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Rapid Response to Change Drives Breakthroughs in Operations Performance

Can Your Business Afford its Current Response Strategy?

For today's brand owners and manufacturers, the ability to quickly and effectively respond to changing customer demands and global supply conditions is crucial. How a company responds to real world volatilities is where profits can be made or lost. Increasingly, success depends not only on how fast manufacturers can act, but how fast they can react—and the effectiveness of the actions they take. In fact, effective response drives much of corporate performance.

Most companies spend vast amounts of time and money upgrading processes, enhancing quality, improving forecasting and planning systems. Indeed, enterprise resource planning (ERP) and supply chain planning (SCP) systems are essential to improve front- and back-end efficiency and help businesses run like clockwork. Valuable as these systems are, however, they were not designed to resolve one of the most crucial needs brand owners and manufacturers face when their business doesn't run like clockwork: the ability to reduce unpleasant last-minute surprises by rapidly and effectively responding to day-to-day changes in supply, demand and product.

Typically, the response strategy manufacturers use is highly inefficient—preventing real-time collaboration among all key participants and making it impossible to predict the financial and logistical impact of responses before they're made. To compensate for this, many companies rely on a wide range of expensive "just-in-case" practices, such as carrying extra inventory or "safety stock" to act as a response buffer, adding lead time to pad schedules, or maintaining excess capacity to meet potential surges in demand. Expediting, overtime, scrap, and rework drive operating costs up and profits down. Last-minute supplier changes, forfeited volume discounts, and the need to procure critical materials at premium prices greatly increase supply expenses as well. And, the inability to respond to customer demands can hit the top-line through customer erosion and the inability to win new business.

At the same time, growing marketplace pressures make effective change response more important—and more difficult—than ever. Brand owners and manufacturers are being pressed from every side to dramatically expedite operations and cut costs even as their supply chains become extremely complex. Overseas outsourcing reduces immediate control over business operations, making businesses more vulnerable to delivery problems, quality issues, missed deadlines, inventory liability issues, and similar risks. Mergers and acquisitions require rapid integration of disparate front- and back-end systems to make new investments profitable. More demanding and fickle customers increasingly expect brand owners and manufacturers to accommodate last-minute changes rapidly and easily—or risk losing their business to competitors who can.

The expense of inefficiency in responsiveness is clearly enormous, creating a virtual sinkhole of corporate margins and eroding customer loyalty. And as the pressure to optimize efficiency and achieve profitable growth intensifies, fewer and fewer manufacturers can afford the steady hemorrhage of time and money required to maintain the "just-in-case" approach.

The Need for a Breakthrough

With all the intended benefits of supply chain outsourcing, brand owners are significantly challenged by the lack of supply chain visibility and the inability to coordinate respond to constant changes. This results from the fact that most essential supply chain information now resides at 3rd parties. Yet, brand owners remain directly accountable for customer satisfaction, delivery performance, and their own financial results and compliance requirements.

Brand owners have become "virtual companies" with supply networks comprising contract manufacturers (work-in-progress, raw materials, providing a finished goods buffer, consigned materials, etc.), suppliers (raw materials), 3rd party logistics providers (maintaining a finished goods buffer and providing efficient logistics) and, ultimately, the customer. While your business has become virtual, you are still accountable to customers and shareholders despite no longer having direct control.

Traditional solutions don't support extended supply networks

Superior operating performance in this environment requires synchronization across several tiers of the extended value chain. Systems originally deployed for managing internal operations were not designed for this new reality. Effective multi-party collaboration, rapid response to frequent change and heterogeneous systems integration among the supply chain partners are keys to achieving the required results.

In an attempt to work more strategically and avoid redundancy, many companies are implementing standardization initiatives that limit the number of vendors they use to improve overall business efficiency. While solutions provided by Cognos, SAP, Oracle, Business Objects, and others provide significant value, they don't support collaborative and rapid decision-making and they tend to rely on after-the-fact information, which is often too late to drive effective response to unexpected change. Although manufacturers need all the help they can get to better meet the challenges of today's fiercely competitive global economy, the frontlines of manufacturing operations remain one of the last frontiers for performance management solutions.

