19 CONTRACT MANUFACTURING: THE VALUE OF A NETWORK BASED APPROACH | 2024
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Recommendations
As a business leader, ask the right questions. Supplier reliability and the bi-directional flow of data at the speed of business improve agility and decrease the issues with having the wrong inventory or aligning transportation inbound logistics with manufacturing scheduling. Armed with the knowledge in this report, take the next steps. Here we share some recommendations: • Invest in the Use of Channel Data. Most companies have channel data that they do not use. Redefine planning architectures to focus on channel flow. (In the process, minimize the use of synchronized channel data due to two-to-three-week data latency.) Connect insights from the flow to the network. • Reduce Data Latency in Networks. Automate networks with bi-directional multi-tier flow. Wean your organization off the use of spreadsheets and email. Educate the organization on the issues of demand, data, and process data latency. Map and reduce black holes. • Understand and Reduce Supply Variability in Planning Through Network Investments. Build a supply planning master data layer to capture supply variability of inbound receipts, conversion rates, yield, run rates, and other variables. Use this data as input to safety stock calculations, procurement decisions, and production planning. • Automation Requires the Understanding of a Messy Market. Today, there is no network capable of connecting sourcing, logistics, manufacturing, and distribution in the market. Make interoperability a priority and push the network providers to drive information across networks. In the short term,
automate the flows of contract manufacturers to brand owners through solutions like Nulogy. • The Devil Is In The Details. Gain insights into how quickly data moves through the network and the inherent latency of data conversion. A Value-Added Network operates on batch jobs, and as a result, the data is not as current as a Supply Chain Operating Network. • Invest in Multi-Tier Process Capabilities. In the investment of network automation, the ERP architecture is largely irrelevant. The goal is to connect trading partners in meaningful ways to unleash higher levels of value. Focus on interoperability between systems using NoSQL, Software Robots, and Graph- based Insights. • Build Talent. Organizational talent to build networks is scattered in the organization. The baby boomers who built EDI networks are retiring, and the digital transformational teams lack an understanding of what it takes. Form cross-functional teams and focus on building value. • Use Standards. Understand the standards available and maximize the use of GS1 and ISO8000 standards. With the increase in contactless shopping, increased security and piracy, and the shift to last-mile delivery, standards matter more than ever, but they are not a panacea. • Leverage Industry Clout. Form a guiding coalition with other trading companies. Stop the slide. Social responsibility and supplier reliability in uncertain times require it. The industry will only move forward if business leaders take action..
Automating Brand Owner and Contract Manufacturing trading partner flows is an opportunity to eliminate 1-2 days from cycles and improve outcomes. With only 8% of flow moving bi-directionally through a Supply Chain Operating Network, it is an opportunity for all to improve the time to know, reduce cost and inventory and improve customer service. Conclusion
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