Innovation Pushes Cannabis Manufacturing to New Heights

Innovation within the cannabis industry is reaching new heights as more and more biotech and pharmaceutical companies enter the fray and the amount of cannabis research and development being conducted accelerates.

Cannabis R&D efforts are yielding creative new products and extraction techniques, as well as new methods of manufacturing aimed at making cannabis plant production easier, faster, and higher yielding.

Radical New Growth and Extraction Systems

Among the most noteworthy new manufacturing innovations are two systems developed by Iaso, called GrowBlox and PhytoX. These systems enable manufacturers to grow cannabis plants indoors at higher speed and without human assistance, and afterwards to extract the valuable ingredients from cannabis plants with greater efficiency and precision.

Traditional indoor growing methods require meticulous care and can take almost a full year to yield a successful crop. According to Iaso, GrowBlox can produce five cannabis harvests per year, which would make it the fastest marijuana propagation system on the market.

Along with GrowBlox, Iaso developed PhytoX as a way to optimize the cannabis extraction process for medical purposes. Touted by Iaso as the world’s first hydrodynamic extraction system, PhytoX freezes and pulverizes cannabis plants to maximize yields and increase potency, converting the entire plant into nano-emulsions that are then centrifuged and distilled.

Benefits of Wet Extraction

According to Iaso, PhytoX can perform extraction on wet or dry cannabis, making it capable of producing concentrate from freshly harvested plants. Extracting from wet cannabis plants retains ingredients that are lost in the dry extraction process. In addition, PhtoX’s use of water for extraction eliminates the needs for other solvents.

By speeding up and optimizing the cannabis growth and extraction process, GrowBlox and PhytoX have the potential to revolutionize the cannabis manufacturing industry. Iaso also produces cultures to optimize cannabis growth and is developing a new drug delivery system to be ready this year.

Better Drug Delivery Systems

A number of leading biotech firms are working to develop new ways to extract the active cannabis ingredients and deliver their medically beneficial effects in ingestible and topical forms. Lexaria Bioscience Corp. focuses its R&D on making cannabis medical compounds more absorbable and easily digestible. Lexaria’s process reduces the time of onset for edible cannabis to 15-20 minutes versus the usual 60-120 minutes, and increases absorption by five to 10 times, in addition to masking the bitter taste of cannabinoids without the need to add sugar.

Earth Science Tech, Inc. focuses its R&D on producing high-purity, high-quality cannabidiol (CBD) oil and infusing it in digestible products that provide medical benefits while not producing a psychoactive high. Earth Science Tech’s products include vitamins, minerals, herbs, botanicals, personal care products, homeopathies, and CBD oil delivered in capsules, tablets, soft gels, liquids, creams, sprays, and powders.

Cannabis Pain Relief Innovators

Several companies based in Colorado and California have established reputations for delivering high-quality cannabis products, including unique and effective methods of making cannabis ingestible for pain relief purposes.

Viola Extracts has become a leading producer of butane hash oil (BHO) products for the medical industry. Extracting the active ingredients of cannabis using butane produces pure and potent concentrates that are productized in a variety of forms and consistencies that include oil, shatter, wax, and live resins.

Another cannabis innovator is Foria, which has received a lot of media attention for its sensual cannabis products for women. For medical uses, Foria provides cannabis suppositories that offer relief from menstrual pain as well as back and hip discomfort. The suppositories provide rapid and long-lasting pain relief.

Colorado-based Binske infuses cannabis in a host of high-quality edible and topical products that can be used as an alternative to smoking. Its edibles include chocolate bars, fruit spreads, granola bars, olive oil, and tinctures of garlic, lemon, and chipotle. Its honey products are produced from local bees and can offer pain relief by being ingested in tea. Its topicals include bath salts, body lotion, and massage oils.

Another Colorado-based company providing quality medical cannabis products is Altitude Organic. Its line of edibles includes organic treats such as assorted fruit and brownie bars, as well as organic fruit gummy candies. It also sells an extra strength pain spray called Apothecanna.

All these standout ventures show how the legalization of cannabis, along with its many medical benefits, is causing an increasingly more diverse and sophisticated set of products to be developed, as well as inventive manufacturing techniques. Expect to see further innovation as more and more companies devote their attention to cannabis R&D and as legalized cannabis spreads to ever more states and territories.

Contact us to learn more about the latest trends and business solutions in the cannabis manufacturing industry. 

