How to Advance your Supply Chain Strategy with Technology: Proactive vs. Reactive

Move from a Reactive to Proactive Supply Chain

Supply chains are the lifelines of businesses across the globe. They connect all the processes required between the manufacture and the final delivery of a product. Due to the global COVID-Led supply chain disruption, many organizations utilizing JD Edwards have realized that their internal strategies and tools aren’t adequate for the ever-changing supply chain. How can JD Edwards organizations leverage Oracle Cloud SCM to move from a reactive to proactive supply chain? Read on for more.

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*For an in-depth demonstration of Supply & Demand Planning Cloud and integrating JD Edwards with Oracle Cloud Apps watch our webinar ‘How to Move from a Reactive to Proactive Supply Chain’.*

Transforming Your Supply Chain

When we think of a reactive supply chain, you’re flying by the seat of your pants each day. You’re fighting fires as they arise with no real significant forward thinking strategy. Whereas in more of a proactive supply chain, you would be leveraging key data points and systems to help plan weeks, months in advance to validate the key needs and solve complex problems to keep the company and process as efficient as possible. When we think of different types of situations that are proactive versus reactive, there are three real life examples of how proactive versus reactive situations impact your organization.

In any manufacturing facility, shop floor capacity is key. If you overload your work centers, your machines, you’re going to have throughput issues and ultimately that will lead to on-time delivery issues. In a reactive supply chain organization, a lot of times they will just send their orders to the floor and react once overloads occur. When a bottle network center has issues, a machine maybe goes down, you’re in reaction mode. In more of a proactive environment, the planner’s leveraging capacity planning tools that can level load and constrain their plans. And looking out two to four weeks to make sure that, if there are any issues they are aware of them and they are able to shift a work order from one specific line to another or possibly even outsource that to a vendor. The next situation is around long lead time parts.

In our current climate, COVID has led to lead times doubling for many organizations. When you get into more of a reactive environment you don’t have that long-term inventory plan for those lead time parts. Where if you don’t have them, you can’t run your production line and it leads you to be scrambling with order and expedites ultimately satisfy that demand. In a proactive environment, we’re utilizing inventory stocking policy for those key components and service levels and driving those based on the demands and also your seasonality to make sure one, you don’t run out of product. But two, you’re also not holding so much inventory where you lose and possibly don’t have enough space in the organizational structure. The final situation is around demands at risk.

When we think of being reactive to demands at risk, many times JDE customers don’t really know what demands they have that are going to be at risk until it’s too late. By the time you know, you are in a situation where you’re having to order an expedite, overnight ship, or move orders around. But when you have a proactive environment where you are systematically organizing those demands and looking at those risks weeks in advance, it allows you to prioritize your top customers first and also make sure that you’re hitting your dates. Now, this doesn’t mean you are never going to have any reactive type of planning in the supply chain. COVID is the perfect example of how organizations had to adapt and react, hopefully nothing like this ever happens again. But by having tools that can help you in those situations, it makes those reactive type of components much easier and it’s a monumental change.

Advancing Your Strategy with New Technology

How do we get there? What are the steps that we need to take to really drive in that direction? It always comes back to these three key areas. It’s our people, our process and our technology. We’re mostly going to focus on the two parts of the equation, which are process in technology, because at the end of the day, a lot of times your technology and leveraging those tools are often what drive the most efficient process to accomplish a task.

JDE is a very complete ERP system. It’s got deep, functionality in finance, distribution, manufacturing in all different types of areas. Unfortunately, one of the key areas that has always been a pain point in JDE is the supply chain management piece of the software. You have the necessities. You can run a supply plan. You can run a demand plan but many times it’s lacking the features that organizations need to answer questions that are important to them from a supply chain perspective. It’s, at times, not the best tool for organizations to reach their supply chain goals.

We need to use the right tools for the job. With JDE, the output is not designed to create a constrained plan. It’s not taking into consideration your materials, capacities, or supplier capacities. Instead of trying to hack JDE, by constraining it via customizations or utilizing tools like Excel reports that are outside the system, the most efficient way to tackle this need is to use a tool that’s built for this specific purpose.

We’re seeing more and more organizations seeking the right tool for the job. Where they don’t have to rip and replace their ERP but can utilize it’s built in strengths and combine those with a best in breed type of supply chain planning solution. The product best utilized is the Oracle Cloud solution. JDE does have built in demand and supply planning. You can run an MRP plan, you can create a forecast but you’re going to notice, if you were to show what the holistic approach of what a supply planning tool is, Oracle Cloud is going to be more of a complete fit for an organization.

