| Synchronized
production means producing products at the rate
required to fulfill customer demand. By moving towards
shorter lead times, manufacturers can reduce their
dependency on longer range forecast data that is
frequently wrong and therefore results in unnecessary
costs and inventory. This improvement concept requires
manufacturers to shift the top 80% of their volume
from a 'fixed-volume, variable-sequence' to a 'variable-volume',
'fixed-sequence' production schedule so as to minimize
change over-times.
As change over time and costs are driven down,
the frequency of the cycle is increased. Most
improvements can be done without major investments.
The role of suppliers is substantial since ingredients
and packaging often account for 30-50 % of total
costs and frequently dictate downstream service
levels.
Two primary elements:
- consolidation of key suppliers
- implementation of ECR concepts by these suppliers
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The extent of the impact of
ECR on raw material costs depends on the type
of material under consideration:
- Commodity ingredients : zero
- Other ingredients : little
- Packaging material : high
ECR places a high priority on
joint efforts that address the supply considerations
of CRP, Synchronized Production, Operational Excellence
and EDI. It is critically important to involve
suppliers in the demand management activities
so they can plan for variations in demand due
to:
- promotions
- new products
- assortment changes
- seasonal effects
This leads to reduced cycle
times and improved demand visibility. Emphasis
is placed on the supplier reliability of both
deliveries and production processes.
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