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Omni Tech Areas of Supply Chain Expertise • Supply Chain Cost & Performance Improvement • Supply Chain Strategy • Supply Chain Operations & Processes • Transportation • Network & Warehousing • Planning & Inventory Management • Mergers & Acquisitions, Due Diligence • Procurement & Spend Analysis Supply Chain: Cost & Performance Improvement Supply Chain is the processes and people that serve an organization managing the delivery of material or services to the customers within the time requested at the lowest cost to the business. Supply chain follows the flow of goods, beginning at procurement, through manufacturing or assembly, packaging, shipment and includes storage along the pathway to the customer. The supply chain includes the supporting processes for forecasting and planning, order entry and customer service, arranging transportation, billing, expediting and generating the supportive documentation. It is both a management process requiring decisions both strategic and tactical, and an operational process that arranges and monitors numerous movements of goods and the information that supports both processes. The Omni Tech International Ltd (OTI) definition of the Supply Chain is one that encompasses the a large scope, because we believe that you need the widest breadth of vision with the highest level of knowledge in the supply chain in order to build it, plan it and operate it in the modern ever-changing business world. No business is without a supply chain and many businesses are actually defined by their supply chains. The broad definition of the supply chain requires many areas of expertise to be successful with the customer and internally. But some businesses do not possess all areas of supply chain expertise or elect to meet expertise requirements from external organizations. After all, most businesses work with limited resources and within an affordability model that sometimes requires outsourcing of both activity and knowledge. OTI understands affordability models and can be your source for supply chain expertise and introduce the latest thought in supply chain concepts into your decision-making processes and organization. OTI can also provide the project management and process support you require. OTI business mangers have the experience that can be helpful to your organization. They have not only the supply chain experience but also the project management skills to aid in managing and speeding your efforts through implementation and results. OTI has numerous experienced supply chain and procurement consultants that can bring specific in-depth knowledge to your requirement, which will ensure the selection of the appropriate methodology or technology to improve your supply chain. Expertise in road, rail and marine transportation are available for not only North America, but also available for Asia, South America, Europe and Africa which was gained through first hand overseas job experiences and international responsibilities with well known global companies forms the basis of OTI's transportation consulting capabilities. OTI can lead you through the entire improvement process - analysis, redesign, option evaluation, implementation and continuing metrics of control. All aspects of supply chain operations are on call for you - procurement of services and materials, spend analysis, outsourcing, forecasting and planning, inventory management and control, all modes of transportation and logistics, distribution center (DC) management, and network design, down to the details of material movement, packaging and storage solutions can be yours. OTI will show you the Total Cost to Serve (TCS) and Total Supply Chain Performance (TSCP) approach to supply chain and procurement that provides you the knowledge base for determining the highest performance levels of your supply chain that are consistent with the business strategy and evolving global supply chain structure in which you compete. The Omni Tech approach to supply chain excellence is based on the concepts of lean manufacturing and lean supply chain that have proven useful for the supply chain, not only in theory but also in daily operation. Get the lean supply chain for your business enterprise and understand the lean principles that will assure you continued supply chain success as the competitive environment changes. Browse the Omni Tech International Web Page for a more in-depth glance into the OTI supply chain expertise that is available to you. Supply Chain Strategy Strategic Planning for Supply Chain & Procurement According to Webster, Strategic Planning is "the science or art of employing the political, economic, psychological and corporate resources of an organization to afford maximum support and achievement of adopted policies." In short, Strategic Planning is the continuous process of designing a desired future state with the best possible data while supporting the goals of the organization. The future cannot be determined by simply extrapolating the present situation forward. Not only the motivation for change but also the ability to recognize and to utilize new technology and methodology are required to change your present structure, thereby providing a new base of performance. Organizations must start with the concept of a desired future and work back to the present. All modern businesses complete a strategy that covers all aspects of business, including product and market positioning, financials and operations, manufacturing and supply chain. Understanding the internal and external supply chain environment provides the data necessary for both the planning of the strategic future and the detailed plan to achieve it. The knowledge of all aspects that are expected to change and how they can affect the supply chain is a critical part of any strategy development, as important as developing the business's growth and profit objectives. Why Implement a Supply Chain Strategic Plan? Having a Supply Chain Strategic Plan is a significant element in most business units as it provides a single supply chain vision for the organization and the action plan to accomplish it. The Supply Chain Strategy also brings clarity to the other parts of the business as it details the future basis for product availability, sourcing, outsourcing, customer service, and delivery while maintaining an effective cost position in the market it supports. The strategic planning process allows an organization to analytically evaluate future factors or trends and develop a plan to incorporate or address these issues. Determining a supply chain strategic plan will also afford the opportunity to