Tag Archives: Supply Chain Integration

Report Calls on Multinationals to Reduce Carbon Emissions

A new report from the Carbon Disclosure Project (CDP) in conjunction with Accenture has called on multinational companies to further reduce their emissions throughout their entire supply chain. The CDP analysed 49 global companies and 1800 of their suppliers to ascertain just how well they were doing in meeting their emissions reduction targets.

The survey included household names like L’Oréal, Philips and Walmart and found that 43% of them had managed to make annual reductions in their own emissions. Somewhat less impressive was the 28% of their suppliers having achieved any kind of year-on-year reduction.

Carbon emission reduction by implementing integrated supply chain solutions

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Supply Chain Management: Preparing for Material Shortages?

Supply Chain Management: Preparing for Material Shortages?Much is made of the impact that natural disaster can have on the supply chain, but businesses in the manufacturing sector are also having to think more strategically about sourcing materials which are becoming ever more rare as we consume more. The British Geological Society has gone on record to state that 52 commonly used minerals are now classified as rare. More troubling still is that 27 of these can only be obtained from China.

Alarm bells ring for supply chain managers whenever their business is forced into a single channel as the margin for knock-on effects on production and stock level is nullified. Where China is the only supplier of elements critical to high tech product development, the best that a business can do is source a number of suppliers to provide fail-over in the event of a disaster. That or stockpile materials, driving up prices in the market and increasing costs through warehousing and the like.

Sourcing additional suppliers can be costly and inefficient, particularly where a high degree of integrated supply chain management between buyer and seller is required. Each new supplier requires significant investment for full onboarding, in both time and money. The provision of a hosted supply chain portal or method by which systems can communicate automatically with minimum onsite intervention can reduce many of these costs whilst delivering the benefits expected of an integrated system.

And although these mineral shortages are currently restricted to high tech electronics manufacturers, other materials are certain to become scarce, affecting the wider manufacturing sector as a whole, regardless of output. The conscientious supply chain manager will be not only scouting for alternate materials and providers, but planning for the capacity required to support and maintain the business relationship.

Does your current supply chain management system provide the flexibility required to add additional capacity as and when required? Can it communicate cross-border without major intervention? If not, perhaps you’d best give Celtrino a call to discuss their Smart Admin platform which can do all this and more.

Boeing Tighter Supply Chain Integration for Success

Keeping a close eye on the supply chain is essential to ensure raw materials are successfully converted into saleable goods, but is observation enough to succeed? Boeing’s epic Dreamliner project demonstrated that tighter integration of the supply chain constituents was absolutely essential in order for the first of the new aircraft to be delivered.

The Dreamliner was born out of a desire for greater efficiency both in the aircraft itself and in the construction process behind it. Boeing took the previously unheard of step of outsourcing the manufacture of the aeroplane components to 50 specialist subcontractors and used a central supply chain management portal to keep tabs on progress. The idea was that the components would be created simultaneously at various plants and then delivered to Boeing for final construction in a three-day window.

Such a deadline requires that members of the supply chain be working in synchronisation with each other and that they are fully informed about progress at each point. As problems arose during manufacture, partners were kept abreast with delays and developments allowing them to adjust their own processes to compensate.Boeing Tighter Supply Chain Integration Success

The collaboration hub also allowed Boeing to keep a tight handle on supplier progress and provided a mechanism by which they could address issues with contractors as and when they arose. At certain points during the project, Boeing was forced to step in and reclaim certain responsibilities to ensure the project continued on track.

The stated goals of the Dreamliner project were impossible to achieve without close integration between suppliers, subcontractors and Boeing themselves. Close communication and working practices made the dream a reality where many industry pundits had predicted disaster.

Collaboration between suppliers has often been seen as an evil necessity, rather than a genuine route to success. The eventual success of the Dreamliner was hard won, but the lessons learned by Boeing will shape the way they work with subcontractors permanently.

How would your business benefit from tighter supply chain integration? What would you need to change to make it a reality?

How Boeing’s Customer’s Customers Inspire Their Success

For manufacturers it is often tempting to think in terms of satisfying our immediate customers’ needs – after all they are the ones paying the bills. But what if we considered the needs of our customer’s customers?

Boeing Passenger Zone

Source: Boeing

This is precisely what Boeing did in the run up to the release of their new Dreamliner aircraft. Widely recognised for its incredible efficiencies and revolutionary manufacturing process, the Dreamliner is also the result of extensive market research undertaken by the plane builder.