 

 


New Bill to Legalize Cannabis Nationally Would Be a Game Changer

Legalizing cannabis in the United States nationally would have a dramatic and far-reaching effect on the cannabis industry, which has been living under the shadow of federal laws that make cannabis an illegal substance. It looks now that nationwide legalization could happen sooner than expected because of New York Senator Chuck Schumer’s introduction of a bill to decriminalize marijuana.

Said Schumer: “My thinking, as well as the general population’s views on the issue, has evolved, and so I believe there’s no better time than the present to get this done. It’s simply the right thing to do.”

State and Federal Laws at Odds

Although an increasing number of states have been making medical and recreational cannabis legal, the growth of the cannabis manufacturing industry has been inhibited by the Trump administration’s pledges to enforce federal restrictions.

Potential investors have been sitting on the sidelines because of fear that the federal government might take aggressive action to close down the recreational use of cannabis. The muddled legal climate also has prevented many banks from providing accounts to cannabis industry operators.

Under the new bill, these sanctions would be lifted and it would be left up to individual states how to regulate marijuana. The federal government’s role would be policing cannabis trafficking from states that have legalized the drug to those that have not, as well as regulating marijuana advertising to prevent children from being targeted.

Investment Floodgates Would Open

If Schumer’s bill becomes law, marijuana would be removed from the list of substances classified under the Controlled Substances Act. For the world of cannabis manufacturing, this could unleash a torrent of pent-up development dollars and energy.

Even under the current legal cloud, the cannabis industry is on track to become a $31 billion empire worldwide by the coming decade. In the United States, the cannabis manufacturing sector is projected to create 300,000 jobs by 2020.

National legalization of cannabis would inflate these numbers as a host of states now hesitant to legalize cannabis join the legalization ranks. As Forbes reported, numerous states are on the cusp of introducing legislation to make cannabis legal on a recreational or medicinal basis, including New Jersey, Michigan, Oklahoma, Utah, Missouri, Virginia, and Ohio. If the federal barriers were removed, many more states would fall in line.

Contact us to learn more about the latest trends and business solutions in the cannabis manufacturing industry. 


Cannabis Manufacturing: Scaling Up and Getting Industrial

As the cannabis industry continues to expand, cannabis production centers inevitably will follow the path of other major industries and become large-scale operations. The new Liberty Health Sciences venture in Florida gives us a sense of what we can expect to see over the next few years as more big businesses embrace cannabis manufacturing.

Medical marijuana became legal in Florida in 2016. In January, Liberty Health Sciences out of Toronto purchased 242 Cannabisa 387-acre parcel with 200,000 square feet of greenhouses and processing facilities in Florida’s Alachua County, near Gainesville, for about $30.5 million. The 242 Cannabis operation is a subsidiary of medical cannabis company 242 Cannabis Canada.  

After a retrofit, the operation is going to include a new 16,000-square-foot processing area in which the company will be able to extract and refine cannabis oils, including adding a kitchen to make edibles. The facility also will produce vaporizer products, some of which will include preloaded disposable pens, cartridges, and pods.

Ramping Up Cannabis Manufacturing

Called the Liberty 360-degree Innovation Campus, the facility at full capacity will employ about 150 workers, including chemists, biologists, horticulturists, and customer service representatives. Liberty aims to speed up the process of producing medical cannabis, as well as to bring to market a number of innovative new products.

The plan is to produce 27,000 pounds of medical cannabis per year, which would be a large spike vs. the yields being grown in other states. After the cannabis plants are grown, Liberty aims to produce most of its products in about eight weeks, which will increase its ability to put out products and generate revenues.

Innovative Products in the Works

To widen the appeal of medical marijuana, Liberty plans to produce softgels, transdermal applications, and beverages. Although each of these products has been the focus of development and marketing efforts of other cannabis distributors, they have not yet achieved the popularity of other medical cannabis products.

For more precise dosing, softgels could become a popular cannabis product in Florida and beyond, particularly for aging populations with a variety of illnesses. Softgels are known for bringing longer relief from pain and other ailments.

Transdermal (or topical) applications also are likely to become popular because they make medical cannabis easier to ingest without having to light up. Considering much of the aging population cannot smoke marijuana without health concerns, topical solutions could quickly become a popular means of ingestion.

Cannabis beverages offer similar benefits. While a number of cannabis beverages are now available, they have not yet become mainstream products.

