LEVERAGING RESPONSE MANAGEMENT TO IMPROVE OPERATIONS PERFORMANCE

Frequent changes to demand, supply, capacity, and product can spread over a multi-site enterprise and global supply chain, creating ripples that may swell to a tidal wave by the time they hit the point of action—the moment just before execution when response decisions must be made. Responding rapidly at the point of action can be difficult, but doing so in a way that aligns with corporate objectives is even harder. This is especially true when hundreds of these make-or-break decisions must be made throughout the enterprise on any given day.

While many organizations are increasing awareness of corporate metrics by communicating them more broadly throughout the enterprise, their focus tends to be historical—i.e., limited to a view of past performance. An inherent disconnect also arises because financial professionals and company management tend to examine metrics in terms of dollars and cents, whereas operations looks at them in terms of units.

Randy Littleson serves as vice president at Kinaxis and has more than 17 years of management experience, having held executive-level positions at Interface Software, Spyglass, and Palindrome Corporation (a Seagate company). To discuss this topic further, join him online at blog.kinaxis.com.

To overcome these challenges, manufacturers must not only communicate what the key metrics are, but also link financials to operational metrics. More important, they need to arm operations with tools that facilitate proactive management, not just measurement, of key metrics at the point of action.

Response Management—a new solution category that enables companies to respond rapidly and effectively to constant day-to-day changes—can help. By developing a core competency in Response Management, manufacturers empower their staff to respond more quickly, positively impacting customer service metrics. And the ability to review and score multiple "what-if" scenarios of various action alternatives drives greater effectiveness by letting participants choose the response that aligns best with key performance metrics.

Through Response Management, operations can instantly see the impact of a proposed action on revenue, on-time delivery, margin, inventory, material costs, and more. The aggregate impact of these decisions directly affects the income statement and balance sheet metrics that finance and management track on a regular basis.

Today's hypercompetitive market leaves little room for error. Though companies have invested millions in technology and strategies to drive long-term market leadership, "managing in the moment" remains one of the least-automated processes. Response Management provides the tools and resources crucial to help operations drive improvements and directly impact the key performance metrics of the organization.