introduce lean manufacturing and lean principles into the supply chain in a manner that will drive future change consistent with the best of global practices. The strategic plan will also provide a tangible set of actions and milestones, which give staff members clear direction, resource allocation, and performance goals. Evaluation of internal and external factors allows the supply chain organization to confirm strengths and competencies and identify areas of weaknesses that must be addressed. Goals and actions are then used to establish the timetable and metrics of success. Ultimately, the supply chain strategic planning process should identify new areas of opportunity required cost efficiencies and it will enhance long-term viability of the organization. The Omni Tech Strategic Planning Process Omni Tech will partner with you to customize a Strategic Planning process based on the size and needs of your organization. The process will resemble the following: Charter the Team | Define Deliverables/Requirements <- Business Strategy | Cost & Performance Review <- External Benchmark/Review | Establish Present Position | Key Elements Vision & Mission Statement | Scenario Planning | Key Objectives & Metrics | Action Plan & Timetable | Implementation Stage | Review & Update Supply Chain Operations & Processes Possessing a well thought out business plan and strategy does not assure business success. It is the solid execution of the strategic plan and the controlled adaptation to the changes in the business environment that lead to success in business. It is no different in supply chain operations. Excellent plans and structure do not assure success, but rather increase the ease of attaining success. Operational excellence is a requirement for the heavy activity-based supply chain. Supply Chain Processes All modern business work activities and decision-making can be defined as processes. One of the modern business processes is supply chain. Having a well defined process and utilizing it daily produces the continuity that leads to better performance, in a minimum amount of activity time. Accomplishing this leaves individuals time to deal with the true emergencies and provides the time and resources for continuous improvement. Link a well-defined and well-run supply chain process with a state of the art IT package and not only do operations run well, but valid, real-time information is available for decisions makers at all levels. A defined supply chain process is necessary for these benefits to be realized. Metrics Nothing improves that is not first measured. We define Profit and Gross Margin to measure business success. How do you measure supply chain success? On-time delivery, inventory turns, freight cost, forecasting accuracy are some of the metrics commonly utilized for supply chain. A complete set of supply chain metrics will accomplish three objectives. The first is the measurement of the supply chain's deliverables. Defining the deliverables and their targets should be the first metric set derived. Omni Tech International utilizes a Supply Chain Total Performance (SCTP) metric process that establishes the measures and deliverables for customer satisfaction and internal supply chain processes required for business success. The second metric set measures the cost and resources deployed in the supply chain. All components of supply chain cost and resources are usually not defined by a budget or even traceable through most organizational charts. Knowing the true Total Cost to Serve (TCS) will give the business the real cost of the supply chain and its detailed components, providing a map to required improvements and the quantitative measure of success. The last supply chain metric establishes the process measurements. These measure how things are being done, the quality of the information coming in, quality of information being provided to others, and how the work process is performing. Supply chain information is important as it provides the basis on which many short and long-term decisions are made in supply chain and other parts of the business. Correct and timely information provide the base for improved decision making. Getting it right the first time eliminates rework and mistakes for the customer. Having the correct metrics is the only way to measure the process that is the complete supply chain in your organization. Lean Manufacturing and Lean Principles The introduction from Japan of the concepts of Lean Principles in Manufacturing can be extended to include the supply chain. Studying the Toyota Lean Methods shows significant principles that originated in supply chain. The controlled movement of material to assembly or manufacturing areas, the timing of their arrival, and the minimization of process inventory is a lesson in supply chain planning, scheduling, and structure. OTI can help you audit your supply chain process focusing on these principles and help you determine both a short term plan of change for effectiveness and efficiencies and develop a better translation of these principles into the organization and process structure for long-term gain and improvement. Lean principles concentrate on improved flow of materials and work process resources. Building a supply chain based on these principles brings the 21st century methodology to the supply chain in both operational efficiency and expectations for future design and performance levels through a continuous improvement structure. Transportation Transportation is the foundation of modern supply chain as it is an activity that all business entities require. Getting something or someone someplace is basic to fulfilling the customers' needs. Getting there at the requested time is the requirement for continual business. But accomplishing all this for the best cost may be the difference between a profitable sale and a loss for the business. On-time and at-cost delivery is a goal of all businesses. How to assure that transportation is executed as planned and that has availed the correct mode, carrier, route and load to meet those goals is key. As 'the rubber meets the road' is all about supply chain. However, it is sometimes difficult to assure continued performance in a fluid situation of changing rates, surcharges, new customer locations, and the ever-present rush shipments. Evaluating transportation can be a complex undertaking as there are many influencing factors that drive cost and delivery performance. OTI supply chain consultants can provide the help to evaluate your performance and to build the operational processes that make the desired stage more achievable for each shipment. Understanding quantitatively the