What Lies Ahead for Cannabis Manufacturing in Florida and Beyond

Liberty Health is part of a new wave of big businesses that are industrializing cannabis production. A spokeswoman for Liberty Health Sciences said its current operation is valued at $327 million.

Last year, Liberty bought and took full ownership of another Alachua County medical cannabis operation, Chestnut Hill Tree Farm’s Medical Marijuana Treatment Center, for about $40 million.

Liberty’s dispensaries will be called Cannabis Education Centers, the company said, because the industry is new and patients need to be educated about what they are using as an alternative to traditional medicines.

Liberty Health Sciences opened its inaugural dispensary in The Villages, a retirement community, in January, and has plans to open five more outlets in Florida this year — in south Tampa, Fort Myers, Fort Lauderdale, St. Petersburg, and Port St. Lucie.

Pundits have been predicting that the lucrative opportunity opened up by the legalization of cannabis would lure big business to embrace cannabis manufacturing. The international market for cannabis is projected to increase from $7.7 billion today to $31.4 billion by 2021, according to the Brightfield Groupa cannabismarket research firm. The U.S. currently accounts for 90 percent of global cannabis sales, but its share is expected to drop to 57 percent by 2021, in large part because of Canada’s plans to legalize recreational marijuana by July 2018.

Contact us to learn more about the latest trends and business solutions in the cannabis manufacturing industry. 


Generic Inquiry Changes in Acumatica 5.3 explained

Generic Inquiry Changes in Acumatica 5.3 explained

In Acumatica version 5.3 you may have noticed some mysterious warnings appearing on your generic inquiries. I could not find any documentation on why this started showing up. After a little digging this is what I discovered.

Problem

Let’s start with a simple test generic query.

Just use the SOOrder table

1

On the Results Grid add OrderNBR and CustomerID_Description and you will see the warning.

2

Generic Inquiry has automatically joined to the BAccount table to get the Account Name (customerID_Description – BAccount.AcctName) to be displayed.

Acumatica created the following SQL Statement to retrieve the SOOrder records. Not so easy to understand, lots of things going on.

SELECT TOP (33)  [SOHeader].[OrderType] [SOHeader_OrderType],  [SOHeader].[OrderNbr] [SOHeader_OrderNbr],  [SOHeader].[CustomerID] [SOHeader_CustomerID],  [SOHeader].[NoteID] [SOHeader_NoteID],  (SELECT TOP (1) [NoteText] FROM [dbo].[Note]  WHERE ([dbo].[Note].CompanyID IN (1, 7) AND 32 = SUBSTRING([dbo].[Note].CompanyMask, 2, 1) & 32) AND [Note].[NoteId] = [SOHeader].[NoteID]) [SOHeader_NoteText],  (SELECT TOP (1) COUNT(*) FROM [dbo].[NoteDoc]  WHERE ([dbo].[NoteDoc].CompanyID IN (1, 7) AND 32 = SUBSTRING([dbo].[NoteDoc].CompanyMask, 2, 1) & 32) AND [NoteDoc].[NoteId] = [SOHeader].[NoteID]) [SOHeader_NoteFiles],  [SOHeader].[CuryID] [SOHeader_CuryID],  [SOHeader].[CuryInfoID] [SOHeader_CuryInfoID] FROM SOOrder [SOHeader]  WHERE ([SOHeader].CompanyID = 7) AND ([SOHeader].BranchID IS NULL OR [SOHeader].BranchID IN (5, 6, 10, 11, 12, 13)) ORDER BY  [SOHeader].[OrderType] ASC,  [SOHeader].[OrderNbr] ASC OPTION(OPTIMIZE FOR UNKNOWN) /* 00.00.00.00 */

To simplify, we can manually create a simplified SQL statement that will provide what we need to see to understand what is Generic Inquiry is doing.

First it returns all of the SOOrder header records.

Select OrderNbr, CustomerID From SOOrder Where CompanyID = 7 Order By SOOrder.OrderNbr

3

Next, it then loops through each of the customer ids and retrieves the AcctName. It caches the results so that for each name it only does the BAccount look up once.

Select AcctName From BAccount Where BAccountID = 2470 And CompanyID = 7

From BAccount Where BAccountID = 260 And CompanyID = 7

Select AcctName From BAccount Where BAccountID = 262 And CompanyID = 7

Example of this in SQL

4

With bigger record sets this can get very inefficient.

