Superior supply chain and enterprise management depends on clean and complete data. This impacts both the customer and vendor sides and directly impacts the overall value chain and ROI. Manufacturing Intelligence (MI) provides critical infrastructure for supply chain and enterprise management. Mark Gavoor discusses how high performing manufacturers incorporate MI and the elements of sustainable improvement to develop world-class supply chain systems including: • How to integrate continuous improvement into supply chain and ERP implementations; • Implementing Supply Chain Physics to meet and beat market needs and improve accountability across all functions in the enterprise; • Trimming program proliferation and focusing on the essential few for maximum results. Accountability across functions and continuous improvement across the enterprise depend upon properly implemented MI. On the receiving end supply chain management provides better value, better supplier management and reduced time to solutions. On the supplier side this means reduced overhead, faster time to issue resolution and higher customer satisfaction. By deploying MI, companies realize greater supply chain value and a rapid ROI. When a company adopts this strategy, operations and supply chain deliver the Right Product in the Right Place at the Right Time in the Right Quantities - which requires first that the Right Data is in the Right Place at the Right Time with Perfect Quality. Presenter: Mark Gavoor is the Managing Director of CR-Supply Chain Consulting, http://cr-supplychain.com which helps manufacturers and distributors reduce inventory, improve service, and generate cash by identifying and continually optimizing essential demand and supply variables to drive sustainable superior performance. Mr. Gavoor is an experienced supply chain and quality management executive and practitioner, and frequent speaker and writer on supply chain and quality management topics. He has been VP Supply Chain, Sanford NA (Rubbermaid); Director of Customer Service and Logistics, Colgate-Palmolive; and Manager, TQM at Rockwell Automotive. View Recording - http://bit.ly/ND4JUm

4. Topics
• Our view of the Supply Chain
• Supply Chain Physics
• Manufacturing Intelligence

5. What is the goal of the Supply Chain
• To have the Right Products
• In the Right Place
• At the Right Time
• In the Right Quantities
• With the Right Quality
• And to execute all that at the lowest possible costs

6. A view of the Supply Chain
• That has evolved over the
years
• Is the basis for how we look
at things
• How it shapes our modern
approach to supply chain
management

7. Customer Service Supply Chain
Forecasting
Mfg. Order
Purchasing Planning Places
Processing
Order
Manufacturing Order Taking
& Fulfillment
Inventory
Warehouse
Suppliers Allocation Trade
Manufacturing
Distribution

8.  Information Flow
Forecasting
Mfg Order
Purchasing Places
Planning Processing
Order
Manufacturing
Order Taking
& Fulfillment
Inventory
Warehouse
Suppliers Allocation Trade
Manufacturing Distribution
Material/Product flow 

9. There has been a change…
• From the days of the “Beer Game”
– Supply chain simulation game developed at MIT
– The flow of information lagged
– Causing havoc in the supply chain

10. Information Flow
• In the Beer Game
• The information flow
– Was slow
– All parts of the supply chain did not have “visibility”
• Inventory went out of control
– Too much product, everywhere
– Why? The right information was not in the right place at
the right time

11. There has been a change…
• To today, where information is
– Due to ERP systems
– Available virtually instantaneously

12. There has been a change…
• To today, where information is
– Due to ERP systems
– Available virtually instantaneously
– Hopefully accurate

13. Instant Information
Instantaneous Information Conduit
& Fulfillment
Order
Taking
Inventory Warehouse
Suppliers Allocation Trade
Distribution
Manufacturing
Material/Product flow 

14. Today
• Information is theoretically
• Available
– Everywhere: ERP systems all communicate
– To facilitate decisions
– To provide that “visibility”
• Life is Good

15. Today
• Information is theoretically
• Available
– Everywhere: ERP systems all communicate
– To facilitate decisions
– To provide that “visibility”
• Life is Good when the information is
– Clean = Accurate
– Up to date
– Complete

