time for you to switch to automation as manual processing is cumbersome and error prone, costing you millions. Deploying a modern ERP system can boost your supply chain efficiency: from better inventory control, to faster delivery of goods, to improved productivity.

A good modern-day ERP ensures stronger supplier relationships, streamlined shipping operations, and better customer communication through reliable lead, opportunity and quote tracking. The software offers fundamental benefits such as reduced lead-time, on-time shipments and reduction in cycle-time. Reduced lead-time is a critical parameter as non-availability of an item can create issues such as missing delivery schedule and losing customers to your competition.

The real-time data analytics helps you to better manage inventory levels and order fulfilment rates.

Per a global supply chain survey, data analytics will help grow DIFOT to 96% or above, which is at least 7% higher than the industry average.

Companies with a modern ERP get a 360-degree view of the customer. This holistic view of the customer relationships and their effectivity helps you to better serve customers. You can offer a tailored service to each customer, prioritize your best customers, and automate allocations, fulfillment and discounts for your “A” customers. Improved shipping operations give you the scope for reliable order tracking and shipping notifications.

ERP has really helped with a better distribution of information across the internal teams within our company.

Success Story

One of our clients, a US-based manufacturing company initiated an upgrade of their existing ERP software. The upgrade was imperative as the system was hurting overall profitability and enterprise-wise efficiencies. There was a lack of visibility of data, most communication was manual, inventory was all over the place, resources & human capital was untracked from a costing perspective etc. Within 6 months of upgrading their ERP system to a modern cloud-based system, their on-time delivery improved by 28% as the system was able to track each step of the operation with enhanced visibility of inventory and supply chain.

Key Takeaways

  • Finally, most companies manage OTD not just as a single date but instead to a range of dates – missed (X) or expected (Y) dates.
  • A structured operations meeting lead by a strong leader can do wonders to OTIF. Resolving operational issues at a micro level is essential.
  • An effective ERP software solution helps drive efficiencies across the board.
  • A metric that drives customer satisfaction will drive long-term customer retention and revenue for your organization.

About XcelPros

XcelPros is a Chicago-based company and delivers transformation through technology. We offer business and technology solutions with deep industry experience in Chemical, Pharma, Life Sciences (including Medical Devices, Bio-Medical & Biotech), Insurance, Discrete Manufacturing, Process Manufacturing, Distribution and Food & Beverage.

XcelPros is a Microsoft Gold Partner, Direct Cloud Solutions Provider (CSP) and a Systems Integrator (SI) offering software licensing, implementation and consulting services for Microsoft Dynamics 365, CRM, Microsoft Dynamics AX, Business Intelligence & Analytics (Power BI), SharePoint, Office 365 and Azure (Cloud, IOT, Microsoft Flow amongst many others).

Our mission is to provide integrated technology solutions that amplify impact and empower our customer’s businesses. We believe technology is the key enabler of exponential growth for us and our customers.

Contact XcelPros today to transform your business.

Call us toll-free – 1.855.411.0585 (or) visit www.xcelpros.com