Solution

So how do we improve the performance and get rid of the warning. Easy!

We add the BAccount table to the Tables tab on the generic inquiry.

5

Create the relations between the Tables  (join).

6

Replace the default customerID_Description with AcctName from the BAccount Table and warning disappears.

7

Now when Acumatica executes the query it runs the equivalent of:

Select SOOrder.OrderNbr, BAccount.AcctName

From SOOrder Inner Join BAccount On SOOrder.CompanyID = BAccount.CompanyID

And SOOrder.CustomerID = BAccount.BAccountID

Where SOOrder.CompanyID = 7

Order By SOOrder.OrderNbr

A much more efficient SQL query. Mystery solved.


Distribution Software Features You Need to Get Ahead

Distribution

To stay competitive in today’s distribution market, it’s almost a given that you’re going to have to use modern software and process automation. This is especially the case if you have a small operation and operate in multiple channels. Tools such as distribution software can specifically help your business successfully compete with larger ones. Here are some features to look for inside of distribution software to remain competitive in your day-to-day operations.

Integration with e-commerce Services

If you run a business that handles multiple different distribution channels, one feature that you absolutely need to have is integration with your e-commerce services such as your on-line stores, eBay and/or Amazon.

The important thing is to try to ensure that any item purchased online through any of your online stores is properly recorded in your ERP software. This is why integration is a such a necessary feature. A one-click solution to integration in a disparate number of online storefronts is exactly what you need to process your orders efficiently. With integrated systems, your inventory and orders can be maintained in one master locations and won’t need to input all of your information twice. The automation will take care of it for you allowing for quicker response to your customers and a complete view of all your sales operation statuses in one system.

Point of Sale Options

Another useful feature to use in areas where it’s applicable is the point of sale integration. Integration will be particularly salient if you have a brick and mortar operation, or if any aspect of your business has you selling to your customer in-person at any time. This could even work for much smaller operations. Integrated point of sale systems with distribution and inventory systems is of particular importance to such operations. Again, you really don’t want to have to input the same thing multiple times. Additionally, inventory allocation and updating can be handled automatically in these cases as well.

Another aspect of this that’s important is the fact that having point of sale integration with distribution services is critical if you have multiple sales happening across different mediums all simultaneously. So, if you have an online portal and a brick and mortar location that are both processing sales at the same time, having an integrative software tool that can handle this kind of multi-channel point of sale approach is an absolute necessity in order to make sure that you’re properly keeping track of the distribution process

 

Multi-Location Integration

Once again, this is a feature that will matter more depending on how large your operation is and how many physical warehouse locations you have. Stocking the right amount in the right location is always a complicated issue. This can be solved by using the right combination of demand planning and distribution requirements planning software. These software solutions will help you determine the what, when and how much to replenish your inventory at the most optimal levels.

Supply Monitoring

Having a systematic way to order, monitor and expedite supplier orders is also a necessity. By automating standard supply chain order process, planners and buyers will be allowed to focus on the exceptions and better buying deals. It is important that accurate lead time be maintained at all times.

Mobile Compatibility

To make sure that you fit your customers and employee expectations, compatibility with mobile platforms is often a must. This includes smartphones and tablets. IBM reported in February 2016 that almost half of all online traffic for this year Valentines’ Day season was done on mobile devices. Without mobile support you would miss out on almost half of your potential customer orders, can you afford that?

For more information about distribution software services, please contact us today.


The Worst Advice We’ve Ever Heard About Demand Planning

It is no secret that demand planning is a process that many businesses go through to remain successful. It allows for the creation of forecasts that will help the business manage their inventory levels. This is beneficial because the business can then use this information to align their inventory levels along with the fluctuation of demand that is placed on a particular product.

Because it is so important, there are multiple strategies that businesses can rely on when it comes to demand planning. As with all other types of strategies, some are better than others. There are also those strategies out there that wind up working against the company instead of for them. When you are choosing your strategy, be sure to avoid these instances of bad advice.

You should use one Strategy for all your Products

There are actually several factors that go into deciding the best strategy to use for any given product. Business leaders should examine things like geographical location as well as the industry in general. While this information may be consistent between some products a company offers, there are also times when each product should be treated individually.

Trying to place all your products into a one size fits all kind of model is dangerous and will not provide the right type of information that is truly valuable. Instead, you should always look at your products individually in order to determine what the true demand for the product will be in the near future.

