Introduction to Supply Chain Scheduling

The term Supply Chain Scheduling (SCS) may be new to you, but I'm sure you will be aware of some of the other technologies that have been used to try and improve the efficiency of supply chains, such as Electronic Data Interchange (EDI), Supply Chain Management (SCM) systems, etc. So where, you may ask, does SCS differ from these other techniques, and why should you want it if you haven't found a use for EDI and SCM.

Both EDI and SCM foster closer relationships between the companies within a supply chain, but it tends to be a one way relationship. For example EDI is, for our purposes, primarily a way for an OEM (typically a car manufacturer) to place orders on their suppliers. The ability of the supplier to produce the components is taken for granted, and for some the advent of EDI simply pushed the necessary stock of components back up the supply chain to the supplier.

SCM goes a step further, but its major application areas have been in controlling stock in multiple warehouses for FMCG and food/drink manufacturers. In this role SCM attempts to maintain the required stock levels whilst deciding how and from where to fulfil particular customer orders. Again the assumption is made that the stock/capacity exists to supply the customer orders.

So effectively both EDI and SCM are mechanisms for companies to place their demand (requirements) on their suppliers, without taking much account of the supplier's capacity. This is the wrong relationship for the vast army of companies who want to build on the classical business practice of inquiring when components will be available. For example, if I wish to buy some specialised bearings, which I know are not stock items, then I will ring the supplier to ask for a delivery promise. In effect I am asking the supplier to review his capacity and tell me when he can make my bearings.

Now we start to see the fundamental difference between EDI, SCM, etc., and SCS. The former are about placing demand and delivery requirements on a supplier, whilst the latter is about reviewing the supplier's capacity and then determining the delivery requirements.

SCS has the potential to improve supply chain efficiency for companies in the make to order sector, but to work in its most effective way, these companies will have to work more closely together. The closeness of the relationships could be measured on a scale ranging from loose to intimate, and to see the difference the type of relationship can make we will review the SCS requirements of Fred, the proprietor of the Acme Bike Company (ABC).

Fred's company is an OEM in the supply chain hierarchy. He supplies finished products to us, the end users. Fred's process route is fairly simple, and is shown in figure 1. He manufactures the frames and wheels in-house, but buys in his saddles and the other raw materials. He also uses a sub-contractor to plate the frames.

Fred has a loose relationship with his steel tube supplier(s), he orders large quantities to get good discounts, and buys to specification from one of a number of suppliers, going for the cheapest each time. For this relationship SCS will provide a mechanism to automatically send inquiries to the suppliers, and to receive and review their responses, but the improvement to the supply chain efficiency is small.

Unlike the tube, the saddles are costly, specialised items with many variants, so Fred orders the saddles on a 'make to order’ basis against each sales order he receives. He always uses the same supplier, and has built up a close relationship. Because of this, the supplier is willing to make more of his schedule data available, and allows Fred's scheduling system to make automatic Available/Capable To Promise inquiries to reserve capacity in the saddle making process. This means that while Fred's planner is creating a schedule for his plant, the capacity of the saddle supplier is automatically checked and taken into account. In this way Fred knows that his schedule is achievable, without having to call his saddle supplier every time a new order arrives, or his own schedule changes. This significantly improves the supply chain efficiency for both companies.

The relationship between Fred and Bert, the plating sub-contractor, can be described as intimate. They have worked together for years, and Bert offers Fred special rates if Fred can time his work so that it uses any 'spare' capacity caused by the 'ebbs and flows' in Bert's other work. To achieve this Bert allows Fred's planner full access to the plating schedule. The planner then schedules the frame plating jobs so that, where possible, they use the spare capacity. Such intimacy requires great trust between the parties, but brings huge rewards in the form of supply chain efficiency improvements.
 

As well as using SCS to improve efficiency between his business and his suppliers, Fred has also extended it to his customers. His sales force carry WAP mobiles (yes, we have finally found a use for them), and by dialling in to the ABC WAP site they can make order inquiries and get delivery promises while sitting in front of the customer. The next step is to make the same facility available to selected customers from Fred's main web site, and, as figure 2 shows, all of these remote inquiries take full account of the saddle and plating capacity limitations. Fred is able to reap the rewards of SCS because of the relationships that he has built with his suppliers and sub-contractors. You can also use SCS to improve your process, but remember that it will require close relationships. Many companies regard their capacity data as commercially sensitive, so the best efficiency improvements will come to those who forge tight knit supply chains or clusters, where such data can be freely interchanged.