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Supply Chain Eight Ways to Save in the Supply Chain By John Daker, Director, Business Development, Riverwood Solutions R
educing the price of manufac- turing has driven much of the development of the supply
chain, but it has also encouraged an adversarial relationship between vendor and customer. Here are some ways to get the cost down without fo- cussing on price alone.
A more collaborative design ap- proach. Taking a concurrent view on product design and supply chain is valuable. The sooner you start de- signing the supply chain, the more effective and efficient it will become. And the sooner you involve your sup- pliers in the design process the more efficiently and economically they will be able to build your product. Your vendors are a great source
of valuable data that will help you create an even better product, that can be manufactured and delivered in a streamlined way. Chances are they’ve done something similar be- fore and because these guys make and deliver stuff, they’ve become quite good at it.
Provide the best forecast you can. Customers often say that mar-
kets are too volatile and consumers are too fickle to allow for good forecast- ing. That’s fine, but even if you can’t see the future, you should have visibil- ity on the past, and while past per- formance is no guarantee of future performance, it’s an outline indicator. Providing information that will
impact on your sales numbers in a timely fashion will also allow for a more manageable and more planned supply chain approach. You should involve your vendors
frequently and early, letting them know when you expect a potential spike or dropoff in demand and why. Let them know if you’re looking at a new market or launching an offer that will bring in additional orders.
Is your product offering too com- plex? Products that can be ordered online and customized seem to be de rigueur, but what level of customiza- tion will enhance your sales and what will give you and your supply chain an unnecessary headache? Look carefully at the volume
you expect to produce and the varia- tions you want to offer. These may
seriously affect the efficiency of the manufacturing process and the sup- ply chain, as well as the total landed cost and the fulfilment cost of prod- ucts. A couple of colors may be a great idea and may make your prod- ucts appeal to more people, but does offering every color of the rainbow do any more than that?
Risk mitigation, not migration. A supply chain needs to be ready for risk, and panicked responses will be expensive. The important thing is to have a risk mitigation strategy, not a risk migration one. Many companies seem to think if they pass risk onto their suppliers they are mitigating or reducing their risk. That may be the case financially, but it will have a cost. And if the outcome is that a problem occurs and your supplier is liable, you’ll still have that problem, with all the associated stress and brand damage. Look for trends and consider
what life might be like if that oc- curred again. Can you have a plan that can be swiftly executed? Do you have contingencies in place? Look at the supply chain in terms of its vul- nerability. Build a robust supply chain and
monitor it dynamically, make sure you have considered as many what-ifs as you can and you have enough flexibili- ty and agility to deal with them.
If you can’t measure it, you won’t improve it. Visibility and traceabili- ty are central to a good supply chain. The visibility is needed to allow the supply chain to flex as things in the market and within the supply chain change. Traceability is needed to en- sure that when something goes wrong you can trace the problem right back to source and fix it quickly. If you pick a single KPI (Key
Performance Indicator) and measure your vendor by that, it will be that statistic that they work to improve. What you need is a holistic approach that measures the entire supply chain, showing the impact of one part on another. If you only measure the BOM price, this will happen, and the results will not be what you hoped for.
Understand landed costs? There’s more to getting your product to the consumer than placing an order with the vendor who quotes the lowest price, and calculating landed costs is more complex than just adding the BOM costs to the labor costs. There are overhead costs need-
ed to manage the supply chain, par- ticularly if you choose to manufac- ture in a different time-zone and ge- ography from your R&D and pur- chasing, and you’ll need to consider how often you will need to visit and what impact will that time have on your product development and prod- uct introduction cycle. You’ll also need to think about
Continued on page 23
August, 2015
John Daker, Director,
Business Development, Riverwood Solutions
John Daker is a career opera-
tions, engineering and supply chain professional with more than 15 years of global operations experience that he brings to his role at Riverwood. He has held engineering, operations, and program management roles at several organizations,
including
NASA, Flextronics, NHT, PowerFile, and Tesla Motors. John has worked with products in consumer electron- ics, networking, photonics, and man- aged manufacturing facilities pro- ducing audio components and elec- tric vehicle power trains. John has managed internal
manufacturing operations at Flex- tronics, PowerFile and Tesla, and has managed outsourced production, reverse logistics operations and ODM programs for companies that include Cisco, Motorola, Apple, NHT, and Sony Ericsson. He has managed numerous international product transfers, offshore product introduc- tions, and substantial product devel- opment and industrialization pro- grams in the U.S., Mexico, and Asia. Prior to joining Riverwood Solu-
tions in 2011, John served as Manag- er of Powertrain Operations for Tes- la Motors, a California-based electric vehicle company where he was re- sponsible for building one of the most technologically advanced power- trains in in the world. John also spent more than 7 years in various manufacturing engineering and pro- gram management roles at Flextron- ics. He has also played an integral role in developing new mathematical models for software, data analysis programs and has worked extensive- ly in computer programming and modeling while with NASA. John has a track record of developing and growing relationships at all levels of both the customer and internal or- ganizations for manufacturing part- ners. John has a BSME from Case Western Reserve University and is a member of the Institute for Supply Management. r
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