As somebody who’s operated in supply chain domain most of his career, co-founded Yantra Packs (a returnable packaging pooling business. Confused? Check it out here) and now building Trakkia (you know what I am talking about, don’t joke), my observation is that the procurement function across most companies still happens to be manually driven. I have seen first-hand the tremendous impact that technology can have on, let’s say, material planning which is one small part of procurement function. And let me tell you, it’s a game-changer. But don’t just take my word for it – let’s delve into the nitty-gritty of how technology can optimise material planning and why that matters for your bottom line.
First of all, let’s define what we mean by material planning. Simply put, it’s the process of figuring out what materials you need to produce your product, how much of each material you need, and when you need it. Sounds simple, right? But as any supply chain professional can tell you, it’s anything but. Material planning is a complex dance of forecasting, inventory management, and logistics.
And that’s where technology comes in. With the right tools, you can streamline this process, reduce waste, and save money. Here are just a few ways technology can optimise material planning:
1. Accurate forecasting: The first step in material planning is figuring out how much of each material you’ll need. This is where forecasting comes in. You need to predict how much demand there will be for your product, and use that information to determine how much raw material you’ll need to meet that demand.
In the old days, this was done with a lot of guesswork and spreadsheets. But with today’s technology, you can use data analytics and machine learning to make much more accurate predictions. By analysing historical data, market trends, and other factors, you can create a much more accurate forecast. And that means you’ll be much less likely to over- or under-order raw materials.
2. Smart inventory management: Once you know how much raw material you need, you need to make sure you have it on hand when you need it. But you don’t want to order too much and end up with excess inventory that just sits around taking up space (and money). On the other hand, you don’t want to order too little and risk running out of materials in the middle of a production run.
Again, technology can help. With inventory management software, you can track your inventory levels in real time, set up automatic reordering when stock levels reach a certain threshold, and even track expiration dates and other important details. This means you’ll always have the right amount of raw materials on hand, without wasting money on excess inventory.
3. Streamlined logistics: Finally, you need to make sure your raw materials get to you on time and in the right quantities. This is where logistics comes in. You need to coordinate with suppliers, arrange for transportation, and track shipments to make sure everything arrives on schedule.
This can be a logistical nightmare (pun intended), but technology can make it much easier. With supply chain management software, you can track shipments in real time, get alerts if there are delays or other issues, and even automate some of the processes involved in coordinating with suppliers. This means you’ll be much less likely to experience production delays due to missing or delayed raw materials.
Now, you might be thinking, “Okay, that all sounds great, but how does it actually impact my bottom line?” Well, that’s the best part – optimising material planning with technology can save you a lot of money.
First of all, by accurately forecasting demand and ordering the right amount of raw materials, you’ll reduce waste. You won’t have excess inventory sitting around taking up space and money, and you won’t have to throw away materials that expire before you can use them.
Secondly, by streamlining logistics and ensuring that your raw materials arrive on time, you’ll reduce production delays. This means you’ll be able to produce more products in less time, which can increase your revenue.
And finally, by using technology to manage your inventory more efficiently, you’ll reduce the amount of money you need to tie up in inventory. This means you’ll have more cash on hand to invest in other aspects of your business.
So there you have it – technology can optimise material planning and have a big impact on your bottom line. And if you’re not using technology to do this already, well, you’re missing out. So get on board! (And if you need help, you know who to call.)