I just returned from the 2016 IBEX boat show in Tampa, getting out right before the hurricane, and the winds outside could not compare to the energy and invigoration of the marine suppliers and buyers on the exhibit floor. The industry is definitely alive and well which is going to push the limits of the boat industry supply chain if the upward trends continue. We all keenly remember the near death of the industry just a few years ago and during that time it was a survival mode operation only. Little investment was made in business systems technology, supply chain optimization and systematic efficiency improvement.
Turning to today where the industry has been seeing near 20% annual growth in many segments, this lack of investment is coming to a head. In speaking with most of the suppliers, the need for improving the communications of supply chain order data is number one on their list. Would you believe the number of OEMs that still communicate with Fax is still very significant? Perhaps if you are the supplier, you will believe it as you live with it daily and see the costs of hand re-keying customer order data into your systems, taking change orders via phone and worst of all inadvertently transposing information and getting the order wrong. Bottom line – excess cost, risk and inefficiency. Excess time and resources that you must regain in order to meet the growth without adding people and capital expense.
So what are we to do in order to get control of this waste and lost productivity? Honestly the marine industry is behind the curve on technology as compared to other growth industries so we do have benchmarks to follow and compare to. We will not be charting new territories. Software providers that have worked in specialty vehicles, automotive and other supply chains are experts and there are some that have the expertise in marine as well. We all can agree that the marine market is not like high volume automotive, but there are supply chain concepts that can cross over. We also know that in today’s business model, excess additive costs for systems and software must have a positive short window for ROI and beneficial cash flow. 12 to 18 months for a software ROI is becoming the requirement.
In order to get started in seeing what can be done in your business, you can take a look at a few key areas and see if you would benefit from improvement:
- Order quoting – does it take engineering to create a new customer quote on products that could be configure to order? If so that means your engineers are doing repetitive design work that could be turned into a design rule. Excess cost, excess time and less customer response-ability are the issues.
- Manual Order creation – receiving your customer orders via phone, fax or email typically requires re- keyboarding of the order. This is not value add cost which can result in order delays, errors and product returns. Consider if you could receive orders electronically right into your order system in real time.
- Forecasting – with increased demands, expediting adds significant cost as well as creates production inefficiency. If you could work with customers to better predict future orders on stock product, would that streamline your operations and better use resources.
- Design and engineering changes – with growing numbers of SKUs and additional complexity, the ability to have detailed and accurate communication with your customers as well as suppliers is required. Have you had the situation where design changes came via email or fax and did not get put into production properly? The result – cost of rework or even scrap increases.
- Warranty – with product complexity increasing, warranty costs can quickly get out of hand. Having proper systems in place to authorize returns, track status of the return and evaluation of the returned product is more important than ever. Are you still handling returns on paper with phone calls and no checks? If so it’s a potential for losses.
Give these points some thought and if you see potential for improvement, it’s time to take action. Lets move the industry forward together and see success.