You should think of Demand Planning as if it were a Program

This is a trap that many businesses fall into. Oftentimes, we tend to look towards the future and wish that we could speed to success instead of going through the process. This is the same issue in some companies that are looking to implement demand planning. They are focused on getting it up and running quickly.

Instead of taking this approach, it is always best to focus on creating a demand planning project that is ran well. While we all want to begin being successful quickly, demand planning is something that should take some time to implement. It is not a program that has certain steps that you must follow in order to be completed. Take the necessary time to carefully analyze the information that you are receiving so that you can gain the best amount of quality data. This will allow you to make the best decisions in regard to your inventory.

If you Plan correctly, you won’t have Surprises

Planning is an important part of the entire process. But, no matter how well you do plan, there will always be something that occurs unexpectedly. To help balance this, you should always have a backup or contingency plan. The most important thing to remember is that there will be surprises and that you must plan for every scenario possible.

In order to plan for surprises, always make sure that you are in a position that makes you flexible. For example, you may find that you need to have a plan to find alternate materials than what you normally use to create your products. Having this plan in place and being able to execute it quickly can help you to manage the times when supplies are out of stock or limited from your traditional supplier.

Don’t Put your Faith in Statistics

Statistics aren’t really all that exciting. However, they definitely have their place in the business industry. In fact, most businesses out there aren’t really using statistics to the best of their ability. Instead, they simply glance at the numbers and carrying on with their daily lives.

Statistics are very powerful. Businesses who have the ability to drive the company towards improvement are those that are the most profitable and successful. Also, when you rely on statistics to make changes to your demand planning strategy, you will find that it is extremely easy to measure the value that is added from your changes. So, along with your forecast information, be sure to review statistics that are related to your industry and your products when making changes to your strategy.

Your Plan should be complicated in order to provide the most Value

Some mistakenly believe that in order for something to work the best way that it must be complicated. This couldn’t be further from the truth. In fact, demand planning will work much more efficiently if you are able to keep your processes and strategies simple.

The most important thing with any demand planning process is that the strategy that you choose is geared towards your specific company. Take a look at the amount of support that you will need as well as the amount of information that is already available. You can then choose a strategy that will help work with your company in the best capacity.

Focus on only one Product at a Time

It is true that you should look at each product individually. However, it is also true that you should focus on all your products rather than just one or a handful of your most popular items. You never really know what you are missing with other products when you choose to rely on this method. When a company only focuses on certain products, they may find that their success is not as great as they had expected.

Instead, you should take more of a 360 approach when it comes to demand planning. Look at the various elements of your entire business and look for changes that you can make to improve each of them. Some companies have found that by making some simple changes with some of their lesser performing products that they were able to greatly improve the success of the entire company.

Final Thoughts

Demand planning is critical for companies that are looking to create historical sales information. With this type of information, forecasts can be created that reflect the company’s customers as well as statistical information about the company as a whole. This information can then be used to collaborate with the customers in order to create products that will appeal to them and that will be available when demand is high.

There are plenty of things that a business can do incorrectly when it comes to demand planning. For this reason, it is always best to rely on a specialist to help with the goals that your company has in place. Choosing a partner for this venture is something that you should consider if you are looking to truly gain control over your inventory and the demand for that inventory.

When choosing a company to help you with this mission, be sure to choose one that has experience within your industry. You should also look for a company that takes the time to learn about your company and what is most important to you. This type of company will be the best option when it comes to receiving the value that you deserve to receive.

To learn more about MaxQ and what we have to offer to our customers, be sure to contact us. With our solutions, you will find that your business is able to receive all the information that it needs to rise to the top.

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The Latest Supply Chain Planning Trends: A Round-Up of Recent Industry Changes

Supply Chain Planning

 

Depending on who you ask, the global economy has hit a bottom, and it’s on the way up or it has already peaked and it’s on the way down. No matter which view you have of the macro-picture, one thing is certain in the finer details of supply chain planning: although there’s a striking mix of the very good and the very bad, depending on the industry, everyone is being forced to adapt. As the actions of these adapting companies become clearer, noticeable trends are beginning to develop.

A Trend Toward Urban: Fulfillment Centers Moving to the City

Real estate developers in the logistics arena have seen some good times lately. Demand and imports in the US continue to grow, and e-commerce continues to fuel activity.