The intense time-crunch pressure of manufacturing operations requires teams of management and specialists across the department, the enterprise and beyond to respond rapidly to changing real-world conditions. These teams need a collaborative solution that will allow them to create and evaluate many alternative options in the context of continuously changing information, and then drive actions that are best aligned to corporate objectives.

Key Requirements for Transforming Operations Performance

Responding rapidly to change in today's complex, multi-enterprise supply chains frequently requires the organization to make tradeoffs and compromises to resolve problems. The best people to spot and act on these issues in a timely fashion are the one's directly involved and intimately familiar with the situation at hand. To optimize the response to change, tools are needed that give users throughout the organization and supply chain three key capabilities:

1. global visibility to actionable data
2. the ability to rapidly and collaboratively assess many "what-if" alternatives, and
3. a comprehensive scoring mechanism that accurately predicts, impacts and weighs alternatives against company goals and customer requirements so the best option can be identified

Global Visibility

Global access to current, live data from multiple, disparate ERP, SCP, and legacy systems across internal and external supply chains allows work teams to accurately align all supply and demand considerations. The ability to instantly and continuously capture new changes and agreements as they are made gives all participants a single view of the truth, empowering individuals across the organization to make intelligent, reality-based decisions and respond at the moment.

Collaborative "What-If" Assessment of Multiple Alternatives

A web-based client interface that enables key players and suppliers both inside and outside the enterprise to rapidly propose, detail, and share potential results of myriad action alternatives facilitates the true collaboration crucial to identifying the best options.

Comprehensive Scoring Mechanism

By enabling groups to immediately evaluate multiple scenarios in terms of how well they meet specific metrics and objectives, the scoring mechanism ensures that decisions are aligned with corporate goals and profit targets, rather than being based on personal opinions or guesswork—allowing companies to understand the impact of their choices before they make them.

The Kinaxis™ Answer: Respond With Speed and Confidence

Manufacturers need to arm their staff with tools that complement their existing ERP infrastructure, but deliver an effective response capability to drive breakthroughs in operations performance. The way businesses respond to volatile demand, supply and other key manufacturing factors can be the make or break point between profit and loss and between winning or losing a deal or even a customer.

Kinaxis RapidResponse™ provides the answer brand owners and manufacturers have been waiting for. Where real world volatility in demand, supply, capacity and product occur, Kinaxis RapidResponse goes beyond traditionally historic scorecarding and performance metrics. By providing access to real-time information and facilitating multi-enterprise collaboration, brand owners and manufacturers are able to reach optimal decisions that align with corporate objectives and rapidly drive effective action.

By automating and expediting the decision-making process and revealing the impact of proposed actions before they're made, RapidResponse allows businesses to rapidly analyze complex manufacturing operations problems across the extended supply chain and make effective decisions in real time – eliminating the chaos and inefficiency inherent in the "people, paper, tools" scramble approach and replacing expensive "just-in-case" strategies with a streamlined response capability. Exceptional performance management drives instant improvements in key business processes and facilitates the successful execution of both day-to-day operational challenges and strategic initiatives such as outsourcing and lean manufacturing.

Instead of limiting access to a few high-level "power users," RapidResponse empowers people up and down the extended supply chain with the tools they need to effectively plan, monitor and respond to change. External suppliers can actively be engaged in the decision-making process, allowing them to adjust rapidly to new action plans. Virtually overnight, brand owners and manufacturers can transform the way they deal with volatility, enabling them to meet corporate objectives, realize remarkable cost savings, improve customer satisfaction, increase profit margins, and gain significant competitive advantage.

Quick set-up capabilities and proven speed to value help guarantee rapid ROI. And exceptional ease-of-use ensures that RapidResponse can be fully utilized at all levels throughout the organization.

The unique RapidResponse architecture connects directly to both front- and back-end systems, supporting standardization initiatives by leveraging existing infrastructure and providing a continuous flow of information across multiple sites to give businesses comprehensive, real-time insight and visibility.

