Green has seen some fundamental shifts in the supply-chain planning paradigm. One involves a continuing trend toward specialization: companies focusing their efforts on research and development, while outsourcing manufacturing. Another relates to a faster product-refresh rate, especially in high-tech. “It becomes harder to predict because your lifecycle’s so short,” he says. A third trend is globalization, with an exponential increase in the number of people involved in the supply chain, and a consequent extension of order lead times. In response, companies are looking to replace their vertically structured supply chains with close partnerships.
Planners face the challenge of dealing both with unexpected short-term changes in demand and the need to create longer planning horizons. As lead times become stretched, it becomes more important to have in place detailed contingency plans in the event that things go wrong. Companies need to acknowledge that the forecast will never be 100-percent accurate, and plan accordingly.
Communication among multiple parties becomes more important than ever before. “You’ve got to get data from the other company much faster,” says Green. In addition, top management needs to acquire new skills in dealing with key suppliers, including the ability to negotiate the appropriate contract terms.
Working with partner Kinaxis, Avaya has been on a four-year journey to improve its ability to react to real-world demand. Green says the company has had “a lot of success,” delivering its best-ever run times and inventory turns. Products include phones for both large and small companies, in addition to infrastructure such as servers and gateways that support global collaboration. Manufacturing is 100-percent outsourced. Most fulfillment is carried out with the aid of a third-party entity.
The changes were spurred by new management and its desire to improve return on investment, Green says. “The new leaders have a very aggressive vision,” he says. “We’ve made great progress.”
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