Manufacturing Strategies Explained.
Understanding the concept
According to ModusLin e-business and CRM leader, Johannes van den Berg, “Having your manufacturing strategy align with your customer’s needs and wishes creates synergy within a business. This results in increased production efficiency and growth as well as improved risk management and end-to-end improvements.”
There are many different manufacturing strategies that use aftermarket support and warehousing technology to improve distribution, customer experience, lead times, and warehouse operation.
At the core of successful supply chain management is warehouse and distribution management processes A report published by Comparative European Research titled ‘The growing importance of the synergy effect in a business environment perfectly explains the synergy concept. Synergy is a core element present in many successful manufacturing strategies and helps with meeting customer needs and demands.
It is a connection/interaction between different elements within a specific environment, creating or subtracting the additional value in the process. Improved tools and technology, such as digitization and automation, along with machine learning and AI processes, are all part of improving synergy within the supply chain network.
How does this relate to businesses today and improved supply chain and direct distribution services? Let’s find out!
Warehouse and Distribution Strategies Explained
The importance of a proper manufacturing strategy and aftermarket support approach are indisputable. The three main Supply Chain priorities reported by U.S. health services providers and pharma/life sciences executives for 2021 are the improvement of Supply Chain transparency, improving Supply Chain security, and finding suitable suppliers (Statista, 2021).
The three elements relate to manufacturing strategy. Close contact with your supplier of raw materials is necessary when implementing the above manufacturing strategies. Reinforcement of supplier relations plays a crucial part in direct distribution, route management, and supply production processes.
Managing inventory properly using principles as JIT reinforces security within your Supply Chain and consequently can increase transparency when closely involving your suppliers.
Figure 1. (Top Supply Chain Priorities 2021) Statista. (2021, January 26). Supply chain priorities of U.S. provider and pharma/life sciences executives 2021. https://www.statista.com/statistics/1196032/supply-chain-priorities-health-services-provider-and-pharma-executives/
Different Strategies for Improved Aftermarket Support and Direct Distribution
Managing warehouse and distribution, supply chain logistics, supply lines, and shopping modes and trends are essential to improving distribution and support. It is easier to avoid issues such as supply chain attacks and weaknesses with the right strategy in place.
Here are three key strategies omnichannel supply chain management teams can use to improve aftermarket trends and demand forecasting methods today:
- Make to Stock (MTS)
This strategy is prominent in many businesses as it utilizes traditional production based on demand forecasting. Companies choose this manufacturing strategy because of the predictable demand forecasting that comes with certain products. For instance, winter coats are known to be purchased during winter, increasing the demand predictability.
Companies can thus safely create and stock winter coats before they are purchased. Unpredictable demand does not incentivize this strategy, as excess inventory can accumulate significant problems. Aftermarket support becomes easier and more straightforward and benefits customers and managers alike.
- Make to Order (MTO)
Some companies that use this strategy put manufacturing on hold until an order is received, minimizing stock levels. This strategy provides strong inventory and market control and aids managers in trend projection and the protection of sensitive data from clients and third parties.
A constant and minimal stream of orders must be present to maintain the production facility in question. Customer waiting times are also significantly longer (TheBusinessProfessor, n.d.) and can be impacted by warehouse and distribution and supply chain tools and tech.
- Make to Assemble (MTA)
This strategy involves the making of product parts before orders are received. The MTA strategy is a combination of MTO and MTS manufacturing strategies. Here product parts are stocked, yet the final product is assembled only when an order is placed and processed.
This strategy is often seen in restaurants as ingredients get prepared beforehand. Yet, the final dishes are assembled only when an order comes in to keep the dish fresh and flavorful.
No matter the inner workings, these three strategies play an integral role in supply chain management and direct distribution today.
Improve Warehouse and Distribution Performance With Help From ModusLink
The MTS, MTO, and MTA manufacturing strategies form the core strategies used by most businesses. These strategies are built upon principles such as the Just-In-Time (JIT) approach that focuses on eliminating waste by ensuring minimal stock levels are held through (party) automated product reordering systems.
John Heffernan, Chief Supply Chain Officer at ModusLink believes, “maximizing the efficiency of your manufacturing strategy is of high importance as it will yield waste reduction and a more streamlined production process, optimizing your supply chain.” And, it’s true; improving warehouse management, manufacturing strategies, direct distribution, and aftermarket customer support are critical to ongoing growth and recovery today.
Need professional advice on the right manufacturing strategy/optimization? Looking for ways to improve aftermarket support and internal distribution and management processes? Contact one of ModusLink’s Industry experts today.
Comparative European Research. (2016, October). The growing importance of synergy effect in business environment(No. 1). Sciemcee Publishing. https://www.researchgate.net/publication/315657493_The_growing_importance_of_synergy_effect_in_business_environment
Manufacturing Production. (n.d.). Investopedia. Retrieved August 27, 2021, from https://www.investopedia.com/terms/m/manufacturing-production.asp
TheBusinessProfessor. (n.d.). Manufacturing Production (Strategy) – Definition. The Business Professor, LLC. Retrieved August 27, 2021, from https://thebusinessprofessor.com/en_US/business-management-amp-operations-strategy-entrepreneurship-amp-innovation/manufacturing-production-strategy-definition
Statista. (2021, January 26). Supply chain priorities of U.S. provider and pharma/life sciences executives 2021. https://www.statista.com/statistics/1196032/supply-chain-priorities-health-services-provider-and-pharma-executives/
The Same-Day Delivery concept.
