For years, manufacturers have been streamlining and automating two sides of the manufacturing equation—links with suppliers on one side and buyers on the other.

But there's a third dimension in this real-time manufacturing equation that many manufacturers, surprisingly, have not adequately addressed. And according to Chris Jones, senior vice president of research at Aberdeen Group, "that's the manufacturing process itself."

"A lot of companies focus on supply chain, optimizing everything around manufacturing, but they forget that the supply chain runs through manufacturing," says Jones.

That wouldn't be a problem except in today's demand-driven market, where change is constant and exceptions are the rule.

"Without any exceptions, a system can operate with very little management. However, exceptions are a fact of any system, and the system must be made to embrace them," says Joe Bellini, executive vice president and general manager of Brooks Software, a division at Brooks Automation, which is a leading real-time manufacturing applications provider.

According to AMR Research, the handling of exceptions during the manufacturing process typically adds up to as much as 50 percent of supply chain overhead costs, and it puts as much as 30 percent of revenue at risk.

By gaining control of and adding responsiveness to supply chain exceptions, a company can not only begin to lessen the risk of revenue impact, but also achieve greater flexibility and gain a competitive advantage.

"It's all about being responsive to the market. And it's a particularly important strategy for manufacturers in developed nations battling global sourcing," says Jones.

As a result, many supply chain management (SCM) implementations are now shifting focus from supply chain planning (SCP) to supply chain execution (SCE). SCP optimizes the flow of products through the supply chain once they leave the factory, while SCE puts supply chain visibility back into manufacturing.

Maximizing Efficiency

Supply chain execution works because it treats manufacturing, distribution, and sourcing as a single process, allowing the supply chain to be fully responsive to the cascading impact of real-world events.

"Manufacturers are extending their systems by pushing execution directives back to the manufacturing process itself, not just the supply chain," says Bellini.

Since many companies have SCE systems in place, the best approach is to add a production-oriented execution solution. This solution integrates with existing distribution-oriented SCE in real time to provide event visibility and responsiveness.

With a fully integrated SCE in a lean, low-inventory, or demand-driven environment, production is triggered by customer demand—not from an out-of-date plan. Production becomes the pivot point that powers real-time supply chain execution. Order changes and problems in distribution are visible to managers, who can then make better business decisions. Production can also alert suppliers to new needs as they arise.

Similarly, production and supply issues can be instantly visible in distribution and customer service, allowing distribution response to stay on target with the customer. If no one in the chain can alleviate the problem, at least customers can be notified in a proactive or timely manner of orders they are not likely to receive as expected.

"With SCE, you're building extended functionality on the fly by being able to create rules as outside events necessitate, without having to take the system down for every rule change," says Bellini.

But having such a dynamic system in place changes the relationship with the people running the systems. Like a real-time dispatcher, a company can deploy and set up rules in real time to react to changing events.

"As a result, it's best to have a business process manager and not IT managing the system and making decisions," Bellini adds.

RFID-Friendly

SCE solutions are also becoming popular because they integrate with a growing trend in manufacturing: radio frequency identification (RFID) systems.

"RFID tags can be placed on all material in movement—sourced material and components coming into the plant; work in process; semi-finished goods; and finished goods in distribution. This greatly enhances the end-to-end visibility and the timeliness of exception alerts across the supply chain. It also gives manufacturers the capability to meet the growing set of government-mandated regulations for track and trace," says Bellini.

A new generation of solutions that address this need is coming into the market. One example is Brooks Software's Supply Chain Execution solution, developed and deployed on Sun Microsystems platforms. It is based on proven scheduling, order dispatching, event modeling and monitoring, and transport activity management. Brooks also provides visibility, multisite control, workflow, and decision support. These solutions integrate with any other distribution-centric SCE and other enterprise systems.

Real-time applications like SCE provide greater visibility to critical manufacturing process and product information, and allow manufacturers to integrate manufacturing operations into broader enterprise strategies such as supply chain management, lean manufacturing, and business process management.

"With these business-level initiatives, manufacturers can more fluidly adapt to changes in market conditions," says Jones, "ultimately achieving a better utilization of assets, greater competitive advantage, and increased profitability."