drivers for cost and performance is necessary for building a low cost transportation process that gets closer to the goals. Quality transportation performance is more than merely getting it there. It is meeting the goals of delivery, and 'Total Cost to Serve' that are part of a determined business affordability model. Supply Chain Networks & Warehousing Warehouses are more than just a location to hold raw materials and products. They can be a requirement of a Just-in-Time (JIT) or short lead-time supply chain or merely a high cost stop off on the way to the customer or sometimes both. Warehouse needs are driven by customer service requirements, inventory quantities, geographic presence, and sometimes lack of space at manufacturing locations; Or merely a wide spot in the supply chain pipeline covering process inefficiencies! In all cases it is expensive. You not only pay for the floor space but also the inventory, extra handling, IT systems, extra personnel, insurance, safety concerns, and you expend an additional time period in your pathway to the customer. Warehouse Management Systems (WMS) If you must have a warehouse, know how to best utilize it at the least cost. Omni Tech can help you place your warehouses in the most effective locations, select a WMS if required, and show you how to optimize performance at the location. OTI is not a seller of software and can, therefore, provide you with an objective evaluation of your IT needs and available technical solutions. Supply Chain Warehouse Networks If you think you need warehouse space in your supply chain, you can confirm this expensive requirement. Once the network requirement is established, designing the most effective and efficient network should be the order of business. OTI will show you how to evaluate a new supply chain network through the combination of the Total Cost to Serve (TCS) methodology and Total Performance (TP) service objectives. Evaluating and implementing a lower cost network structure can reduce the direct costs and indirect costs associated with a warehouse network while still meeting the delivery demands of the customers. Do it right by design and simplify operation through the knowledge of how it should all work together. Duplicity of service is something that most businesses cannot afford. Planning & Inventory Management Inventory Whoever coined the phrase 'inventory as an investment' anyway? Most likely the originator of this deceptive phrase, was a person who needed significant inventory to cover the service needs in a company with a less than best in class manufacturing or supply chain planning process. The most recent data from the Department of Commerce (Jan. 1, 2005) shows 47 days of inventory in place for every month of sales. How do you perform against these averages? Are you presently above or below the U.S. averages in inventory? A closer look shows most manufacturing and assembly businesses require $1 of inventory for each $6 of sales. That is quite an investment or more correctly stated - a high cost. Even if you have achieved twice the average performance, significant dollars are involved. And if one considers the additional hidden costs associated with inventory, such as extra storage space, multiple material moves, obsolescence, taxes and insurance, lost alternate investments and others, the inventory 'investment' is very expensive. Lack of the right inventory can be even more damaging as it reduces the revenue stream. The balance of availability and cost is the key inventory performance equation. So how do you get balance in availability and affordability? Forecasts, targets, real-time information and good planning and scheduling are part of the answer. But again there are the less obvious impactors on inventory requirements. Consideration should also be given to these factors; lead-times for delivery, manufacturing capabilities and cycles, quality, sequencing, lot sizes, seasonal demands and price movements - either by you or competitors. Mapping out the total supply chain and identifying your inventory drivers will show you what is most important to establish the right inventory for you. This exercise will also help prioritize other items in the business that may need attention. Inventory can be considered the price you pay for not having the perfect business. But inventory is surely not an investment. Planning & Scheduling Processes Significant help is promised by planning and scheduling software to manage inventory and product availability. Has it led to reductions in inventory? Not according to most US data. Inventory levels remain the same when measured in days of supply or have risen slightly in the past 10 years. Why? Quite possibly the changes in modern business offering more products, JIT, longer supply chains from Asian suppliers or higher service expectations are the reasons. Do you want this extra cost if there is a better way? Planning & Scheduling Processes: continued OTI and many others subscribe to the concept that planning and scheduling is a process, not an organization or IT requirement. And that planning is always a multi-functional process as no organization plans in a vacuum unlinked to the individuals providing the information. The planning and scheduling processes require the correct information in a timely manner to enter a decision process that understands the supply chain capabilities, market demand and service requirements. There are indeed one-number planning processes, but inside these processes is built the understanding of the variability of the demand and the supply capability to meet it. It is this latter capability that makes these one number processes successful. Beginning with an effective planning process is step 1 to managing availability and cost. Building a formal Sales and Operations Planning Process (S&OP) fulfills step 1 requirements. Setting S&OP parameters of operation is critical to cost effective success. OTI can help you gain the insight into your business supply chain that is used in the S&OP process and will help to define the control parameters for your objectives and affordability model. Forecasting & Lean Scheduling To build a business plan and it's supporting operation plan, one begins with a demand forecast. A business plan will have multiple levels of future demand projected. This is part of the business process used to establishing goals and objectives over the next time-periods. But most operational availability plans require a single forecast derived from the business reality to which manufacturing or procurement establish their plans. Getting this operational forecast correct has been the 'holy grail' in a number of