16. Today
• Bad data or information is as
instantaneously available
as
• Good data or information

17. Topics
• Our view of the Supply Chain
• Supply Chain Physics
• Manufacturing Intelligence

18. Part of the Supply Chain
• Is a physical world
• We buy things and have them delivered
• We may transform the things we buy into more
valuable things others will want to buy from us
• When our products are bought, we have to get
them to those that bought them

19. Part of the Supply Chain
• Is a physical world
• We buy things and have them delivered
• We may transform the things we buy into more
valuable things others will want to buy from us
• When our products are bought, we have to get them to
those that bought them
• Real objects, Liquids, Solids, & Gases, are
manipulated & moved in Space & Time

20. Objects moving in Space & Time
• That sounds like Physics
• Which means there are
limits to what can and
cannot be done in the
physical part of the supply
chain
• There are laws to be
followed

21. The Three Laws of SC Physics
1. Law of Interdependency
2. Law of Constraints
3. Law of Information

22. The Three Laws of SC Physics
1. Law of Interdependency
– Inventory, Service, Quality, Costs are
interdependent
– In business improvement, silo-ed functional
improvement can only take you so far. All further
improvements require cross-functional efforts.
2. Law of Constraints
3. Law of Information

23. The Three Laws of SC Physics
1. Law of Interdependency
2. Law of Constraints
– How much of any item can be produced in a finite
amount of time?
– How far, fast, & in what quantities can goods be
shipped from Point A to Point B?
– Yes … very related to the Theory of Constraints
3. Law of Information

24. The Three Laws of SC Physics
1. Law of Interdependency
2. Law of Constraints
3. Law of Information
– Information moves at the speed of light, er… the internet
– Independent of accuracy of the information
– Data and information influences
Lead Times
Inventory
Customer Service
Reaction to Market Demands

25. Supply Chain Whack-a-Mole
• Quality
• Cost
• Service
• Inventory
• Optimize all to a point
• Then trade-off
optimization
http://www.mmt-inst.com/End_of_management_whack_a_mole.html
• Need structural change
to optimize all further

26. When we Violate the Laws
Not Accounting for Realities of Compromise &
Supply Chain Physics Cause Trade-offs
in Performance
• Manufacturing Lead Times
• Transit Times • Inventory
• Production rates • Service
• Production capacities • Quality
• Warehouse utilization • Cost
• Transportation equipment
availability
• Demand Volatility

27. It is a complex Multi-Criteria Problem
Optimize all i Cost i, Inventory i, Service i, Quality i
Subject to:
Manufacturing Lead Times > MLTij
Transit Times > TTijk
Production rates < PRij
Production capacities < PCij
Warehouse utilization < Wik
Transportation equipment availability < Eijk
Demand Volatility = σi
i = SKU number
j = Plant or Supplier (how many plants/suppliers?)
k = DC number

28. Why Supply Chain Physics?
• Supply Chain Physics is a concept based on
science, engineering, and business
• But it is a concept…
We cannot, yet, articulate and solve the multi-
criteria optimization problem
• It is language and set of principles to foster
– Accountabilities across functions
– Improvement across the enterprise

29. The Law of Information
• Is fundamental to this concept
• It is impossible to have the
Right Products in the Right Place at the Right Time
in the Right Quantities
• Without having the Right Data in the Right Place at
the Right Time with Perfect Quality.

30. Topics
• Our view of the Supply Chain
• Supply Chain Physics
• Manufacturing Intelligence

31. We have data!
• We have an ERP!
• We have mountains of data!

32. We have data!
• We have an ERP!
• We have mountains of data!
• Do you have information?
– In the right format, in the right place, at the right time,
with perfect quality
– To enable business decisions to have the right Products
in the right place at the right time in the right quantities

33. Let’s consider our ERPs
• They drive our businesses
• They are socio-technical systems
– People
– Technology
– Business processes
– Working in harmony to drive transactions
• They are business processes

34. Three Things You can do to a Business
Process
• Manage/maintain current level of performance
• Marginal/incremental improvement
• Dramatic Improvement

35. There is a 4th Thing...
60
Neglect the process &
watch the performance 50
level gradually decay over 40
time
30
20
10
0