The key features that are built into the Oracle supply chain planning tool are demand management, sales and operations planning, supply chain collaboration, contract manufacturers and supply planning. Built in social features around messaging analytics is an incredible tool to get your KPIs and information that you want to see. This is a way you can round out your supply chain by leveraging the functionality JDE has out of the box, from a financials and procurement perspective, but having a best in breed supply planning tool to give some recommendations of how you accomplish tasks.

The Oracle Cloud demand management module combines proven forecast algorithms with flexible analytics to anticipate customer demands. It’s giving you immediate feedback on things like new products, business segments, customer behaviors, and time phase replenishment requirements.

Benefits of SCM Cloud

Many organizations want to know and simulate what if situations. What happens if a large order drops in? What if the largest supplier can’t satisfy the demands anymore? What if a machine goes down? What if I add a shift or a weekend crew? What does that do to my supply chain?

Understanding those what if situations and getting a real time view of how that can impact all of your orders and planning is a game changer. And it’s something that many organizations do at this point, either offline or through manual manipulations inside of the demand planning tool, you can do all types of simulations.

It’s not just across the demand plan but an S&OP in supply planning, all of those have what if simulation and the ability to generate multiple plans. Inside of JDE, it’s a single MRP output. You get a single plan and if you want to make changes to it or run simulations, you can’t do it. You must rerun your plan.

Inside of Cloud, you can have multiple plans and you can compare those plans to one another. You can say, “If I run this plan and maybe I outsource an item versus I run this plan and I shift it from this facility to a different facility, which one gives me the best output?”

The next thing is around S&OP. From a sales and operations planning standpoint, it’s an integrated planning process that aligns demands, supplies, financial planning, and its managed as part of the company’s master planning. It’s designed to execute and support executive decision making. Do I need to buy more machines? Do I have to bring in resources? What does my forward thinking future look like from an organization perspective? Do I need to buy another building?

All of these types of decisions can be identified and run through simulations inside of this S&OP planning tool. Now, JDE doesn’t have any S&OP out of the box. It’s obviously a whole different ballgame when we get into this planning tool but the feature here is the ability to execute a forward-looking S&OP process. Which is connected to the organization’s strategy and operations and allows the organization to plan for the future.

Running simulations is such a valuable tool, if you were to buy a building, what does that do to you output? If I were to bring in a couple more machines, what does that do to my output? Will that reduce the cost? Whatever it might be, these simulations can be run inside of the planning tool in S&OP. Just like demand planning, JDE does, out of the box, have a supply planning tool, MRP, MPS, but it comes with its limitations.

The Oracle Cloud planning tool gives you a simpler, faster, better way to plan and execute your operations strategy. It detects material issues, capacity constraints, prioritizes competing demands and at the end of the day, also reroutes global supply to minimize your disruptions.

Constraint-based planning is probably the number one biggest differentiator from a JDE to a supply planning tool. You can run an unconstrained plan inside of JD Edwards. The problem there is when we are assuming infinite capacity. Everyone knows no organization in the world has infinite capacity. Having the ability to constrain our plan allows us to understand our bottlenecks, gives us an actual validate where we can build a product and it will take different options into play.

From a value perspective it is important to identify those demands at risk. This allows you to quickly and easily identify all demands that are directly at risk and recommend different solutions to mitigate that risk from an operations perspective. The last one is supply chain collaboration. The best way to think about this is, gathering data from external sources, contracting manufacturer suppliers, to have a full picture of what my supply chain looks like.

If you want to collaborate with a supplier when they’re going to tell you what their capacities are to make sure you don’t send them more PO quantities than they can satisfy. Or if you want to know when a vendor ships the product and have a communication where they can commit to that, you know, this product’s going to be coming on time or it’s going to be late. And it can also simulate what some of the effects are inside of the supply chain run. This, once again, is rounding out the supply chain process to gather data outside of internal systems.

From a high level, these are the three broad areas that will be touched from a supply chain planning perspective. As a JDE customer, there are a few key components to keep in mind: the increased speed to decision is massive. You can get to a decision, simulate a decision, know the impacts in a short period of time. It’s also heavily decreasing the amount of manual manipulation that needs done inside of the system or outside of the system.

Oracle cloud solution is a little more visual than what JD Edwards provides. But it also provides some high-level data that’s designed to present to the planners to highlight things about the plan. It’s designed to give the demand planners visibility into the plan without having to go into the grids like JD Edwards and look at a very detailed view of each of the plan. For an in-depth demo see our on-demand video.

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How to Move from a Reactive to Proactive Supply Chain Strategy