Supply Chain Management (SCM)

If a company's job will use half of the company's manpower, 70% of its assets, and 80% of its expenses, it will have double-digit savings. Is there any interest in learning more about it?

A management method that has a history of 20 years and has helped countless industries improve overall operating efficiency is gradually being developed in the printing industry. This is the so-called "Supply Chain Management (SCM)". The executors of this management approach try to analyze and improve every step from the production of raw materials, the manufacture of finished products or services to the delivery of the customers, and the overall goal is to complete a perfect order (eg, what the customer wants The time to give the right price, just the right amount of things to think of them) to increase the "value" for customers, and increase the efficiency between suppliers.

Supply chain management includes the management of the demand and supply of finished products, the search for raw materials, manufacturing and assembly, manufacturing scheduling, inventory management, order entry and management, delivery, warehousing, distribution (send), customer service and delivery to the government, etc. . The entire information system needs to monitor each of these activities in order to achieve this concept.

When it comes to supply chain management, the term "from the forest to the door" is used to compare. The industry's leader in the use of supply chain management, Don Donleyley & Sons Company Chairman Jon Ward explained: " The steps of management are from the collection of raw materials or the start of manufacture of inks and papers to delivery to customers." Keith Pratt, another vice president of procurement at Mail-Well, which actively promotes supply chain management, added: "The supply chain is the integration of every process that is used to deliver the finished product efficiently to the end customer." He emphasized the role of "integration" in supply chain management. What is the integration of the entire supply chain?

In the past, every department in the printing industry considered procurement, manufacturing, and delivery as a single, single task, and did not communicate with each other. Supply chain management was an information-based operation that quickly responded to customer needs.

Is this approach just like an efficient operation? This is not actually the case. Efficient operations are the result of adopting supply chain management. Supply chain management can ensure that raw materials can be delivered on time and respond quickly to customer requests. And the changes in the market can therefore reduce the cycle time.

"Supply chain management provides the benefits of the entire industry, regardless of the size of the company's use of supply chain management technology can reduce costs, reduce repeat operations and waste generated. Many printing plants and management consulting companies believe that supply chain management strategies in any future industry Whether or not to survive is decisive. An important indicator in this view is that companies in various industries have reduced their suppliers by 40% to 70%, and those suppliers who survive are all leaders in the supply chain."

Network advantage

It is not surprising that the Internet plays an important role in the supply chain management of the printing industry. Industry consultant Craig L. Press said: "The Internet simplifies many steps in the supply chain, and printers can directly connect Go to the vendor's inventory system and see what's going on with those orders and orders, because there isn't a lot of order processing, which makes suppliers more flexible, and printers and suppliers use the Internet. Connections, orders can automatically process, reduce the cost of operations and processing orders."

In the past, customers sent print orders or estimates via telephone or facsimile, which slowed down the supply chain. Now customers and printers want to use online orders to make ordering procedures consistent and increase efficiency. At the same time, customers also hope to know the progress of the work more quickly, and the printing company provides services for customers to view work status through the Internet. Vendors have reduced the cost of order processing because of the online ordering system, and the number of partners required has also been reduced. Even small companies can form a stable cooperative relationship with suppliers through the Internet.

Not familiar with how to make good use of

Although many industries have realized its importance to supply chain management, it is still unfamiliar to most printing companies. Only a few companies in the printing industry actively adopt supply chain management strategies. The printing and publishing industry is at least 10 years behind this in the high-tech or packaging industry. RR Donnelley had a turnover of 5 billion U.S. dollars last year, 31,000 employees and more than one dozen production plants, making it the largest printing company in North America. cause. It entered supply chain management three years ago when they introduced a corporate strategy that wanted to increase the productivity of the organization's operations by 6% per year - three times that of the average company.

Concept introduction

Jon Ward said: “We did not have the concept of supply chain management before. When we implemented a productivity enhancement plan a year or two ago, we felt there should be room for customers and suppliers to create some economic value in addition to printing and binding. It started with a few individual proposals for logistics and procurement, and finally came to understand that this was what management consultants called "supply chain management.""

Through the implementation of supply chain management, the company expects to achieve a goal of saving 100 million U.S. dollars for customers and suppliers within three years.

"No company can manage the entire supply chain. All it can do is analyze the parts of the supply chain that it is responsible for and find opportunities to add value to its operations, customers, suppliers and the entire industry."