The Same-Day Delivery concept
The internet allows people to achieve instant gratification for things that they want. All you have to do is open a search engine such as Google and request the information you need. For most parts, you can get what you want within seconds thanks to advances in supply chain operations, delivery logistics, and supply chain digitization and automation.
This drive for instant gratification has been introduced in today’s fulfillment practices as the concept of ‘same-day delivery. Understanding the answer to “what is the omnichannel supply chain” often focuses on operations. These processes are essential to mastering modern supply chain and e-commerce.
What Are Omnichannel Supply Chains and Same Day Delivery Services?
Same-day delivery is used chiefly for online companies to increase their sales. Customers are willing to pay an extra fee to get their products as fast as possible. The main reason is that it narrows the gap between instant gratification and brick-and-mortar store shopping.
Embracing omnichannel supply chains can improve overall customer satisfaction, business performance, and profitability.
Effectively implementing this concept does, however, require a vast number of resources which results in large companies adopting this practice for the most part and leaving smaller companies behind as they gain a competitive advantage.
Leveraging advanced supply chain tools, advanced smart technology, and XPO Logistics freight tracking options can help improve end-to-end e-commerce performances.
With the rise in popularity of online shopping, e-commerce shipping, and M-commerce business, the need for reliable delivery services is more important than ever. As more people begin looking at online platforms and using eBay, Etsy, Amazon, and Shopify plus B2B features, the more these digital tools and processes are needed.
According to Marlin W Ulmer (Ulmer, 2017) and the EconoCourier website (EconoCourier, 2016), the same-day delivery concept comes with both advantages and disadvantages, which are listed and further clarified below.
Disadvantages of Same-Day Delivery for Supply Chains
A recent article published by Fulfillmentworks (Fulfillment Works, 2020) focused on the question of what is omnichannel supply chain operations and how they impact the network today? The study shows that there are three main disadvantages for both companies and consumers that correspond with the same-day delivery concept.
Same-day delivery can limit companies’ flexibility due to planning and order prioritization disruptions. Companies that don’t utilize the same-day delivery concept can adjust more efficiently in their fulfillment operations, such as re-routing, altering contents, canceling, and holding orders, to optimize their fulfillment strategy.
Companies that utilize same-day delivery do not have this flexibility, as changes within the fulfillment process will result in delays, which can upset consumers who paid for the same-day delivery option (Fulfillment Works, 2020).
Efficiency is a critically important factor within all fulfillment operations. A powerful way to improve the efficiency in shipping is to group or batch orders, also known as consolidated shipping, as this can reduce travel times.
Same-day delivery limits the possibility of grouping orders as there is less time available to accumulate charges in your picking queue before the rankings get processed.
Some M-commerce companies avoid a same-day delivery concept as the inherent nature of the concept offsets their sustainability practices. 92% of consumers are more likely to trust companies that support social or environmental issues (Fulfillment Works, 2020). This means that your brand’s perception may improve its reputation more than same-day shipping.
Advantages of Same-Day Delivery for Supply Chains
Utilizing the same-day delivery concept allows companies to gain a competitive advantage over other companies that do not use this concept. Research shows that consumers want to get their products as fast as possible. This reinforces the statement of gaining a competitive advantage using the same-day delivery concept.
Companies that utilize same-day delivery see a reduction in their inventory costs. This is because they can reduce the stock warehouses held for retail stores and also improve cross-border logistics.
According to EconoCourier (2016), companies that offer same-day delivery also require their customers to pay an extra fee to realize this concept. This is mainly due to the additional costs associated with the abrupt same-day delivery request. Consumers that need a specific product fast can use the idea of same-day delivery and reduce the time it takes before they acquire their product.
This means they can reduce the time spent before they receive gratification by obtaining their product (EconoCourier, 2016). There are plenty of indications that same-day delivery will become an even stronger standard in today’s fulfillment practices since companies that do not apply this concept lose their competitive advantage.
Understand Same-Day Delivery and Omnichannel Services With ModusLink
ModusLink is ready to help you understand what it would take for you to be able to implement same-day delivery. We can analyze where you do business and want to do business and give you proposals as to the best approach, whether it’s a “universal” same-day offering, a geographic dependent same-day offering, or some other fulfillment as service criteria.
Umer, M. (2018). Dynamic pricing and routing in Same day delivery. Informs, 1-2.
Ulmer, M. (2017). Delivery-deadlines in same day delivery. Logistics research, September. From inventoryops: https://www.inventoryops.com/articles/same_day_shipping.htm
EconoCourier (2016, December 22). The advantage of same-day delivery to businesses and shops. From Econo courier blogpage: https://econo-courier.com/advantage-day-delivery-businesses-shops/
Fulfillmentworks. (2020, June 10). The disadvantages of same-day delivery. From Fulfillmentworks home: https://www.fulfillmentworks.com/blog/post/disadvantages-of-same-day-shipping/
Clarkec, I. D.-P. (2020). Same-day delivery with drone resupply. Informs, 1-2.
DHL, T. R. (2019, May 16). DHL . From DHL launches its first regular fully-automated and intelligent urban drone delivery service: https://www.dpdhl.com/en/media-relations/press-releases/2019/dhl-launches-its-first-regular-fully-automated-and-intelligent-urban-drone-delivery-service.html
EHang. (2021, January 29). EHang home page. From EHang: https://www.ehang.com/ehangaav
CNBC. (2019, July 15). How Amazon delivers on one-Day shipping .
Geekwire. (2016, December 22). How does amazon prime now deliver packages in under two hours?