Frank Murphy, Independent Consultant

Mesmerized by ever accelerating Supply Chain information technology, we sometimes lose sight of the brick, mortar and human process we are trying to manage.

At times it’s like we’re strapping laser guided drones to our cap guns (Hope the millennials get what cap guns are).

Subcontracting or Third Party Manufacturing (TPM) is a case in point. For decades, these shop floors outside the four walls have been very challenging to manage.

Order management is the least of it. Inventory control, production reporting and quality tracking have been a world class Rube Goldberg of emails, voice mails, faxes and ‘Hail Mary please let them get it right.’

Your Internal Supply Chain Processes

Here’s the situation – your internal Supply Chain processes have matured to the point where you need a high-powered ERP system to take you to the next level. You need the agility and velocity these systems provide to keep ahead of the competition. Nowhere are these two attributes more critical than in our fashion driven sector.

While sourcing the new system you see the Supplier Relations module offers web-base portal access. That long desired goal of casting your TPMs operations in your shop floor’s image is there for the asking.

Give them secured access to your system, and get real time updates on material receipts and inventory reconciliation. Better yet, get interactive Advanced Shipping Notices that automatically re-jigger ‘Available-to-Promise’ for the supply planners.

And while you, the fully mature Supply Chain mentor, is busily blue-printing your little TPM brother’s future; that rascal is still wrestling with how to cross reference your part numbers with his warehouse system (aka a bunch of Excel spreadsheets).

Of course, first he has to record that stack of receivers that piled up when Judy went on maternity leave. Or maybe he has to wait until the end of deer hunting season to get some hilo drivers back to clear the receiving dock.

Now you’ve brought on $600,000 worth of consultants to champion your transition and integration plan. You’ve published libraries of BPPs, as your state of the art ERP system will not tolerate the work-a-rounds and on-the-fly fixes of the old system.

You’ve done all the due diligence including bringing the little rascals in for a week of hands on portal training. They nodded their heads for the whole week and they passed all the knowledge checks and skill assessments.

You’ve also judiciously added additional resources for when the system goes live and have planned a hyper-care period where these resources will be available to assist with transition and ramp-up issues.

Now you’re getting to the end of hyper-care and yet stubbornly your community of TPMs needs a high degree of assistance.

And it’s not only the little rascals; it’s also your major players (those TPMs with their own ERP systems and demonstrated Supply Chain maturity). To make matters worse, the Major TPMs claim your old patch work of systems was easier to work with. They’re adding their own resources to deal with new complexities.

Yikes! That wasn’t the vision…

What’s going wrong with this TPM Supply Chain model? Where are the reporting improvements to material receipts, production reporting and quality tracking?

The promises to a more fully integrated Supply Chain are slow in coming because we didn’t respect the basics:

1. Collaboration with partners at the functional point of contact
2. Engagement with partners in design phases
3. Analyzing and understanding maturity levels across the Supply Chain.

The Steps to Take

What steps could have been taken to mitigate the unintended consequences of rolling out our world class ERP system across the TPM supplier base?

First we should have done an analysis of all TPMs to categorize by Supply Chain Maturity as well as business criticality.

Here is a picture of the stages of Supply Chain Maturity:



This is a matrix to define ‘Types’ for your TPM Supplier Base:



Next, we should have engaged with the community for each type TPM to:

1. Process Map the ‘as is process’
2. Blue Print the most effective collaborative ‘to be process’
(Remember collaboration by definition is win/win).

Supplier Support Resources, Creating Engagement Templates

Next, ramp-up Supplier Support resources and create engagement templates for each TPM Type.

Key steps here are:

1. Identify a contact high enough in the TPM’s org chart to champion this effort
2. Identify by functional area both internal and TPM players that support each Portal based task

• TPM Goods Receipts/Internal Inventory Steward
• TPM Production Control/Internal Third Party Planner
• TPM Quality Assurance and Internal Quality Assurance

3. Most importantly, present to both teams a ‘process flow’ that defines the overall vision of TPM Portal actions (you cannot leave this as a mere list of transactions to be performed by individual players….use RASCIN charts to clearly indicate Roles/Predecessor Tasks and hand-offs).



This type of forethought and adherence to Supply Chain principles create a schema of engagement modalities leading to system adoption with greatly reduced pain points and early realization of desired outcomes:

• Increased Supply Chain visibility
• Reduced Lead-time
• Higher inventory turns
• Seamless plan execution and movement of goods.

The Post Go Live Solution

So where do you go, if you strapped the drone onto the cap gun?

First, keep your powder dry. And keep hi-touch resources in place until you resolve the problems your TPMs are having using your portal.

Look for root causes (not a hunt for the guilty). Blend your root cause analysis with the processes laid out above to engineer a post Go Live solution.

ABOUT THE AUTHOR: Frank Murphy, CPIM and CSCP, is a 30-year veteran prestige cosmetics operations. He is currently an independent consultant on SRM portals. He is a past executive board member of APICS – Northern New Jersey Chapter