An urgent matter of supply chain preference

Logistics and Supply Chain News Uncategorized

Karl Heinrich Lauri, managing team member at MRPeasy says implementing an ERP/MRP

system should be high on the supply chain priorities list of smaller manufacturers – that is,

if they wish to become ‘preferred suppliers’.

COVID-19 has accentuated problems and accelerated change in a global supply chain

environment already under stress. Supply disruptions are no longer a once in a generation

act of god; they have become routine. Demand is increasingly fragmented and

unpredictable. The risks of Just in Time begin to outweigh the benefits; large, long term

commitments to low cost suppliers half a world away no longer look so attractive.

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In theory, the uncertainty and complexity rule presents an opportunity for smaller

manufacturers and suppliers who are closer to market and that are agile and responsive

enough to change in a way that challenges larger organisations. But complexity is costly.

A number of countermeasures can be taken along the supply chain. Retailers may

rationalise the variety of merchandise they stock. OEMs can reduce the degree of

customisation they offer.

These measures could see the niches for products and services offered by smaller firms disappear as companies limit complexity, uncertainty and cost by reducing their supplier base. With major procurements now having to be constantly monitored and actively managed, companies don’t feel they have the bandwidth to interact with the myriad small suppliers.

SMEs risk being squeezed out of the eco-system. There is a similar dynamic upstream in the supply chain – suppliers with their hands full dealing with major accounts, changing their requirements on a daily basis, are less eager to service small, intermittent orders, or to prioritise smaller customers in times of shortage.

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Small manufacturers have to make themselves ‘preferred suppliers’ or indeed, ‘preferred

customers’. This goes beyond technical and quality standards, competitive pricing, service

levels and financial checks. It is about making the SME as easy and hassle-free to trade with

as the larger companies – if not, more so. ‘Seamless’ is the word: the customer’s procurement, operations and finance people should be essentially unaware of the boundary

between their own company and their SME supplier.

Recent developments in business systems automation, delivered through SaaS, mean that

even SME suppliers can come close to this supply chain nirvana. An appropriate MRP system

is at the core of delivering such a system.

Now, the small manufacturer may reasonably say that they don’t really need sophisticated

manufacturing resource planning – the issues are well understood and can be

accommodated on a couple of simple spreadsheets. But look at this from the corporate

customers’ point of view – what do they want, expect, and increasingly demand? In three

words, simplicity, visibility and confidence.

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Can the SME provide, very quickly, a quotation that accurately reflects real production costs,

and offer guaranteed, achievable delivery times? Can the SME dynamically reschedule

production and delivery as customers’ requirements vary? How robust and well documented

is batch and serial number tracing? Can the SME raise orders on its own suppliers quickly

and easily? How timely and effective is the commissioning of carrier and courier

requirements? How easy is it to generate dispatch advices and delivery notes? How accurate

are the SME’s invoices?

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Crucially, how much of this activity can be done electronically and automatically, machine to

machine, without phone calls, emails and costly, time-consuming and error-prone rekeying

of data? Is the firm set up for e-commerce? E-invoicing, at the very least, is often now an

entry-level requirement for trading with major corporates, and indeed with the public

sector. Corporates expect that if with one key-stroke they send a revised order/delivery

schedule, everything else will happen from their point of view, automatically.

While commercial customers expect to purchase through portals and websites, many small

manufacturers are also building Direct to Consumer e-commerce channels, partly due to the

Covid-19 lockdown.

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Take small brewers for example. The Covid-19 lockdown has been devastating for the

industry. While the big brands were able to supply grocery chains in volume, smaller

independent brewers who sold mainly through pubs, bars and restaurants have been hit

hard and need to adapt. According to a survey of small brewers across the UK, conducted in

April 2020 by the Society of Independent Brewers (SIBA), 70% of breweries are offering new

delivery or takeaway services in order to help supply their local communities with

independent craft beer. 61% of those breweries now offer free delivery to local

communities. The survey also found a 55% increase in online orders.

As with other small manufacturers, this raises the need for, amongst other things, dynamic

real-time rescheduling, and public visibility of stocks and delivery times.

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Customers, no matter where they are in the supply chain, demand visibility and confidence.

They need the certainty that the goods are in stock, or an order has completed a key

manufacturing process, or that it will arrive in the booked docking slot. They want the

assurance that, if problems do arise, the SME has the systems to pick them up, act on them,

and if necessary advise the customer. They may require real time access to and visibility of

progress reports.

This can’t be achieved sensibly by phone calls, emails and huddling over a brief-case full of

spreadsheets, even when that is allowed again. It needs systems and, although not all these

applications are core MRP functions, MRP provides the backbone from which they all


Building an MRP backbone is no longer a long term, big ticket, consultant-intensive project.

Systems from MRPeasy are highly graphical and intuitive, easy to use, with low training

requirements. They can be readily tailored to the business practices of the individual firm –

usually by the users themselves. As a Cloud-based software offering, initial investment is low

and on-costs are determined by the features used and the level of usage, which is highly

scalable, without long-term contract commitment. Updates and patches can be installed

automatically from the Cloud, as can new features developed from the shared experience of

the wider user community.

#mrpeasy #software

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