Supplier Capacity Management

Customer demand volatility is having real, negative effects on manufacturers’ bottom lines. When demand is low, suppliers are able to make sufficient quantities that meet these demands. When demand suddenly spikes, suppliers are struggling to produce adequate amounts – hurting sales and leaving customers unhappy. Couple this ailment with an increasingly global supply base – often resulting in lack of emerging markets supplier maturity (capacity/capability) – makes manufacturers’ visibility and control of meeting customer demands very difficult. The key to balancing capacity in an upturn, inventory levels during downturns and managing customer demand throughout the business cycle is an agile supply base. By increasing a supplier’s possible capacity, a manufacturer’s entire value stream provides the framework for a truly agile enterprise.

CGN Global’s Capacity management starts with a thorough evaluation to accurately gauge the current state then rapidly plans and implements capacity improvement efforts to impact the OEM’s bottom-line, top-line and key performance metrics.

Sustainable Capacity Improvement

The key outcome of CGN’s supplier capacity transformation is the achievable idea of sustainability. Customer demand will always be a rollercoaster with twists, turns and 50-foot drops. Organizations often invest millions of dollars throughout the year increasing the capacity of their suppliers when needed, and are left with excess when demand suddenly takes a dive. CGN uses a workshop based approach to enable suppliers to be more efficient and effective and able to ramp up/ramp down capacity with ease, resulting in huge benefits to all parties’ bottom lines and invaluable customer satisfaction.

CGN generally takes a 6 step approach towards sustainable Capacity Management:

  1. Supplier Identification and Engagement - a critical first step in developing a collaborative program that defines the relevant level of intervention with suppliers
  2. Deep Dive Capacity Assessments - involve “doing the homework” prior to supplier visits as well as detailed on-site assessments for identifying all capacity challenges at a business level
  3. Mitigation Planning - establishes commitment through clear understanding of roles & responsibilities, timeline and investment expectations from both sides
  4. Enterprise Capacity Planning & Modeling - Tactical action plans are augmented with a strategic understanding of the mid-long term supply and demand gaps across the supply base to further refine the mitigation plans
  5. Governance - collaboration, coordination and control are extremely important for providing continuous focus on the common goals of the program and ensuring success
  6. Action Plan Management - ultimately, relentless execution by working the plan is the key to achieving success

Furthermore, harnessing data throughout the enterprise is a challenge to accomplish and a huge benefit if achieved. See our Analytics for Supplier Capacity Management to learn more about harnessing data to improve supplier capacity and close the gap between supply and demand.

For more information on CGN's Supplier Capacity Management capabilities, please contact:

Rick Diefenderfer
Associate Partner
Office: 630.386.2705
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