By Christian Perry
Today?smanufacturers bear little resemblance to their nuts-and-bolts predecessors fromthe previous century. Managers overseeing assembly lines in search ofinefficiencies and security lapses have been replaced by IT-driven innovationsdesigned to streamline processes in lightning-quick fashion.
Theway manufacturers apply these innovations rests heavily on the uniquechallenges they face with their products and in their industries. Baseline spoke with severalmanufacturers to get a closer look at some successful mergers of manufacturingand IT.
WhenHurricane Irene collided with the Northeast U.S. coast in August 2011, consumerproduct companies that supplied retailers in the region scrambled to understandthe storm?s impact on their supply forecasts for the coming week. Forecaststhat had consumers buying their typical weekly supply of diapers and tissues,for instance, proved useless when storm-struck residents loaded up on batteriesand bottled water.
However,Kimberly-Clark?a producer of personal and health-care consumer products?had an ace up its sleevein the form of demand-sensing technology that it had recently adopted toimprove supply forecast accuracy.
?Byaccessing consumer data daily, we could tell when retailers shifted back from emergencysupplies to restock a more normal product mix,? says Jared Hanson, demandsenior specialist for Kimberly-Clark. ?As a result, our response to the stormwas quicker and less expensive because our forecast was based on actualconsumer and retailer behavior, rather than on historical sales that becameirrelevant the moment Hurricane Irene threatened to sweep the Northeast.?
Withshifting retailer dynamics already presenting challenges to maintaining servicelevels and containing costs, the Irving, Texas-based company made the move to ademand-driven supply chain strategy in 2007. To achieve a more responsivesupply chain, Kimberly-Clark defined a set of initiatives that included improvedforecast visibility, lean manufacturing and segmentation. Improvedforecast accuracy, in particular, served as a key starting point for themanufacturer.
Largeretailers such as Walmart were making POS (point of sale) and customer dataavailable, and Kimberly-Clark saw a similar opportunity to operationalize datain a structured way to respond to changes in consumer demand and gain acompetitive advantage, Hanson says. Not only did the size and scope of thecompany?s data increasingly require a solution that could effectively handlereal-time response, but the market downturn in 2008 further ramped up both theneed for such a transformation and an improved cash flow.
?Asone of the pillars of our strategy, we implemented Multi-Enterprise DemandSensing from Terra Technology to gain visibility into the demand our retailersare facing and to better protect their orders,? Hanson explains. ?The solutionuses transactional data from within our operations, along with downstream data,such as POS, to produce daily forecasts that are published directly to ourplanning systems.?
Byimproving accuracy in near-term forecasts, Kimberly-Clark can make betterdecisions about which materials to order, which products to build and where toship them. Data is now operationalized through demand sensing to create aresponsible supply chain that forges a direct connection from the consumer tothe 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 useaccurate daily forecasts to better serve customers and capture new revenueopportunities.
Accordingto Hanson, Kimberly-Clark views supply chain evolution not as an endpoint, butas a continuous journey to meet consumer needs more effectively. Forecastingcan be tough sledding, especially in volatile times, due to the dynamic natureand scale of the consumer-products sector. Performance is undoubtedly improvedthrough the addition of downstream data, but there are challenges around theanalysis and application of mountains of data to manufacturing systems.
?IT?srole has never been more important,? Hanson says. ?It sits at the heart of thistransformation with structured solutions that enable the change to aresponsive, demand-driven supply chain that will ensure we stay competitive.?