Our Philosophy

Supply Chain in Motion

End-to-End Solutions (E2E)

The world is changing and so must the paradigm of carrying on-site, in-house inventories. The function of a manufacturing plant is to produce real goods. Its function is not to store idle inventory which is waiting for transformation. However, as we all understand, inventories are necessary. You simply cannot produce goods without some form of raw material.

We clearly know all too well that managing those same inventories cost real dollars. The question becomes - at what point…should the inventory transformation from supply chain to assembly line occur and where and how should it be managed?

The role of a plant manager is to obtain the greatest return on assets as a result of his planning, organization and direction of manufacturing operations. The ultimate solution for any plant manager is one that involves every square foot of his real estate in the production of real goods. Production is a function of a profit center which makes the accompanying inventories a necessary evil. In contrast, the logistical support of production is a function of a cost center.

Inventories provide equal opportunities to add value or detract value from the bottom line. Let’s face it; inventories come with burdens such as: suppliers, transportation, packaging, handling, capital equipment, storage, losses, gains, expedites and large teams of people to manage these opportunities.

These logistics teams are designed to avoid cost and provide continuous improvement of the overall plant goals. These teams cost money. The challenge for many manufacturers is simple, they just aren’t large enough and do not have the capital available to build large supply chain teams. Conversely, large companies with capital are highly susceptible to volume spikes and their large supply chain teams often sit idle.

Customers today demand more options and more choices in their purchases. Naturally, more options translate into more variations in content, resulting in larger inventories and more risk.

Think of a traditional assembly line and the work cell for any given operation on that line. The trick is to present material without causing an operator to walk several feet to pick a part. Travel is one of the most basic forms of waste. How do you best minimize the risk of a miss-pick without adding incremental capital to "poke-yoke" the process? Replenishing this type of system becomes reactive, sending material handlers searching for minimums and maximums.

Vendor managed inventories (VMI) are not new. However, the traditional managed inventories do not create synergies for anyone other than the VMI Company. This practice is basically sound but stops short of a fully-optimized supply chain. It requires a paradigm shift by the customer; they must relinquish control over the End-to-End (E2E) supply chain.

VMI falls short because the VMI Company shares no real risk. They do not have ‘skin’ in the game. The skin in the inventory game…is managing the scheduling, the receiving, the storage, the picking and the delivery to the assembly worker. The new VMI Company should be an E2E Supply Chain Company providing a total logistics architecture. It should not be a company who reduces your margin by offering only a piece of the solution. Production is dynamic and supply chain solutions must be too. What is needed today may not be what is needed tomorrow. Flexibility to supply and demand is critical to quality.

Supply chain architecture is about finding optimized solutions. Those optimizations come from many different sources and/or combination of sources. The true E2E Architect Company must be asset neutral. In other words, if I am a transportation company, my tendency will be to demand inventory and ship trucks. Other functions want to hold large amounts of inventory so they never have an out of stock condition. This typically drives up obsolescence costs. It’s human nature.

E2E companies see the complete picture and understand when they should cancel trucks, add inventory, change packaging, switch carriers, modify material handling equipment, combine loads with competitors, charge suppliers for quality issues, increase pack densities, repack, kit parts or employ a multitude of other solutions to properly optimize a total solution.

Companies win when they no longer have to carry large teams of overhead to enjoy cost saving, optimized solutions. When volumes relax and focused supply chain teams are not needed, they are simply reduced. Warehouse space is no longer a burden and transportation movements become highly synchronized with other E2E customers.

Since the E2E Architect Company already understands your business and it’s critical to quality concerns, the E2E can jump right in and manage the variation within the plant.

Managing cash flow is a daily tight rope walk. If your cash is tied up in managing the supply chain, it isn’t available for production, R&D, marketing and other margin generating business.

E2E Architecture Companies earn their value by managing the inherent risks of inventories and the associated E2E supply chains that bring these inventories to the assembly line.

One size does not fit All!

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