Finally, Donnelley put into practice the three aspects of "send", "original material analysis" and "procurement" in the supply chain. Currently, it sends 25% of the country's catalogues and magazines. Before adopting supply chain management, it sent out prints from 40 publishing factories respectively. They think that if they concentrate their shipping and sending work in four major areas, they will compare Well, when the delivery volume at each point increases, the customer can provide better delivery time, higher quality delivery process, and more cost savings.

Donnelley delivered the goods to the post office. Not only was it more efficient and it saved US$140 million in postage for mailing customers. Its magazine and catalog customers were satisfied with the postal service and began asking other companies to do the same. For Donnelley, the implementation of supply chain management represents two things: the company must expand and import common work and systems because they see all the subordinate printing companies as one big company rather than as independent individuals.

Paper

Another supply management program underway at Donnelley is a proposal to understand the actual cost of paper procurement. In the past, the printing industry bought paper in terms of weight. But in fact, buying the cheapest paper, the cost is not necessarily the lowest, because if Paper will consume more ink or reduce the production capacity of the printing press by more than 20%. The price will be much higher than that of the paper. Therefore, they use scientific measurement methods to determine the actual cost of the paper.

"The printing industry has lazily learned all the factors that affect the quality of printed products in a scientific way. We have obtained data from paper companies and customers' supply chains to understand the use of paper, the performance on the press and the consumption in the factory. Situation, not just how much a pound is."

Delivery standardization

It took One and a half years for Donnelley and major paper mills to develop a paper delivery model. The system first went to the printer to determine the needs of the customer, and then went to the paper mill to plan the needs of the printer. It is hoped that such a model can become a standard in the printing industry, not just Donnelley's standard. They also restructured the procurement process. Forty branches merged and purchased, and they no longer purchase independently. They hope to reduce their purchase costs by 10% within three years, and they spend more than US$1 billion each year on materials.

If the plan is successful, Donnelley and his collaborators will be able to achieve significant savings. But will it lose its flexibility in the market? Ward said it does not, although there are many rules for centralized procurement, it will not slow down or become annoying, and supply chain management is difficult and cumbersome. Worthwhile, it can create value for customers, partners and themselves.

Food for the soul

The printing consultancy company of the printing plant and the counseling supply chain management makes several suggestions for companies that want to implement supply chain management:

Support from the highest management

Supply chain management cannot be implemented without administrative support, and the entire operation must also be performed by professionally trained management personnel.

The supply chain is started by the client, not by manufacturing or purchasing

All the actions taken to add value must first consider the customers and their needs.

Learn actual costs

The actual total cost does not only come from a single cost. If you spend a pound per pound, but if there is a problem with 15% of the cost, the cost is not just a dollar. Another illusion of savings is that, in order to reduce the unit cost and purchase a lot, it seems to be cheaper on the books, but it requires relatively more inventory and storage costs. Therefore, the company’s major financial staff also have to join the supply chain management team.

Ken King, general manager of GATF, explained: “Buying too cheap paper may be detrimental to the production department. Only the purchasing department can buy paper suitable for the press, and the production department can control the production process and reduce the occurrence of printing failures.”

Clearly define the scope of the supply chain

In order to improve the process, you must understand each part and actually describe the production supply chain from the original material to the delivery. Verify that the client is included in your design and analysis of the supply chain, because the customer is the beginning of the supply chain, it is very important to know the needs of the customer and understand how to improve themselves to meet the needs.

When defining the supply chain, you need to spend a period of time carefully observing your strengths and weaknesses. If some parts are not as good as or better than competitors, then find a partner to help you deal with it. This part.

Although there are some ready-made methods that can help you define and evaluate the supply chain, you don't have to overdo it. Too much time is not helpful in the analysis of details. It should be noted that when you do the analysis, you know that The value that a business operation has and the added value it can give a customer.

Responsible for education and training of employees and suppliers

When employees and suppliers worry about the company's new proposal, they will delay the entire plan. Therefore, they must help them understand what supply chain management is and what benefits it can bring to them and the company. You must also involve major suppliers in training programs because many suppliers may already have such training and may even increase your learning curve.

Accurately identify major suppliers can help the company's supply chain management succeed

A large number of non-recurring costs often appear in the basic suppliers. In this regard, the printing industry can make significant progress in the supply chain by classifying suppliers and strengthening the partnership between selected suppliers. Selectively reduce the number of suppliers and ask them to provide more services to replace the previously hostile relationships and become strategic partners.

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