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Collaborate with Suppliers to Ensure Reliable, Agile Delivery to Customers

Secure Assurance of Supply

A STRATEGIC IMPERATIVE FOR MANUFACTURERS

Volatility in supply chains makes it hard for companies to prof-itably meet demand. Sourcing is complex, involving hundreds of partners around the world. Suppliers often don’t have access to adequate capital, causing instability in the supply base. The majority of inventory, cost, and risk is outside of a single enter-prise’s control — and with a growing percentage of manufac-turing being outsourced, the problem won’t solve itself.

Impact of Uncertainty in Supply Channels

Lack of visibility and control over supply leads to excess costs and wasteful processes in the manufacturing supply chain. Com-panies hold inventory to guard against risk, but it’s expensive — and the extra costs eventually get passed on to customers.

Without a strong assurance of supply program, manufacturers fi nd themselves with:

Too much buffered inventory

Inability to predict accurate lead times

Poor WIP visibility at the supplier level

Limited control over in-transit inventory

Longer lead times throughout the supply chain

The Root of the ProblemThe systems manufacturers have used for years no longer solve global supply chain problems. Some companies are juggling multiple ERP systems — ones that are prohibitively expensive, don’t share partner data well, and cannot connect many entities to a single, real-time source of information.

Too many siloed systems and not enough shared data make it impossible to reliably meet customer demands. Companies, with only a few pieces of the puzzle, must scramble to track inventory and provide accurate ETAs.

1. Fundamentally different supply chains with little enterprise control

When supply chains were shorter and constrained to nearby regions, managing risk and cost was much easier. Today, up to 80% of data lies outside the enterprise, leading to:

More blind spots and lower levels of control over data and activity in the supply chain

Global markets and sourcing with long, variable lead times

ERP ineffective for managing distributed manufacturing networks

2. A shift in focus on planning vs. execution

To regain control of their extended supply chains, compa-nies turn to planning and forecasting. But with new mar-kets, more frequent product launches, and shorter product life cycles, incremental gains in planning accuracy will not meet the drastic demand swings that are common today. Focusing solely on forecasting leads to:

Blind spots where accurate, real-time data is unavailable

Near-term horizon problems

Partner knowledge excluded during decision-making

Money wasted on planning systems that cannot ac-curately predict demand

3. Financial uncertainty and stress on the supply chain

Extended payment terms and late remittance put unneces-sary stress on suppliers. Outdated processes like manual three-way match slow down the payment process, and relationships with suppliers are put at risk. The results are:

Suppliers lack enough capital to fund production

Quality is negatively affected as suppliers fi ght to protect margins

Supply base is unstable, with poor relationships and little trust

© GT Nexus, Inc.

2

Manufacturers struggle to ensure a reliable fl ow of supply through the production cycle.

The Challenge

The biggest challenge: having exactly the right amount of supply to meet volatile global demand.

Tier-1

Enterprise

Global Supply

Volatile Demand

Multi-tier Constraints

OutsourcedManufacturing

Customers

Global Supply Global Supply

Tier-n

Inbound Outbound

Volatile DemandVolatile Demand

Plant

Plant

NetworkConnectivity

Agility

Customers

Customer

DC / Warehouse

Plan

Actual At-Risk DelayDynamic ETA

B

A

Sense more accurately

Operate more efficiently

Respond faster

Make better decisions

3

The SolutionTo execute on a strong assurance of supply program, manu-facturers must be in control. They need to make informed deci-sions using a system that allows for visibility and management by exception.

As inventory moves through the supply chain, managers can use a networked platform to adapt to demand or disruption. They ensure the order will be fi lled on time by understanding fi nancial viability of suppliers, collaborating with n-tiers on parts, and using WIP data. Later, they use transportation data to ensure on-time delivery. Bookings, rates, and compliance

are handled from a central location. Finally, goods are managed by exception to allow dynamic ETAs and ac-curate availability projections.

Connect every trading partner on single, cloud-based supply chain network:

Shift to execution and tighter integration to provide “rapid re-planning”

Procure-to-pay that manages the end-to-end fi nancial supply chain

Fusion of the physical and fi nancial supply chains, monitor-ing fl ows from factory to customer

Visibility into inventory and WIP

How to use this technology to build a strong assur-ance of supply program:

1. Collaborate on orders and supplier commitments

2. Manage order, receipt, and WIP status by exception, automatically

3. Track inventory with visibility into goods from point of manu-facture to customer receipt

4. Replace manual 3-way match with automated supplier payment programs that show status throughout

Value PropositionsA healthy supply assurance program adds value to all of a company’s trading partners. The manufacturer sees a drop in inventory-related costs, while partners benefi t from fi nancial stability and easier communication on production, cycle times, and shipment of parts and fi nal products. Execution is synchro-nized across all partners, complex workfl ows managed without extra manpower, and the physical and fi nancial supply chains are viewed from a single source.

1. Find and allocate the right supply when it’s needed

Move inventory easily from one place to another with higher agility

Increase customer satisfaction with reliable deliveries

2. Decrease transportation and inventory costs through better visibility

Expediting only parts effected by disruption, not the whole shipment

Gain visibility into in-transit inventory and WIP

Lower costs associated with excess buffer stock

3. Improved supplier performance and relationships

Better supplier fi nancial health leads to reliable production

Reduced DSO for suppliers through supply chain fi nance programs

Assurance of Supply and the Networked CompanyTo uphold a strong assurance of supply program, companies must transform themselves from silo-based, inward-facing corporate operators to interconnected, highly agile business network orchestrators.

What’s the point of all the planning? The real power lies in being able to make changes along the way.