What’s interesting, however — and what has been exciting for them — is the growth in urban sectors. While the huge fulfillment centers in the remote locations far from cities are still critical, retailers and distributors are supporting the rural locations with smaller fulfillment centers in urban areas. Research reveals growing demand for locations under 200,000 square feet in dense urban areas.

Amazon has been a textbook example of this new trend. As this September 2015 article from Supply Chain Digest explains: “Amazon and others often find space in old industrial and warehouse areas within a city, and generally need few of the amenities companies look for today in traditional DCs, such as high ceilings and modern layouts. Location is the chief attribute these distributors are seeking to support so-called ‘last mile’ delivery.”

In the case of Amazon, they began this small service center experiment in London in 2013. It worked exceedingly well, and they launched the same strategy in the United States soon after. As noted in the Supply Chain Digest article above, Amazon already has 19 such urban centers as of June 2015 with more on the way.

Crisis in the Publishing Industry and How Publishers Are Switching from In-House to Third-Party Logistics Providers

Publishing has been wading through a crisis ever since the e-book hit the markets and redefined what “book” means. Now that years have passed since the late 2000s when the sea-change began to take form and noticeably affect publishers, what this crisis means for the supply chain has taken a more observable form. The new publishing paradigm has emerged. Publishers have realized that the usual fixed pricing model and the familiar system of publisher owned and operated warehouses is no longer ideal. The use of variable pricing models and, as bound paper inventories diminish, the switch to third-party logistics providers are rewriting the supply chain story.

McGraw-Hill Education is a recent example of this new dynamic as a recent August 2015 white paper from Supply Chain Management Review observed. The publisher worked with a third-party provider (GENCO) to accomplish four major goals:

  1. Mitigate risk
  2. Transfer assets
  3. Establish a variable pricing model
  4. Build a flexible platform

 

  1. Risk

McGraw-Hill’s risk was two-fold: a large supply chain workforce and excess warehouse space for an ever-shrinking inventory.

What was heartening for the employees, however, was that they didn’t lose their jobs. Their positions were transferred to the third-party logistics provider — same job; different boss. The transferred employees were then placed in a consolidated warehouse system that used Lean principles to obtain the highest efficiency.

  1. Assets

McGraw-Hill’s long-term leases were near their end dates. The third-party provider transferred the real estate assets, took over the leases, and made more efficient decisions with the excess space.

  1. Variable Price Model

McGraw-Hill, through the third-party provider GENCO, needed to change to a variable pricing model that could bring in new streams of revenue. GENCO’s solution was surprisingly simple: re-purpose the excess warehouse space by leasing it out to tenants, even if those tenants were competing publishers. Instead of unavoidable losses, the unused space became strengths that helped stabilize McGraw-Hill.

  1. Flexible Platform

The third-party provider had a large network of distribution centers that McGraw-Hill could use. This flexibility and access to large amount of resources without taking the risk was exactly what McGraw-Hill needed.

To summarize all of it in one sentence: today’s publishers must trim the excess weight of fixed, in-house systems and transform themselves into lean, agile operations that can turn on a dime as the industry continues to change rapidly.

How China’s Decline Will Hurt Asian Parts Suppliers

Asian electronic-parts suppliers are nervous, to say the least. And there are three reasons for that: China’s devastating downturn, the evolving smartphone industry, and the frighteningly volatile market.

In a recent September 2015 article from The Wall Street Journal — as quoted by Supply & Demand-Chain Executive — a severe slowdown in China’s smartphone market is sending ripples through the supply chain: “World-wide sales of smartphones grew at their slowest rate since 2013, research firm Gartner said this month, with sales in China falling for the first time in the second quarter.”

Samsung Electronics Co. and SK Hynix Inc. will certainly feel the burn. Many smartphone devices use the memory chips of these companies to store data. And other companies higher up in the supply chain, like Fanuc Corp. and Tokyo Electron Ltd., have already lowered their sales forecasts for the fiscal year that ends next March.

Aerospace and Defense Supply Chains Still Trying to Figure Out Wearables, Analytics, and the Internet of Things

As Supply Chain Quarterly noted recently in a September 2015 article, digital technology is still in its infancy in supply chain planning. It’s ironic, really. As covered in the fascinating new report from Accenture — “Are You Playing Ramp Up Roulette With Your Suppliers?” — industries with incredibly advanced technology (aerospace and defense) are still rookies in their use of digital technology in supply chain planning.