Traditionally, aircraft manufacturers build the shell of the plane and tweak the cabin innards to suit their customers, the airline. In this scenario, the needs of the passenger tend to be considered last – something Boeing regarded as fundamentally wrong. In 2000, at the start of the Dreamliner design process, Boeing instituted their Passenger Experience Research Center (PERC). This analysed the psychological and emotional responses of passengers to air travel. The research took the form of various focus groups as well as a look into the medical effects of flying.

Using the data gathered through PERC, Boeing managed to address a number of the passengers’ wants through clever design. The Dreamliner is intended to help passengers fall in love with flying again by helping them reconnect with their earliest positive emotions. The high tech carbon composite fuselage also allows for greater control of the internal cabin environment recreating atmospheric conditions closer to Earth and thereby reducing many of the negative health effects associated with long haul flights such as headaches, itchy eyes and dry noses.

By considering the needs of their customers’ customers, Boeing have created an aircraft which passengers actually want to fly in. The application of the results of extensive customer research has therefore made the Dreamliner easier to sell to airlines too.

All of this raises the question, how could your business improve by considering the needs of customers further down the supply chain?


Boeing Prove Direct Integration Is Not Everything

During late 2011, Boeing finally began shipment of their latest aircraft, the 787 ‘Dreamliner’. Three years late and massively over budget, the Dreamliner has had a troubled route to market but Boeing executives are convinced that the changes the technological and manufacturing advances made during the project, coupled with their new approach to supply chain management will reap major benefits in the future.

Prior to the Dreamliner, Boeing bought parts from suppliers before assembling the finished aircraft themselves. The 787 project however required suppliers to design and build major sections of the aircraft before delivering them to Boeing. The ultimate goal was to reduce the final assembly time by Boeing to just three days.Supply Chain Management in Boeing

To make this ambitious plan a reality, Boeing implemented a collaboration hub which would bring together all 34,000 suppliers involved with producing parts for the Dreamliner. The system allows suppliers access to real time data to ensure that every single part is assembled in the correct order and delivered on time; with a three day assembly window, timing of deliveries is critical so that everything is in place at the right time.

The centralised data system means that every member of the supply chain is immediately aware of any potential delays and can adjust their assembly and delivery schedules accordingly. As the primary buyer, Boeing are able to gain an instant overview of the entire supply chain, so that parts are only ordered as requested and helping to speed payment of invoices between suppliers.

One of the most notable aspects of Boeing’s new supply chain management platform is that it is not reliant on every supplier having the same ERP systems in place in their businesses. Instead of using a proprietary EDI format to join inventory and accounts systems, the new Boeing platform collects and retains information in the online hub.

Although Boeing’s new cloud-based supply chain management system has revolutionised the way that the business operates in terms of efficiencies and future cost savings, there remains room for improvement. Using a platform which allows for transparent data transfer between ERP systems would further reduce complexity and potential data duplication between onsite systems and Boeing’s portal. Time will tell whether Boeing’s supply chain management system undergoes such an evolution.


Apple’s Obsessive attention to Supply Chain Management pays off

For the fourth year in a row, market analyst Gartner has rated Apple as having the world’s best supply chain. In their annual breakdown, Gartner examine the discipline, execution and value-added capacities of each of the 25 largest global corporations to produce the list which is now in its seventh year.

So how did Apple attain this latest accolade? The Cupertino-based computer giant is well known for its cut-throat pricing negotiations and obsessive supplier secrecy, which allows them to exert a high degree of control over the entire manufacturing process. Although they sell their own hardware, Apple manufacture very little themselves, choosing instead to outsource as much as possible.

Apple logo in AcesOne of the major tools used by Apple to ensure supply chain success is a willingness to invest heavily in every aspect of it; reports from Apple suggest that supply chain expenditure will almost double this year to $7.1 billion. Apple has found that massive expenditure on supply chain management is not only good for their business, but provides a significant advantage over their competitors too.

Back in 1997 when the original coloured iMac was released, Apple took the unusual step of buying up all of the available air freight around the Christmas period to ensure stores would be able to stock the computer. The move cost $50 million dollars, but it also hamstrung the opposition including Compaq, who were unable to secure any air transportation for their goods over the crucial holiday period. So successful was the move that Apple moved into ‘drop-shipping’ when the iPod was released, delivering goods to the customer directly from the factory and reducing lead times (and costs) yet further.

