Celestica's collaborative initiative comprises three elements - inventory visibility, much closer relations with suppliers, and optimized inventory management, says Erwin Hermans, vice president of supply chain solutions at the contract manufacturer.
By almost any measure, Celestica, which manufacturers primarily for high-tech companies, is best in class when it comes to supply chain operations. Over the past four or five years, it has put together an operating model of people, process ad IT infrastructure as well as suppliers, customers and its own internal organizations.
As he defines it, supply collaboration has three elements: visibility to the entire supply chain, collaboration with suppliers so tight that decisions are made not just on internal data but on suppliers' data as well, and inventory optimization. When the alignment is right, significant reductions around working capital take place, and that's the expectation of management and shareholders, Hermans says.
Results with the collaboration center have been impressive enough that the company is making the model available as a service offering to its customer base.
The complexity that increased outsourcing has caused in the last 10 to 15 years has made the degree of collaboration Hermans speaks of somewhat of a challenge to achieve. Celestica prefers to be close to its clients, especially for fulfillment operations. But manufacturing itself is now often geared to low-cost countries, so the supply chain is greatly "stretched" out. The OEMs' need to optimize for cost has costly ramifications in terms of the layers of complexity that result.
"Balancing supply and demand is at the core of what we do," Hermans says, "and that's ultimately what gives us the ability to respond to customer needs, to respond to customer orders and make intelligent decisions about the orders that we fulfill." The company invested in the RapidResponse solution from Kinaxis to help with that.
It's at the end of every quarter that the Kinaxis solution really gets a workout, Hermans says. That's when "customers are looking to optimize revenue, shipping product with the highest revenue." Celestica runs what-if scenarios to look deeply into the supply chain and determine which products it can commit to deliver despite the constraints that exist.
The control tower concept that Kinaxis recently introduced is welcome, Hermans says, because it unifies previously disjointed capabilities. Traditionally, one gets proficient at either demand planning or supply chain planning. With the former, forecast accuracy may mean your supply chain doesn't require maximum flexibility; on the flip side, you may not count on forecast accuracy if you manage your supply chain efficiently.
"What Kinaxis has done with the control tower is bring those two into one application where supply decisions and demand decisions can be made in one environment and made instantaneously. That's really the big value proposition that most customers will be greatly accepting."
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