Driving Down Cost in the Supply Chain

Driving cost out of the supply chain goes beyond reduction of raw material cost. Though many of the manufacturers today concentrate on negotiation with their raw material supplier(s) the hidden cost of internal supply chain goes undetected. To address the cost of the entire supply chain we should not only look at direct material cost but also the cost of internal supply chain. At Epoch we looked at four areas in particular which include: planning/tracking, storage/delivery, inventory management, and supplier relationships. 

Planning and Tracking
At Epoch International, a provider of engineering and manufacturing services to diverse customers in such fields as telecommunication, automotive, medical, etc., this challenge becomes more acute due to various sizes and diversity of production that we run daily. Due to the vast variety and number of components used in various product lines, Epoch realized early on that, without any ERP tool, it would not be humanly possible to manage the entire supply chain. Epoch has been utilizing Oracle EBS suit since the early 2000s to operate its entire business operations.

To further enhance its internal supply chain it has augmented the ERP with a series of in-house designed interface modules. One of the early modules designed was a “barcode interface module.” This system has allowed the removal of all the manual entry into the ERP system by merely scanning the material as it moves from point of entry to the production floor. This system is very much integrated with the in-house developed MES system that monitors the movement of the product/material throughout the production stage.

Storage and Delivery
One area of cost that has been addressed by Epoch is the movement of raw material back and forth from inventory to production site. This has been achieved through the implementation of an environmentally controlled Point of Use Smart Cabinet. The company has deployed a series of these smart cabinets that is designed and patented by Epoch right at the point of use of the production. Bringing the inventory right to the production floor eliminates all movements back and forth between inventory and production. This also reduces the number of inventory staff since parts are picked by the production staff utilizing its fully automated locator and FIFO dispensers. The smart cabinet is fully integrated with the ERP system ensuring full control of the inventory. Since the implementation of the smart cabinet six years ago, Epoch has doubled its inventory material line items without increasing any head count on its material management team.

To read this entire article, which appeared in the April 2021 issue of SMT007 Magazine, click here.