Tech Innovation Fuels ManufacturingBy Christian Perry Print
Differing requirements for efficiency, knowledge and security spawn a variety of technology approaches from these manufacturers.
By Christian Perry
Today’s manufacturers bear little resemblance to their nuts-and-bolts predecessors from the previous century. Managers overseeing assembly lines in search of inefficiencies and security lapses have been replaced by IT-driven innovations designed to streamline processes in lightning-quick fashion.
The way manufacturers apply these innovations rests heavily on the unique challenges they face with their products and in their industries. Baseline spoke with several manufacturers to get a closer look at some successful mergers of manufacturing and IT.
Weathering the Changes
When Hurricane Irene collided with the Northeast U.S. coast in August 2011, consumer product companies that supplied retailers in the region scrambled to understand the storm’s impact on their supply forecasts for the coming week. Forecasts that had consumers buying their typical weekly supply of diapers and tissues, for instance, proved useless when storm-struck residents loaded up on batteries and bottled water.
However, Kimberly-Clark—a producer of personal and health-care consumer products—had an ace up its sleeve in the form of demand-sensing technology that it had recently adopted to improve supply forecast accuracy.
“By accessing consumer data daily, we could tell when retailers shifted back from emergency supplies to restock a more normal product mix,” says Jared Hanson, demand senior specialist for Kimberly-Clark. “As a result, our response to the storm was quicker and less expensive because our forecast was based on actual consumer and retailer behavior, rather than on historical sales that became irrelevant the moment Hurricane Irene threatened to sweep the Northeast.”
With shifting retailer dynamics already presenting challenges to maintaining service levels and containing costs, the Irving, Texas-based company made the move to a demand-driven supply chain strategy in 2007. To achieve a more responsive supply chain, Kimberly-Clark defined a set of initiatives that included improved forecast visibility, lean manufacturing and segmentation. Improved forecast accuracy, in particular, served as a key starting point for the manufacturer.
Large retailers such as Walmart were making POS (point of sale) and customer data available, and Kimberly-Clark saw a similar opportunity to operationalize data in a structured way to respond to changes in consumer demand and gain a competitive advantage, Hanson says. Not only did the size and scope of the company’s data increasingly require a solution that could effectively handle real-time response, but the market downturn in 2008 further ramped up both the need for such a transformation and an improved cash flow.
“As one of the pillars of our strategy, we implemented Multi-Enterprise Demand Sensing from Terra Technology to gain visibility into the demand our retailers are facing and to better protect their orders,” Hanson explains. “The solution uses transactional data from within our operations, along with downstream data, such as POS, to produce daily forecasts that are published directly to our planning systems.”
By improving accuracy in near-term forecasts, Kimberly-Clark can make better decisions about which materials to order, which products to build and where to ship them. Data is now operationalized through demand sensing to create a responsible supply chain that forges a direct connection from the consumer to the supply base—all the way back to raw materials, such as pulp, Hanson says. No longer limited by only weekly or monthly forecasts, the company can now use accurate daily forecasts to better serve customers and capture new revenue opportunities.
According to Hanson, Kimberly-Clark views supply chain evolution not as an endpoint, but as a continuous journey to meet consumer needs more effectively. Forecasting can be tough sledding, especially in volatile times, due to the dynamic nature and scale of the consumer-products sector. Performance is undoubtedly improved through the addition of downstream data, but there are challenges around the analysis and application of mountains of data to manufacturing systems.
“IT’s role has never been more important,” Hanson says. “It sits at the heart of this transformation with structured solutions that enable the change to a responsive, demand-driven supply chain that will ensure we stay competitive.”
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