RapidResponse represents a generation leap in performance management allowing brand owners and manufacturers to develop a core competency in integrated planning, monitoring and response, enabling them to "manage at the moment™".

Among existing software tools, only RapidResponse delivers the resources and information critical to enabling brand owners and manufacturers to drive collaborate response and manufacturing action.

Personal Alerts
Personal Alerts proactively drive stakeholders to focus on urgent exceptions. Individuals can schedule regular and contingency monitoring of supply and demand conditions pertinent to their role and based on the threshold and conditions they choose. They receive notification by email, web page, flat file and other mediums and can centrally manage all alerts with the integrated Message Center.

Active Spreadsheets
Active Spreadsheets provides accurate, detailed information in an easy-to-use spreadsheet interface that is automatically populated with live data feeds from front- and back-end systems across multiple systems and sites. AlwaysOn Analytics™ instantly completes computations that would take ERP or SCP systems hours or days to produce, facilitating fast impact analysis of supply and demand changes.

Resolution Engine
Resolution Engine delivers proactive management capabilities that empower everyone throughout the enterprise and across the extended supply chain to drive effective resolution to continually changing situations. Iterative simulation capabilities enable a wide range of internal and external participants to propose, detail and share the impacts of myriad potential "what-if" alternatives that accurately simulate their MRP process in just minutes, instead of the days or weeks formerly required.

Live Scorecard
Live Scorecard enables rapid examination and shared impact analysis of all proposed action alternatives, mitigating the risk of last-minute surprises and driving optimal decisions in real time. Group members can rapidly score multiple scenarios to rank the consequences of specific decisions on a wide range of parameters—including inventory liability, customer satisfaction, lead times, quality measures, on-time delivery, cost of goods, and more—to support alignment with corporate goals and mitigate surprises.

RapidResponse in the Real World

Jabil Circuit Improves Responsiveness and Efficiency with RapidResponse

The need to rapidly and efficiently respond to constant changes in supply, demand, capacity, and product—combined with an unswerving commitment to deliver best-in-class customer service—was the catalyst behind Jabil Circuit's decision to adopt RapidResponse. With steady growth in its more than 46 facilities worldwide along with multiple ERP, SCP, and legacy systems and an increasingly complex supply chain, Jabil found that its existing front- and back-end infrastructure wasn't equipped to quickly and intelligently handle last-minute customer and supplier changes.

"We have global SAP along with various other ERP systems that we integrate as much as possible, and certainly they're crucial in executing transactions and helping our business run smoothly," says Ron Stappert, manufacturing operations manager of Jabil's Guadalajara facility. "But even with those systems rolled up, our ability to analyze information—especially from plant to plant—was limited." Greater speed was also imperative. Jabil's decision-making process depended on cumbersome spreadsheets and emails, often preventing wise decisions on the fly. Though the company had a welldeveloped SCP process, the plans were only good until the next change arose— and tweaking them often took too much time and effort to be cost-effective.

As the pace of business increased, the need for a better process was clear. Jabil found the answer with RapidResponse.

"RapidResponse provides the perfect complement to our existing systems," Stappert says. "The ‘what-if' capabilities let us use integrated ERP data to cut response times from weeks to hours, and at the same time reveal how proposed actions will affect other areas of our business so we can more accurately predict costs, plan effectively, and foresee consequences. And the scorecard helps us rank potential actions according to how well they support our corporate goals. It really solves a very different problem than what our planning and execution systems—and other optimization tools we considered—are designed to handle."

Whereas SCP solutions are typically top-down products designed for use by experienced master planners, RapidResponse puts visibility and decision-making tools into the hands of people who deal with change across the organization. "Its speed and easeof- use really allow us to simplify and expedite the decision-making process, and everyone from the CEO down to the production planner can work with it," says Stappert.

Jabil uses RapidResponse to do what-if analysis on different pieces of information, then makes that visible to the extended supply chain—including customers and suppliers—for joint collaboration on different action alternatives. "As you get into a true supply chain environment, those companies that collaborate best will win, because they're sharing information," Stappert says. Seamless integration with internal Jabil tools and infrastructure allows users to go to one location for all their analysis and planning. And clear downstream visibility to constraints allows Jabil to quickly and accurately identify and focus on critical parts.

