The turmoil surrounding the COVID-19 pandemic has put organisational and business supply chains firmly under the spotlight.
Looking for ways to improve your supply chain is something you’re likely already doing. However, now is the perfect time to put a game plan in place. It starts with investing in the right technology. Here are five ways Microsoft Dynamics D365 Finance & Operations (D365 F&O) can help with supply chain optimisation and provide a strong foundation for dealing with the ‘new normal’ that will undoubtedly follow COVID-19.
- Improves sales demand forecasting.
- Allows for more efficient constraint management.
- Enables proactive supplier collaboration.
- Sets dynamic safety stocks.
- Helps you achieve effective customer demand management.
1. Improves sales demand forecastingImproving the accuracy of sales demand forecasts is critical for efficient and reliable supply chains. D365 F&O harnesses the power of Azure machine learning to analyse your individual product sales histories and automatically trains itself to select from five sophisticated statistical forecasting models based on minimising forecast error.
Forecast accuracy is monitored and alerts can be set up to advise by exception when a review is required. This reduces the risks of product run-out or oversupply.
Once these demand forecasts have been reviewed and authorised, they’re then immediately available for the master planning module to consider in its calculations. This ensures your supply chain planning system has the best possible information about future requirements and can react appropriately in giving your Planners and Buyers prompts for placing new orders and rescheduling existing ones.
2. Allows for more efficient constraint managementMany businesses must contend with constraints that limit their ability to satisfy market demands. These could be physical constraints such as:
- Manufacturing capacity.
- Bottleneck machines.
- Inappropriate planning systems.
- Antiquated control and scheduling methods.
3. Enables proactive supplier collaborationExperience shows that the more information and knowledge you share with your suppliers, the stronger the partnership and the better the service you will receive.
D365F&O enables your strategic suppliers to have controlled remote access to your ERP system. This means they can receive rapid updates for information such as:
- Confirmation of purchase order requirements.
- Suggested changes to delivery schedules.
- Alternative & replacement products.
- Sharing of forecasts.
- Supplier performance.
4. Sets dynamic safety stocksIn many businesses, safety stocks are a necessary evil put in place to protect the supply chain from erratic and unexpected demand.
Setting the appropriate safety stock levels for products is always a challenging task and many adopt a blanket, simplistic approach that invariably results in shortages of some products on the shelf, coupled with severe excess stocks of others. This is the classic ‘feast & famine’ situation that customers always struggle to appreciate when their order can’t be satisfied.
D365 F&O provides automated methods for dynamically calculating appropriate statistical safety stock levels for individual products and groups of products, based on the variation in their demand and desired % service levels.
This enables your business to continuously tune its inventory profiles to achieve the best trade-off between customer service and inventory holding costs.
5. Helps you achieve effective customer demand managementEffective customer demand management is all about protecting your supply chain from unrealistic demand requests. Your customers’ own ERP systems can often be the root cause of these due to poor setup and inaccurate data. In many instances, you’ll have a better idea of a customer’s real requirement than they do themselves.
Exposing your supply chain to unrealistic customer demand requests has huge consequences, including:
- Instability in your planning process.
- Sudden changes in priorities.
- Wasted capacity.
- Additional workload for your staff.
- Poor customer service.
- Significant ramifications for future planning (e.g. raised forecasts, raised safety stocks).
D365 F&O sales order processing offers ‘available to promise’ and ‘capable to promise’ functionalities. This provides your Sales Administrators with the ability to generate realistic confirmed ship and receipt dates against sales order lines in ‘real-time’ based on the product’s current inventory, demand and replenishment situation.
This enables the smoothing of customer demand in the case of a large order quantity via scheduling of the sales order into manageable ‘drops’ at time intervals that are realistic and compatible with the supply situation. Thereby avoiding planning instability whilst managing the customer’s expectation effectively.
Microsoft Dynamics 365 can help the manufacturing industry on its digital transformation journey
So, it's clear D365 F&O can help optimise your supply chain for the ‘new normal’. But let's take a small step back. How do you go about introducing new technology into your organisation?
Or, if you already have the D365 platform, how can you improve and increase the value you're getting from it? In our latest resource, we outline the key success factors for digital transformation - from the capabilities you must have to how to identify value.
Download it below.