MEASURING RISK WITH SUPPLY CHAIN PERFORMANCE MANAGEMENT SYSTEMS
ERP systems have a rich view of the past, but they are not capable of visualizing and modeling the future and expected events, issues, and risks. In contrast, the supply chain planning systems can look into the future by generating plans and modeling the future. Adexa’s Supply Chain Risk management system, sits between the planning system and the ERP system collecting the plans for the year, upcoming months, and weeks while the ERP system provides the history that can be aggregated to compare to the past plans. Combined the actual and the plans provide the projection for the whole fiscal year highlighting if a company is on track, or at risk of missing financial commitments. Only a system with one hand in the future and one hand in the past, along with the intelligence of modeling, can understand when the metrics signal trouble and capable of managing risk of your supply chain.
The measurements required span across the entire supply chain from suppliers, to manufacturing, to distribution, and finally sales to the customer. A typical performance management system would offer issues that happened in the past and the users need to figure out how to avoid them in the future. Although this is useful, Adexa’s Risk Management solution identifies potential risks in the future and ways of avoiding them before they occur. Some examples are single source suppliers, expected low inventory items for some key parts, changing trends in delivery schedules of some suppliers, long lead-time parts that can cause delays and much more. Every time a plan is completed the system flags all the potential risks and shows where the issue is and what can be done to avoid them. For example, too much use of a substitute part is an indication of increasing cost and low level of inventory for a key part#. By recommending to increase the minimum inventory level of that part#, the issue is avoided in future. Some of Adexa’s customers, perform risk management using the what-if scenario management of Adexa. Adexa’s incremental planning feature allows changing certain parameters and then looking at the potential issues that may arise. For example, if an earthquake in a region in Asia causes delays in deliveries of a certain part number, then what would be the outcome on production and meeting the expected demand, what alternatives are there and how much is the potential financial risk. Learn more about Adexa’s Risk Management solutions by sending an email to firstname.lastname@example.org.
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