36. Why are ERP Re-engineered Processes Different?
• The transaction processes in an ERP are indeed
PROCESSES
• The same four things can happen to these
business processes
• The processes were re-engineered, substantially
modified, for go-live
• Without a well conceived, implemented and
managed Continuous Improvement Program…

37. This will happen
60
The processes are
neglected and the 50
performance level will 40
decay over time.
30
20
10
0

38. What Can Happen to Deteriorate ERP Performance
after Go-Live
• Socio-Tech Gap
– The Human Process & the ERP Programmed Process
are not aligned
– Re-engineering only 60% complete at Go-Live
(Gavoor’s Guesstimate)
• People not being Fully Aligned do not trust the
system

39. People not being Fully Aligned do not Trust the
System
1. They believe, “This damned thing doesn’t work!”
2. They often revert to their old spreadsheets or
create spreadsheets that mimic their comfortable
legacy world
3. They are not motivated to do data
management… an overlooked and tedious
process in the best of circumstances
4. “This damned thing doesn’t work!” becomes a
self-fulfilling prophecy.

40. What Can Happen to Deteriorate ERP Performance
after Go-Live
• Socio-Tech Gap
– The Human Process & the ERP Programmed Process
are not aligned
– Re-engineering only 60% complete at Go-Live
• People not Being Fully Aligned do not trust the
system
• Key Users: The best trained & most adept users
– Move on: Promoted, transferred, leave the company
– Faster than one would have guessed or hoped or
wished

41. Management Misconceptions about ERPs
• Myth: It is over at go-live
Truth: It is just the beginning
• Myth: It is an IT project
Truth: It must be a business led project to succeed
• Myth: Data Management is just about data
• Truth 1: Data Management is a key maybe strategic
business process all on its own
• Truth 2: Maintenance is way more complicated and
costly than imagined

42. Manufacturing Intelligence (MI)
• Supply Chain must be part of corporate Data
Management Process
• If there isn’t, lead the charge to create one.
• Clean, accurate data is not enough…
• The data must become information you can use

43. MI: Own it and Manage it
• Have capable MI system in place
• Enabling technology for the process
management/improvement systems.
• Must include:
– Direct access to all data sources
– Data aggregation
– Analytics
– Role specific reporting

44. MI: Own it and Manage it
• Have capable MI system in place
• Enabling technology for the process
management/improvement systems.
• Must include:
– Direct access to all data sources
– Data aggregation
– Analytics
– Role specific reporting
• MI must have Continuous Improvement embedded
in it

45. The Alphabet Soup Problem
• Do you have too many
improvement initiatives?
• 6σ,TPM, JIT, Lean, Change
Management, SPC, Lean 6σ,
Kaizen, Kaizen Blitz, Workouts
• Add on top of this an ERP
implementation or upgrade
• People do not know what they
are doing, when, or why

46. Improvement Initiatives
• Put under or marry it to MI
• Pick two
– Lean 6 sigma
– Technology/Process Re-engineering
(covers all the ERP & IT projects)

47. Have a running list of projects
• Tactical – this never goes away
• Strategic – supporting your supply chain strategic
plan
• Lead MI and drive the projects
• Do not burden the organization with too many
projects

48. MI: Should Enable Sustainable
Improvements

49. Summary
• Showed the critical importance of data and
information in our modern supply chain
– Flow of materials and goods
– Flow of information
– Laws of Supply Chain Physics.
• The criticality of not just data management but
Manufacturing Intelligence
– A key business process
– Tied to improvement efforts
– Tied to ERP effectiveness

50. Summary
• Accountability across functions and continuous
improvement across the enterprise requires a
properly implemented MI.
• Customers will see you as more agile and
providing higher levels of service.
• You will see reduced overhead, smoother running
processes, less firefighting, and higher customer
satisfaction.
• In total, this delivers greater supply chain value and
a faster ROI.

51. Summary – Getting it ALL Right
• When we do this, our operations and supply chain
have
• Right Data is in the Right Place at the Right Time
with Perfect Quality which facilitates having
• The Right Products in the Right Place at the Right
Time in the Right Quantities