Upon first look, the numbers in the report seem promising, especially in the use of analytics:

Three-fourths of respondents [in aerospace and defense] say they have either implemented or plan to implement analytics for supply chain execution…The use of mobility tools, such as tablets, wearables, and other personal devices, is also increasing, with half of respondents planning to use or already using them for supply chain execution. Cloud-based technology, currently used or planned by 34 percent of respondents, also shows great potential for the aerospace and defense industry.

But the report makes this conclusion: the aerospace and defense industries are “still challenged by a lack of transparency and weak collaboration.” There is still great potential for improvement, and Supply Chain Quarterly suggested a few great ideas to start: “analytics and simulation of products could be used during development and testing, and wearables could help companies conduct virtual production inspections.”

Meanwhile, other industries are already finding powerful ways to use digital technology. Take the Internet of Things, for example; as InboundLogistics.com writer Udaya Shankar explains, companies are using RFID chips in pallets that are linked to a device integrated in the shipment vehicle to provide crystal clear in-transit visibility. This sends vital information to the company — GPS coordinates, weather conditions, traffic conditions, departure and arrival times, the driving behavior and speed of the driver — that adds many new capabilities to supply chain planning.

As Shankar observes: “Combining real-time sensor data with environmental data can provide intelligence of higher order to all the stakeholders in the ecosystem.”

Contact us for more helpful insights about the current trends and future of Supply Chain Planning.

 


Statistical Forecast for Better Demand Planning

Using a statistical forecast as a starting point often proves to be a solid start to a collaborative Demand Planning process. First, why do companies forecast? There are several benefits of more accurate forecasts;

 

  • Improve customer service levels.
  • Increased sales.
  • Reduced cost of carrying inventory.
  • Improved cash flow projections.
  • Production smoothing (level loading).
  • Reduced employee costs.
  • Increased return on investment.

In basic terms, all manufacturing/distribution companies want to do the same thing. They wish to have the right stuff in the right place, at the right time. So then is it better to use a statistical forecast or one made by a person? Well, a statistician would call this a choice between statistical and empirical estimate. The statistical forecast gets generated by software that calculates that forecast strictly by applying statitical techniques to the sales/booking history while an individual or a group of people uses judgment to formulate a collaborative forecast.

So then, how does the statistical forecast fit in a collaborative process? Some experts recommend using a statistical estimate as a starting point rather than asking someone such as sales person, to create a forecast from scratch. This statistical forecast, should not be the final answer; rather it is the starting point of that collaborative forecasting process. It’s a great input to start cross-functional demand planning.

Another question that people ask is; are there other cases where we should not use a statistical forecast? And the answer there is yes.  Any product that its history is not indicative of the future cannot use statistics effectively. Items that can be considered fads are particularly hard to predict. Many companies that have forecast increasing sales based on past sales trends for items that were a fads. They get stuck with inventory that can possible bankrupt a company. Remember the Atkins diet craze from a few years ago, Atkins Nutritionals went bankrupt after being to force to throw away millions of dollars of inventory.

New products, for example, pose a challenge for statistical forecast in that there’s no history, in this case, we suggest using a similar or like product, to model the projections for that new product.

Short life cycle products can also be a challenge because there’s a little history, and little history does not yield strong statistical forecasts. In other cases, volatility of historical demand can result in unstable or unusual trends that do not have any statistical correlation. And finally significant changes in demand patterns caused by acquisitions or other either company or external events can drive unreliable forecasts.

In summary, a statistical forecast can be an excellent tool but should not be the only method used to create an accurate forecast. Need more information and help? Then contact us and we will give you the best advice.


7 Great Benefits of Vendor Managed Inventory

 

Vendor Managed Inventory

Vendor Managed Inventory, or VMI, is a business relationship where a manufacturer or distribution business takes over management of inventory for a retail or wholesaler. Using Electronic Data Interchange (EDI) or other electronic methods for communication, the vendor of the product will manage orders and fulfillment for those further down the distribution chain.

VMI: Managed vs Consignment

There is significant difference between managed and consignment sales types of VMI, and some similarities/differences which merit further discussion before we look at the benefits of VMI management. Consignment is where the vendor retains ownership of the product until the time when it is sold to the end user. When the inventory is sold, the retailer takes a commission of the price and sends the rest of the money back to the vendor, as payment.

