I was asked to provide preliminary consulting to help out with the Navy’s Inventory Management Challenges and SAP. The US Navy has a multi – billion dollar supply chain that needs to be war ready at all times. Military is never an easy client, as some of my suggestions ended being unacceptable to the pentagon. That’s right. The pentagon. So what did the US Naval Command take away and use?
We discussed the following topics;
- Forecasting and the segregation of items to provide more detail and accuracy.
- Metrics and performance management meetings.
- Demand Changes affecting the initial forecast.
- APO – Advanced Planning Optimization … how mathematical heuristics are being used as well as collaborative forecasting.
- Shorter cycle time for disposal and termination of materials.
- Safety stock levels done in a collaborative approach with Demand and Supply.
- Reducing acquisition lead-Times.
- Over complex automated reports to manage excess inventory.
The key take away for the US Navy was to use SAP transaction MD04 as a Supply Chain Monitor.
MD04 provides Supply Chain alerts to all the Naval Planners and Buyers on:
- Master data issues
- Lead time alerts
- Shortages
- Overages
- Cancellations
- Stock coverage
- And many more
This Supply Chain Monitoring transaction gives planners and buyers the tools to make informed decisions (the best companies drive the decision making down to the lowest levels). And you also want your entire Supply Chain team to execute based on priorities and with MD04 those should be:
- Reviewing master data alerts
- Placing orders within lead time (manufacturing or purchased)
- Shortages
- Overages
- The rest (ex: safety stock alerts)
If your entire Supply Chain team is not executing alerts (exception messages) in a uniformed priority then your supply chain will always be out of sync. You also want to drive your alerts down to zero because this indicates a healthy and stable Supply Chain. Therefore it’s important that you monitor MD04 alerts and hold the team accountable to bring all Supply Chain messages to an established target (hopefully zero). Hence Supply Chain accountability.
This particular advice resonated with the US Navy and we also eventually signed a 2.5 billion dollar consulting contract with the Navy (shared with 6 other firms). I like to think that my small piece of advice influenced the Navy and led to a contract win for us.
Terry Vermeylen is hell bent on rapidly transforming your business into a World Class Operation by major transformation or by eliminating one bad habit at a time.
Terry Vermeylen brings 30+ years of experience in Digital Transformation and Supply Chain Process improvement to multiple clients.
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