The supply chain issue - an overview

Citation

(1999), "The supply chain issue - an overview", Aircraft Engineering and Aerospace Technology, Vol. 71 No. 6. https://doi.org/10.1108/aeat.1999.12771faf.005

The supply chain issue - an overview

Keywords Supply chain, Manufacturing, Aerospace industry

One of the most pressing demands on modern manufacturing industry, particularly aerospace, is the need to reduce costly inventories and hence improve cash flow - a pressure that is making accurate and effective supply chain management a complicated but essential task for most companies. However, it is thought that managing the process through traditional supply chain methods gives rise to problems through an acceleration principle called the "Forrest Effect", where even a modest 10 percent increase/decrease of rate of sale at the retail end can result in a 40 percent demand change at the manufacturer's end - leading to supply chain chaos!

To try to moderate the effect these uncontrollable market fluctuations have on the supply chain, organisations invest in excess inventory which acts as a buffer (but is a financial burden most would be glad to avoid), or simply pull out all the stops in an attempt to fulfill the order. Most often, by the time a supplier is notified about the change in requirements further up the supply chain, it is too late to prevent unwelcome pressure on the business, either through increased workload (demand), increased financial exposure when the materials are tied up in inventory, or through difficulty in obtaining raw materials in the quantities required (supply). The end result is a supply/demand situation that is destructive to business relationships and gives rise to feelings from manufacturers and suppliers, that retail business practices are antagonistic to manufacturing objectives.

The way forward

In an ideal world, the best retailing situation is where a product is ordered, paid for and only then made, cancelling out the need for "buffer" inventories throughout the supply chain. While this is already the business model adopted by organisations such as Dell Computer, achieving this demands a drastic rationalisation in current supply chain thinking and implementation.

Numetrix believes the way forward is to "synchronise the supply chain" giving all of an organisation's suppliers access to the same information, all at the same time. This is defined by Numetrix as a Collaborative Enterprise Network, and means that when a customer orders a product, every organisation involved in the supply chain is instantly notified of changes, which can be immediately accommodated when scheduling or ordering - effectively smoothing out the Forrest Effect. It is here that information technology (IT) offers businesses the capability'to facilitate the required manufacturing revolution through products such as Numetrix/3 and Numetrix/xtr@, which take advantage of networks and Internet technology (through intranets and extranets), to enable the levels of instantaneous collaboration and notification required.

About Numetrix

Founded in 1977 in Toronto, Canada, Numetrix is a developer of collaborative supply chain management solutions for both the process and discrete manufacturing industries. Originally founded on the premise that traditional NW and NWII software could not adequately address the decision support requirements of global manufacturers, today the company has more than a dozen regional offices throughout North America, Europe and the Far East, plus distributors in the Middle East, New Zealand, South America and Australia. Servicing over 1,200 users in more than 150 organisations.

Through its products Numetrix/3 and Numetrix/xtr@, Collaborative Enterprise Network Systems, Numetrix believes that it offers a solution to the Forrest Effect. These systems are deployable across the Internet, intranets and extranets, and facilitate collaboration among all parties involved in the manufacturing relationship. As a result, fixed planning cycles give way to a threaded decision-flow process, driven by real-time conditions in the network. Through this enhanced collaboration, timely and accurate information is said to be shared and barriers of uncertainty are removed, delivering a better service to customers while reducing inventories and resources requirements for'suppliers.

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