Since that time, Apple have managed to stay ahead of the opposition by taking a similar approach to every aspect of their supply chain. If a new manufacturing technique is identified, Apple sign exclusive supply contracts and invest further with the supplier to keep competitors playing catch up.  Similarly Apple have the reserves to offer significant pre-payments to suppliers, obligating them to fulfil Apple’s product orders first. Because of this the lead time on certain parts increases, again delaying production and release of competitor’s offerings.

This attention to supply chain efficiency, ruthless negotiation and an awareness of the effects of their business actions on the competition are a significant part of what has allowed Apple to become the world’s most successful company. Apple invest heavily ensuring that their supply chain does exactly what they need, how they want it and in time to fulfil their customers’ orders proving that obsessive control does pay off.

The Gartner Supply Chain Top 25 for 2011 is the seventh year of their annual Supply Chain Top 25 Report. You can download a copy of the report from the Gartner website.

EXPP 2011 Observations

Taking place in Barcelona this year, the EXPP Summit drew speakers from across the world to discuss the impact electronic invoice presentation and payment (EIPP) was having on their respective countries. Along with the usual discussions about that status of the market and current trends within EIPP, several in-depth case studies of successful deployments were presented to conference delegates.EXPP Summit logo

Examples given of e-invoicing deployments within South and Central America focused on the need to reduce tax fraud, which has been rampant under previous transactional regimes. Changes in legislation in some countries has seen market uptake reach 90%, whilst all of the nations implementing EIPP have recorded a rapidly growing uptake of the service. Providers of outsourced EIPP services in Latin America have recorded exponential growth and many established European businesses are now trying to penetrate the market.

When the focus was shifted to European EIPP uptake, success was driven by the need to increase business competitiveness, rather than reduce tax fraud. The ability to adapt business transaction methods quickly and to increase efficiency were identified as the driving forces behind e–invoicing deployments. Unlike Latin America, where  the government forces  businesses to interact electronically, European decision makers must be convinced of the cost benefits of EIPP before they will commit to using the technology available.

Unlike Latin America, where many countries have chosen to legislate to enforce e-invoicing, the European Union continues to accord paper and electronic invoices equal status, slowing the uptake of EIPP. However, it was pointed out that many EIPP service providers had misunderstood the EU’s directive which suggests that electronic invoices should be audited in exactly the same way as paper invoices.

And despite the high uptake of e-invoicing in Latin America, businesses are only engaging this way for tax purposes. EIPP has not led to greater supply chain integration as could be expected. Clearly EIPP providers still have some work to do to show companies in the region the benefits of integrating systems for greater efficiency and cost  savings.

Supply Chain Integration Introduction Part 5 – The Future

For businesses looking to implement their first supply chain integration systems, or those looking to improve that which they already have, the future of the methodology will remain of interest. The continued explosion of hosted systems (also known as Software as a Service – SaaS), has already begun to radically alter the supply chain integration landscape.

As discussed elsewhere throughout this short series of articles, supply chain integration is currently a job requiring extensive (expensive) expertise due to the complexities inherent in joining multiple computer systems. As with most technological advances, implementation of integrations should get inherently easier as on-site complexity is reduced. Suppliers will be faced with the choice of rolling out the exact same ERP system in each of their own businesses, or to outsource the EDI functions required to communicate between disparate systems to a third-party.The Future written on the white board

As cloud-based software and services continue to mature, the use of on-site systems becomes more expensive and effectively redundant. By outsourcing functions to the cloud such as invoicing and billing, businesses immediately benefit from a reduction in complexity and duplicated effort. An ideal Business Process Outsourcing (BPO) platform will take input from any ERP or accounting system, as Celtrino’s Smart Admin product does, and seamlessly convert and transfer the data to a receiving system. The onus for translation and EDI connectivity becomes the responsibility of the hosted service provider.

In such a scenario, the cloud service provider configures and maintains the EDI connectors for the systems of all of their service users, for the same subscription fee. The clients are then able to make savings on the costs of hiring EDI consultants every time a reconfiguration of the data interchange layout is required.

Business Process Outsourcing as part of a Supply Chain Integration is a hot topic and looks set to remain so for some time. As demand for BPO increases, service providers will be forced to further tune and improve their offerings. All this is great news for the customer and their customers in turn.

