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Stay Lean to Keep Sky-High Prices from Derailing Supply Chains

Stratospheric prices for essential commodities like gasoline, diesel fuel, and raw materials are forcing manufacturers of everything from baby formula to bulldozers to root out waste in their inventories and supply chains. The most common strategies: Pare down already bare-boned stock and use analytical tools more effectively to drive the most accurate demand forecasts possible.

"The rope is tightening in terms of how price increases for commodities are impacting companies," says Stephen Slade, Oracle's senior director of applications and industries marketing. "As a result, managers are taking a new look at how they do business and how technology can help them through the Lean journey in these difficult times.

"Many companies are increasing their reliance on broader Lean practices to better optimize their supply, demand, and design chains," Slade adds. "By collecting and making real-time information more readily available for decision-making, companies are becoming better able to predict demand and adapt to changing business conditions such as volatile commodities prices."

To gain these insights, managers are expanding their use of supply chain, inventory management, scheduling, and related technologies. According to a recent forecast by market analyst AMR Research, supply chain software spending could grow about 44 percent to $3.9 billion by 2011.

The new Release 12.1 of the Oracle Advanced Planning and Scheduling Feature Pack provides four modules for advanced supply chain planning. The Manufacturing Operations Center (MOC) manages real-time data to closely align shop floor and enterprise resource planning (ERP) systems. The Advanced Planning Command Center collects and displays information from across extended supply chains using analytical dashboards and related tools. The Demand Signal Repository captures demand data from stores, retail distribution centers, and other data sources to help build accurate demand forecasts. The Service Parts Planning (SPP) tool helps companies decrease spare parts inventories.

"With the right strategies and supply chain technologies in place, companies can achieve operational excellence, accelerate innovation, and better manage risk to stay in the game," Slade says.

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