Optimization is not the only algorithmic tool that supply chain companies need to solve their planning and decision-making problems.More May 2, 2019
Fighting fires: Coping with sudden, severe disruptions in your supply chain
Author: William Citrin
Supply chain companies have come to expect the unexpected. Beyond the usual, unpredictable fluctuations in demand and supply, they must also cope with the unforeseen delays, disruptions, and even disasters that regularly occur in their end-to-end operations.
Supply chain agility – the ability to respond rapidly and effectively to the inevitable disruptions to ensure ongoing productivity and profitability – is one of the cornerstones of success in today’s hyper-competitive, omni-channel, consumer-centric world.
At the 20th annual EMEA Supply Chain & Logistics Summit & Expo last month, representatives from consumer electronics manufacturing giant Vestel – which has had a nearly 20-year business relationship with ICRON, and has been implementing our solutions at its production facilities since 1999 – spoke about one such disaster: a devastating fire that broke out in 2017 on a container ship carrying a large stock of crucial component parts from Vestel’s suppliers.
Before describing the disaster and Vestel’s reaction to it, let’s provide a bit of context to give you a sense of the scale of the manufacturer’s operations and the scope of the problem caused by this fire on the ship.
Vestel is one of Europe’s largest electronics manufacturers – with an annual production capacity of 35 million devices (including 18 million television sets and 10.9 million home appliances), over 16,000 employees, an annual turnover of US$4 billion, and an export network spanning 155 countries. Vestel’s supply chain is characterized by short customer lead times (with an average target of delivery to the customer within 21 days), short product lifecycles (typically around six months), and long material lead times (usually more than three months) – and this causes tremendous complexity in terms of planning and execution and challenges in achieving supply and demand synchronization.
The vessel that caught fire, the MSC Daniela, is one of the world’s biggest container ships with a cargo capacity of 14,000 containers. When the fire incident happened, the MSC Daniela was approximately 120 miles off the coast of Sri Lanka. It was carrying 67 containers for Vestel, inside of which were 2,200 SKUs, worth an estimated US$14 million, that were to be used in the coming days to manufacture around 5,000 products for over 400 different customers. The fire caused extensive damage on the ship, whose crew needed to be evacuated before it was hauled to a port in Sri Lanka by the country’s navy.
For Vestel, the fire on the MSC Daniela immediately caused a 15-day materials supply gap, which in turn had the potential to have a disastrous domino effect on the manufacturer’s supply chain – as it could lead to production disruptions, spikes in costs, and drops in on time, in full (OTIF) delivery performance for customers. To prevent this from happening, Vestel’s planners needed to be able to instantly process data from the field, dynamically adjust their production plans, and make decisions and take the necessary actions to ensure the ongoing, optimal flow of their operations – and with ICRON’s Optimized Decision Making platform they had these capabilities.
Without an automated, intelligent, and integrated planning and scheduling solution like ICRON, this type of catastrophic event could have spelt disaster for Vestel – as it would have taken the company’s planners around a week to manually update their system to reflect accurate levels of materials availability and revise their production plans accordingly. And this would have caused production bottlenecks, increased costs, and decreased customer satisfaction.
With ICRON, Vestel’s planners were able to:
-Instantly analyze data and immediately assess the impact of the fire on their materials availability, supply chain constraints, and overall manufacturing operations and business KPIs.
-Automatically, optimally revise their production plans in less than 10 minutes.
-Make optimized decisions and proactively take the best course of action to maximize efficiency and OTIF performance and minimize costs.
ICRON gave Vestel’s planners the real-time, end-to-end visibility and the agility they needed to react – with the utmost speed, flexibility, and effectiveness – to the fire on the MSC Daniela.
With ICRON, Vestel was able to instantly transform data from the field (or, in this case, the ocean) into optimized decisions that enabled the manufacturer to keep supply and demand in perfect balance in the wake of the fire on the container ship – so that production operations continued sailing smoothly and the company remained on course to reach its business goals.