Supply Dynamics Helps Large Manufacturers Connect the Dots
Solving complex manufacturing challenges through technology
Technology, globalization, and the twin pressures of cost and efficiency have been driving large manufacturing companies to outsource manufacturing for the last 20 years.
This outsourcing has resulted in highly distributed manufacturing environments. Decentralization has made manufacturers more competitive; however, there have been unintended consequences.
Collaborating effectively across multiple enterprises, geography, and layers of partners and suppliers add enormous complexity—especially when it comes to sourcing, procurement, and supply chain management.
Supply Dynamics, an Ohio-based technology solutions company, helps large manufacturing companies meet these challenges head-on.
Delivering end-to-end visibility and control, saving customers millions in the process
“In companies with distributed manufacturing, the company designs, assembles, and delivers a product, but they often don’t make the parts,” said Trevor Stansbury, founder and president of Supply Dynamics.
“Instead,” he said, “they outsource the majority of what they used to make in-house to better, faster and cheaper sources of supply. This creates is the sub-optimization of raw material prices for things like metals, plastics, and electronic components. Where once you had one large customer buying raw material, now you have dozens of them buying the same or similar raw materials in much smaller quantities and paying higher prices.”
Another big challenge to managing a distributed supply chain is that the data related to raw materials is in silos and is often unstructured.
Stansbury has been working this problem for more than 15 years, starting when he was a Director of International Programs for Honeywell.
“It was shocking to me how often the root cause of a really thorny delivery problem wasn’t that the supplier couldn’t make a part,” he said. “It was that they couldn’t get the raw material, bought the wrong material, or bought it to the wrong specification, or inside of lead time or were paying a ridiculous price for it.”
To further complicate things, no one called out the material the same way.
“Today, not much has changed,” Stansbury said. “Large manufacturers and their contract manufacturers use different names and taxonomies in relation to the same raw materials without any real attention to data governance. Absent a better way to tackle the problem, manufacturers today employ armies of people and the mother of all spreadsheets to try and deal with it.”
Supply Dynamics SDX software connects the dots across all stakeholders with a suite of analytics tools
The suite (delivered in a SaaS model) integrates non-invasively and presents an “extended bill of resource” that captures the materials, parts, manufacturing operations, and special processes required to deliver a finished product. There is no requirement for a customer to change existing ERP (enterprise resource planning) software or other IT systems. Nor do customers have to tie up internal IT resources to spend months integrating with the Supply Dynamics solution.
“We start with our customers’ engineering drawings and use a separate software application process to extract the bill of materials and establish one common view of materials that need to be purchased across the extended enterprise,” Stansbury said. “In fact, our database of raw materials is probably one of the most comprehensive in the world.”
The data conversion process is a combination of best-in-class technology and human expertise.
“The engineering team that assists us with this are, for the most part, retired manufacturing engineers, Stansbury said. “They are talented people who spent their careers on the shop floor and can look at an engineering drawing and instantly know whether to make a part out of bar or plate.”
The Midwest is full of these incredible and largely untapped resources. “We pay them well,” Stansbury said, “and when we have work to do, they come in and use our proprietary software to do it. We are presently working on a large aerospace project that began with more than 45,000 blueprints.”
Supply Dynamics’ timing is good
Imagine the impact of a solution that tells a Fortune 500 manufacturer with multiple business units and hundreds of contract manufacturers which materials being purchased are common, who is purchasing those materials, when materials will be purchased and at what price.
“This allows the manufacturer to quarterback the collaborative purchasing of raw materials,” Stansbury said. “Instead of hundreds of contract manufacturers buying individually, they can buy off one contract and get a great market price.”
But the benefits aren’t all about price. Customers and their suppliers value the benefits of ensuring quality, service levels, and a consistent pipeline of supply based on one unified and verified forecast.
“We typically drive a 7 to 25 percent reduction in the cost of goods sold,” Stansbury said. “One customer who worked with us last year is forecasting a $45 million reduction in raw material costs over four years and saved $1.7 million in 2017.”
“Companies don’t compete with companies anymore; supply chains compete with supply chains,” Stansbury said. “If a manufacturer wants to be relevant and competitive, they have to figure out a way to choreograph the interactions of their extended supply chains. It’s a matter of survival.”