organizations. But there are significant limits to working with-in one-number demand limits. The math is easier and well suited to planning and ERP software, but the number is never correct. But how accurate must your forecast be and how far into the future must it cover? OTI believes that understanding forecast requirements is almost as important as the forecast itself. What level to forecast? SKU or aggregate groups. How long to forecast? Weeks, months or years. Forecast everything or critical items only? Knowing your supply capabilities will answer these questions. OTI will show you how all this comes together in order that you spend effort on improving only the required forecasts and not unneeded efforts that yield little added value. Forecasting & Lean Scheduling: continued; Are you ready for a 'Lean Scheduling' process? Pull scheduling at the lowest levels of manufacturing have been in practice for years by some of the supply chain cutting edge practioners. OTI can unveil what these methods are and help you determine how to place them into practice in your supply chain for inventory control. As with all Lean processes, once understood and implemented, it needs less effort and is less error prone. Leaving one with the thought of 'why didn't we think of this - it is so easy'. Understanding the Lean Concepts for inventory can build a supply chain of high response and low cost for the present and future and may also change other practices through out the business. Mergers & Acquisitions, Due Diligence Contemplating the expansion of business through acquisition or merger? In an M&A, most businesses will perform Due Diligence in market, product, manufacturing and financial areas. What about getting the product to the customer? Past history may not always lead to the same results in the future. How will the two organizations work together in the future? Supply chain is an area that presents both high potential for cost efficiencies and stumbling blocks for any integration of two entities. Supply chain should be subject to the same investigation prior to M&A as the other parts of the business. Due Diligence OTI associates have experience in M&A from the earliest phases of Due Diligence and integration planning through the final phases of implementation and cost recovery. Supply chain redesigns and integrations provide the corporation with the opportunity for significant efficiencies in transportation, procurement, inventory management, organization and work processes. Selecting the best practices and implementing them in the new organization can provide the fastest path to improved cost structure and profits. Or done incorrectly can result in a crash course on what not to do, when the integration fails and the simplest operations of shipping and billing become a nightmare. OTI recommends you start at the beginning and get the correct information on supply chain and the impact the combined supply chain will have when the initial decisions and valuations are being made. Include supply chain and procurement in the earliest Due Diligence stage. Merger Valuation and Critical Issues Identification Continue the M&A process by fully evaluating both companies' supply chains for capabilities and structural benefits. Determine the value of changes and integration that can be expected, from the organizational overlaps to the leveraged procurement potential. Make judgments and decisions based on quantitative value rather than gut feel. In this manner you will receive the most value for the effort in the shortest time. I Implementation & Startup Let OTI help speed the integration process that will otherwise be open only to a discovery method. As you progress through the new union, assure recovery of all possible excess costs in the timeliest manner. OTI can help you evaluate and examine supply chain cost and structure that can be synergized into a lower Total Cost to Serve structure and build the project plans that are required to implement. Evaluate what will go right for the integration and identify areas of concern tat must be or addressed prior to integration or monitored during the project. Supply chain is an important operational component of the business as it is customer facing and often the last thing the customer remembers of your entity. Procurement & Spend Analysis It is usually payroll and purchased goods that head the column of cost for most businesses. Yet procurement process remains one of the cloudier mysteries in some businesses. There are no formulas for assure success. Negotiate lower prices, leverage, reduce suppliers, improve supplier relationships, all have their share of headlines but it is the detail on how to manage these and predict a supply future that separates the merely good from the excellent. OTI has a number of successful procurement consultants that re called upon to build the high performance balanced procurement strategy and practices that will provide an excellent in the short and long-term. Spend Analysis Start at the basics or with the sophisticated procurement universe that you operate. With Spend Analysis, OTI can show you were the dollars are spent and identify and quantify the variability can you need to know in order to organize the approach to improvement in managing spending by concentrating your limited resources on the right items. Procurement Process & Metrics Building the procurement process and determining the performance metrics will assure you of a continuous measure of spending and provide you more than a one time evaluation of your spend. It is not always a simple $/item metric that leads to both short and long term control of purchases. Rather, quality, substitution, and availability can also be procurement metric components to be utilized. Cheapest is not always the best choice, moderately priced and available may be more value adding strategy for your business. Assuring your metrics drive decisions in the best direction is important. The procurement process and organization need not be complex but should be supportive to the business and the complexity of the its spend. Making the routine purchase automatic and possibly automated can provide the procurement individual time for expediting and developing negotiation skills. However, taking the next step to eliminate the need for expediting - through the understanding of the supply requirements and the selection of best supplier are part of the process. OTI will explore these concepts and others of Lean Procurement with you and help build a process that will yield a lower spend and high performance procurement team for your business.
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