If you would like to know more about how Celtrino’s Smart Admin platform can be used to assist your business in Supply Chain Integration, please do not hesitate to contact us.

Supply Chain Integration Part 1

Supply Chain Integration Part 2

Supply Chain Integration Part 3

Supply Chain Integration Part 4


Upstream and Downstream – Navigating the Supply Chain

Upstream and Downstream in Kanuti River, Alaska.In terms of metaphors, the river is a perfect picture of a general supply chain. At the river’s source lies the producer of the raw materials. He loads his wares onto a boat and sails downstream until he reaches his buyer whereupon he offloads his goods, takes his payment and sails back upstream to his home. The buyer then assembles the raw materials into a product and ships them further downstream to his buyer. The goods travel downstream and a payment is returned upstream. This process continues down the length of the river until the finished goods are sold to the consumer.

In terms of the river, two things always happen. Goods travel downstream and money travels upstream. And so it is with the supply chain.

In the event that the supplier at the start of the river delivers directly to the end customer, the supply chain is a simple two stage process. Once there are multiple buyers and suppliers involved however, the supply chain becomes more complicated.

Also worthy of consideration is the fact that the cost of the intermediate goods rises with each stop. Value is added to the product at each intermediate stage and prices must also rise to cover mounting costs.

At this level, everything is still quite simple without any obvious room for efficiency savings. However, add an accounts department at each stop and the process immediately becomes more complex. The buyer has to send a purchase order to the supplier upstream before the goods can be sent downstream adding another journey to the supply chain. An invoice can be sent along with the goods, but payment and remittance advice will not be available immediately upon presentation, so that means another trip upstream to clear the account. Suddenly the supply chain is slowed considerably. Instead of a simple there-and-back trip, the are now three or four journeys required for one hop in the overall supply chain.

At this point, only the introduction of a system which links both up and downstream but which exists outside both can make the efficiency savings required to maximise profit and ensure value added is retained as profit. Adding an electronic supply chain integration platform such as Celtrino’s Smart Admin system obviates all the journeys back and forth with bits of paper between suppliers and buyers – almost like sending a carrier pigeon between both parties and saving the ship’s captain a number of trips.

Less trips, means lower costs. Tying seller and buyer together with an integrated supply chain management helps increase efficiency and everyone shares in the increased profits.

Supply Chain Integration Part 4 – Best Practice

Best Practice written on a white boardThe recognition that supply chain integration with your suppliers and partners is of paramount importance is the first step in a sometimes challenging and complex process. Each member of a supply chain has their own way of doing things, using a variety of different systems which at first glance are probably not fully interoperable.

Despite being a “standard” Electronic Data Interchange, or EDI as it is known for short, there are many minute variations and tweaks required in order for one computer system to “talk” to another. As a result, reconfiguration will have to take place at each supplier to allow for smooth communications. EDI setup and maintenance is an expert job and being time intensive, is also costly. As a result the use of an outsourced service which does the required EDI translations automatically is preferable.

The use of an externally hosted Electronic Invoice Presentment and Payment (EIPP) system allows every member of the supply chain to integrate their payment systems for maximum compatibility, whilst retaining complete autonomy over their own data and in house processes. During the supply chain integration process, companies can choose to enable as much or as little interchange as they desire. Obviously the more interchange permitted, the greater the on-going cost savings through a reduction in labour costs that would be accrued through manual processing of the same actions.

Clearly the complexities of such an integration is outside the experience (or interest) of most businesses and so they will need to secure the services of a specialist consultancy. Here are three suggestions to help when choosing:

  1. A proven track record in successful completion of supply chain integration. Any company you consider should have verifiable testimonials from previous customers and reference sites which can be visited for first-hand verification.
  2. Experience in trading community onboarding. Integration projects deal not only with system interoperability, but also the political issues raised by bringing together businesses with differing values and ethics.
  3. The ability to make integration as simple as possible with the minimum of disruption for any member of the supply chain.

In the light of these suggestions, expertise in supply chain integration is just one facet of the decision process. The technology and methodology used is just as important with on and off site implementations of supply chain integration. Clearly Business Process Outsourcing (BPO) options which see the EDI services hosted externally are preferable in terms of scalability, speed of deployment and minimisation of disruption – all data interchange is performed externally with minimal local reconfiguration required.


Supply Chain Integration Part 1

Supply Chain Integration Part 2

Supply Chain Integration Part 3

Supply Chain Integration Part 5