Would your customer benefit significantly if your business is able to offer reliable delivery in less than half of the current delivery lead times? Can this become a competitive edge for your business? Would you believe that this is possible with lower system inventories though with higher SKU range?
Industrial products are what people in different industries use. These are products or services purchased for use in the production of other goods or services, in the operation of a business, or for resale to other consumers. These could include raw materials, equipment, or product components required by a business for the production or distribution of other goods or services. Industrial goods range from mineral, agricultural, and forestry products to complex electronic equipment.
The products are different than what most people would use in their house or taking care of their own items, and involve B2B selling. At the foundation level, there are three basic value-adding activities – Agriculture, Manufacturing and Transportation.
Industrial Product manufacturers are organized on the lines of value chain. An industry value chain is a physical representation of the various processes that are involved in producing goods (and services), starting with raw materials and ending with the delivered product (also known as the supply chain). It is based on the notion of value-added at the link (read: stage of production) level. The sum total of link-level value-added yields total value.
At an individual firm level, a value chain is a chain of activities that a firm operating in a specific industry performs in order to deliver something valuable (product or service). A business unit is an appropriate level for construction of a value chain, not divisional or corporate level. Products pass through activities of a chain in order, and at each activity, the product gains some value. The chain of activities gives the product more added value than sum of the independent activities’ values.
There are a number of locations in any business process to add value or to improve the process, which in turn will help in saving money and time while improving the performance. The basic idea is the same age-old concept of utilizing the incoming of information, let the source be anything. A firm’s value chain is part of a larger stream of activities, a value system. A value system, or an industry value chain, includes the suppliers that provide the inputs necessary to the firm along with their value chains. After the firm creates products, these products pass through the value chains of distributors (which also have their own value chains), all the way to the customers. All parts of these chains are included in the value system. To achieve and sustain a competitive advantage, and to support that advantage with information technologies, a firm must understand every component of this value system.
Players at each stage of value chain compete with upstream and downstream players to retain maximum amount of value with itself while also competition with me too suppliers. There is competition amongst the players at the same level of the value chain.
The variation in demand at the end consumption point is not visible to most value chain players. This fact coupled with intense competition creates a scarcity mind set amongst the players. The relationship amongst value chain members is transactional and tends towards win-lose. The sales for each of the player appears to be totally out of their individual control and hence totally uncertain. Moreover, a slight change in end demand creates a bull-whip resulting in alternate flood and draught in the upstream of the value chain.
Some of the symptoms are:
Supply Chain Intervention:
Our solution is designed to eliminates loss of sales by ensuring inventory (availability) at end consumption point. This is done by ensuring inventory at every point in the entire channel. Thus our solution is able to increase sales with smaller inventory levels.
Production Intervention:
Adding value at every point in production by releasing capacity and reducing production lead time enables the plant to give faster and real-time responses to market dynamics. Released capacity helps in availability of the fast moving items and expanding the existing portfolio.
Avenir, with its team of Expert Consultants deliver significant growth for their clients. Our engagement model is based on closely working with the client in strategy development and implementation of the Production, Custom Manufacturing and Supply Chain. Within a six-eight month period we are able to establish and deploy the solution. Immediate internal gains are observed within three-six months, while system gains of financial benefits may lag by two-three months. We have deployed our solutions across various Industrial Goods companies in India and abroad – a national player in the Electrical Engineering industry, a leading Food Machinery manufacturer, a leading pumps manufacturer in India, an international giant in the ball bearings industry are some of our successes.
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