RapidResponse has helped Jabil eliminate more than $80 million in excess and obsolete material while realizing one of the highest inventory turn rates in the industry. Delivery performance has significantly improved, and the company now responds to customer questions the same day. These and other benefits have increased Jabil's market share and given the company a valuable competitive advantage. "Customers used to be happy with a response in a week, but now they want it in a day," Stappert says. "RapidResponse integrates with our existing systems to fill the gap between planning and execution and delivers the speed and extended supply chain visibility we need to meet customer demands.

The Cost of Not Acting

By delaying action and continuing to rely on inefficient methods to respond to change, companies can miss out on crucial opportunities to reduce customer erosion, improve margins and lower inventory costs as much as 20 to 50 percent.

Here are just a few examples of the results manufacturers have already achieved using RapidResponse:

• A multinational supplier of advanced electronics reduced its six-week sales and operations planning (S&OP) process to just three days, dramatically improving cash-to-cash cycles and reducing inventory levels by five weeks.
• An electronics manufacturing services provider received $20 million in new circuit board production business due to its proven ability to react to unplanned events via RapidResponse.
• A leading aerospace and defense corporation reduced inventory over $600,000 within the first 90 days after implementing RapidResponse.
• A telecommunications business used RapidResponse to immediately identify $9 million in inventory with no associated demand.
• In the first year after implementing RapidResponse, a premier electronics contract manufacturer reduced inventory by 25 percent and improved on-time deliveries from 95 to 99 percent.
• Through RapidResponse, a communications component and electronics and optical test instrument manufacturer reduced days of supply from 462 to 119 within one year.

As margins grow tighter and the pace of business continues to accelerate, manufacturing success increasingly depends on the ability to respond rapidly and effectively to volatility. Companies that neglect to optimize their operating performance with response capabilities may soon find themselves losing customers and market share to those who have.

Can you afford to lose your competitive advantage by not acting now?

Solectron Kinaxis RapidResponse was the only tool that was able to meet all of our requirements, and since it was already in use at several Solectron sites that had experienced the rapid deployment and ease-of-use of the solutions, we knew it was a sure fit. Kevin Sachs VP Worldwide Account Operations Solectron (Now Flextronics)		Jabil RapidResponse... lets us instantly pull together a lot of disparate information and analyze it in many different ways–so we can answer ‘what-if' questions from our customers and make informed decisions in hours, not weeks. Ron Stappert Manufacturing Operations Manager Jabil Circuit, Inc.		Raytheon RapidResponse enables us to perform monitoring and analysis on all aspects of our value stream, helping us to plan accurately and provide reliable information to all participants. Michael Campisi Site Excecutive and Operations Director Raytheon Network Concentric Systems
Coty RapidResponse enables users to make the right decisions faster by allowing them to collaborate, simulate and analyze options first–it's like an Excel spreadsheet on steroids. Robert Reinckens, CIO Coty Beauty Americas		Cannondale Prior to deploying RapidResponse, our response management strategy was to maintain larger levels of safety stock, which tied up needed space and cash. John Nafis Manager of Supply Chain Cannondale

ABOUT KINAXIS

Kinaxis delivers an on-demand Response Management service that enables customer-focused companies to achieve breakthroughs in operations performance and customer satisfaction by rapidly and more proftably responding to constant changes in demand, supply and product. Kinaxis RapidResponse combines personal alerting, multi-enterprise visibility, collaborative "what-if" analysis and rapid decision support to empower front-line supply chain staff with tools for risk tradeoff and response to daily changes inside the Sales and Operations Planning horizon. Global leaders such as Casio, Honeywell, Qualcomm, Raytheon and Toshiba use Kinaxis RapidResponse to establish superior responsiveness within their fulfllment networks and supply chains and gain competitive advantage. For more information, visit the Kinaxis web site at www.kinaxis.com or the company's blog at blog.kinaxis.com.

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