Article by Lars Junker,
Solutions Manager, NNIT
For companies facing a global supply network encompassing plants, business units and divi- sions, the complexity of managing working capital the most optimal way and balancing production capacities while maintaining satisfactory service levels is significant. NNIT has recently conducted a survey showing that companies are still strug- gling to achieve a satisfactory production plan- ning. One of the findings is that while the ability for demand planning seems to be mastered; capacity planning continues to be a challenge.
Supply chains of today typically consist of many players: partners, sub-contractors, offshore production plants and stock managers. All of which interact at various phases and contribute to a product’s creation and journey before it eventually is passed over the counter to consum- ers. If it sounds like a walk in the park following a scheduled route from dot A to dot B to dot C and so on, that’s only the case on a theoretical level. Supply Chain Management is in fact a complex discipline and to walk in a straight line and avoid detours and dead ends takes an effort. However, it can be done by the aide of process optimisation and IT tools. NNIT’s survey shows that some companies already excel in Supply Chain Management – and some companies excel to some degree and are in the process of adopting new management tools and processes.
Typical pains in global supply chain:
Among the survey participants Demand Planning is a mature concept and is implemented by more customers than Capacity Planning. The market- driven planning (i.e. Demand Planning) based on external data feeds has consolidated due to the recent years’ focus on BI and the companies participating claim they have the ability to Demand Planning.
Capacity Planning seems to be more challenging as it is based on numerous internal as well as external data feeds, and typically the big transparent picture is hard to establish. Capacity Planning requires more internal investment, more internal collabora- tion and more detailed and accurate data. Therefor capacity levelling is still at an early stage for many companies, as it takes time to analyse and prepare an organisation for this more complex process.
Another finding deals with the degree of overview to adjust the production capacity on a local respectively central level. It is a clear trend that companies claim to have a much better local overview as compared to overview on a central level which is far from optimal in terms of planning. With the lack of central overview planning is decentralised and partial with all the shortcomings this potentially poses.
The central overview is at the core of global Supply Chain Management. This is ideally what any global life science business is aiming at: complete trans- parency and the ability to access data, analyse, plan and act. To obtain a central overview and orchestrate planning with a global scope compa- nies must turn to an integrated IT planning tool.
With the proper integrated planning tools compa- nies are able to refine planning and move from reacting, to anticipating, facilitate increased collaboration and master an optimal orchestration of the global supply chain.
NNIT has recently implemented SAP SCM solution based on SAP APO (Advanced Planner and Optimiser) at a large international pharmaceutical business. The APO solution combines product planning and detailed scheduling models for operational planning and SNP (Supply Network Planning).
Integration to vital systems ensures that data such as sales forecasts, stocks, and orders are fed into the SAP APO. By establishing and collecting the data and accessing them in a single model the company can plan and synchronise actions.
NNIT’s strong focus on quality as a result of our pharma legacy combined with a well-proven quality management system and a pool of highly skilled SAP Consultants ensures a world class wall-to-wall SAP APO solution, compliant with regulatory requirements.
NNIT recommends the following activities:
Engage with an experienced consulting company and taking the following overall approach:
In the summer of 2011, NNIT was in contact with more than 100 Supply Chain Managers and execu- tives within the Life Science industry in order to identify and map the biggest challenges they presently face. The target group represents the largest and most advanced companies within Life Sciences in Europe. All respondents were asked a series of questions in order to rate their maturity level in different Supply Chain Management-related processes. 67 interviews were conducted and followed up by an analysis by NNIT’s market analysis department.