VMI can be used with consignment products, but does not have to be. VMI can as be used as “Managed”. In this case, the goods are sold to the retailer at the time of shipment, but the vendor manages the inventory levels at the customer’s sales location. The Vendor does not wait to receive a purchase order to restock; the vendor handles replenishing the inventory to maintain optimal sales. In some VMI relationships, it means the vendor creates and maintains the displays at the sales location and stocks them to make certain they are full.

VMI is dependent upon having the right software and the right relationships with customers. Since communication between customers and vendors is essential to a successful VMI system, the right software will need to facilitate communication via the cloud to increase access and communication.

 

Increased Customer Service

Perhaps the most important aspect of VMI is the improved channel communication. Manufacturers, distributors and retailers/wholesalers have to build communication systems utilizing advanced software.This provides both you as the vendor and your customers with information necessary to operate a VMI system. Additional results from increased communication and cooperation are better customer service, improved quality, reduction of costs and increased sales.You improve your customer service by accurately and swiftly responding to your customers’ needs.

Better Planning

To establish a proper VMI relationship, you must have access to a significant amount of data from your customers, including POS and inventory adjustments. This data provides you the information necessary to create an optimal inventory management plan. Additional uses for this information include order management, income planning, parts and supplies planning, HR and more.

Rather than guessing how much product a customer will need based on intuition or limited information, VMI gives both parties the right information needed to optimize the supply chain.

Strategic Business Alliances 

VMI benefits business relationships between more than just you and your customers. Distributors often take part in a VMI relationship, increasing the accuracy and efficiency of your inventory management while decreasing the costs. Often a distributor will receive the same sales data the vendor does and then optimize the inventory at the customer site to reduce costs to the vendor and to decrease turn-around time when the customer needs new inventory.

Additionally, the same system of communication built with your customers can be used to build relationships with your suppliers to increase your use of JIT inventory in your manufacturing processes. While any business relationship needs to be entered into with caution, the systems that businesses need for VMI facilitate much stronger business alliances across the entire supply and distribution chain.

JIT Inventory

JIT stands for Just-In-Time. JIT, focuses on only ever having enough inventory on hand to meet current needs. The amount of inventory needed depends on your product type, how fast it will move off the shelves to consumers and how long it will take to produce more. Because of the complicated management systems required, JIT inventory management has only recently become affordable options for businesses because of the advances in the cloud, IT speed and storage and business systems.

Your customers want to utilize JIT inventory to get the most out of their physical space and reduce costs to their business. With VMI, you establish JIT inventory levels for your customers and produce according to that need. You see their sales and inventory levels and now have a better insight into their need.  This has tremendous advantages for manufacturers and warehouses as well as for their customers. Leading to much better forecasting for the vendor, inventory levels can be really optimized for both parties.

Variation from Franchising

For many businesses, the advantage of franchising is maintaining control of parts and inventory down the distribution chain. Napa Auto Parts has consistent pricing, inventory and displays for all their manufactured goods, no matter the location. This is just one of the major advantages of franchising. With the increased communication with your customers through VMI, you have the opportunity to build quality control into your relationships with your customers. This means that you can have a hand in marketing your inventory to the end users of your product, not just the other businesses in your distribution chain.

Advanced Forecasting

Accurate forecasting requires data. The more data you have about sales results, the more information you can infer about customers, about seasonal trends, about the demand curve and your product life cycle. With historical data and an understanding of the causes of trends through common sense and experimentation. A spike in car parts from May-September could be caused by summer travels, for example. With the large amounts of data gained by using a vendor managed inventory system, you can improve accurate forecasts of the most likely scenario for increases and drops in demands. This aids long-term strategic planning and short-term order fulfillment.

Reduction of Sales Costs

Storage adds significantly to the costs of your product.  You incur costs to store inventory waiting for an order, your customer also incurs costs storing inventory waiting for a sale, you have collectively added significant costs to each item sold. Whether this cost is visible or not, it is there.

These 7 benefits show that with the right IT and communication, Vendor Managed Inventory is an excellent way to increase your customer service offerings, whether you are a manufacturer or a distribution company. Integrate VMI to build relationships, improve quality of product delivery, increase income and decrease costs.

We offer complete warehouse management solutions that integrate well with any VMI system you may put in place. Contact us today to see if our WMS will work for your business’s needs or for more information about business systems to improve your bottom line.