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CONTRACT MANUFACTURING: THE VALUE OF A NETWORK BASED APPROACH | 2024
Without network automation, getting shipment and quality information takes 1.5 days, insights on materials on hand and manufacturing schedule changes take longer (two days on average). Getting information for perpetual inventory changes is even longer (2.5 days on average). We show gaps in information in these network black holes in Figure 8. When brand owners invest in a supply chain operating network to manage contract manufacturing, they get the critical data on these nine flows 85% faster. The availability of information faster to make decisions quicker and more accurately through a trading partner network also reduces 1.5 days of inventory on average. In addition, the network serves as a system of record to ensure that trading partners across multiple tiers are working on the same information.
Without a network, the time to get the data is a supply chain blackhole. The longer the time, the greater the impact on customer service, transportation costs, working capital, and manufacturing decisions. Network automation also helps to align multiple stakeholders within the brand owner’s organization. This is critical in managing new product launches and facilitating discussions between the new product launch team, marketing, and distribution/customer service. This lack of alignment makes it difficult to decide on the timing and volume of second production runs after the product is launched into the channel.
Figure 8. Frequency of Data Exchange without the Investment in Network Automation
Shipment Information Quality Control Status Yield Materials on Hand Manufacturing Schedule Changes Perpetual Inventory Signals Forecast Purchase Orders Available Capacity
22%
43%
16%
14%
5%
16%
38%
27%
3%
16%
11%
22%
27%
11%
30%
22%
24%
32%
5%
16%
14%
22%
30%
22%
14%
3%
38%
16%
16%
27%
22%
11%
11%
57%
22%
24%
22%
5%
27%
5%
16%
16%
5%
57%
Multiple Times / Day
Within 2 Days
Greater than 3 Days
Daily
Next Day
Source: Supply Chain Insights 2024 Q24. How long does it take you to get information?
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