How SanDisk has transformed its supply chain
The global leader in f...
SanDisk, a Western Digital Brand, has transformed its supply chain through improved visibility and decision-making capabilities.
The global leader in flash memory storage began working with JDA and, from the outset, SanDisk knew that it wanted to achieve optimal balance between service level and inventory turns across scenarios, to create a better experience for its commercial and retail partners and customers.
SanDisk began using JDA’s advanced planning solutions in 2006 to create a more responsive supply chain. As part of the project, SanDisk implemented a series of supply chain initiatives including postponement strategy, product delay, supply chain segmentation, allocation management, inventory optimization, and profit optimization.
Using JDA solutions, SanDisk was able to compute statistical forecasts and translate sell-through forecast data and actuals to sell-in, while effectively identifying optimal inventory levels and stages, and managing silicon allocation. The JDA solutions are also used to manage complex demand prioritizations; optimize supply and demand responses based on material, capacity, cost and service levels; and support re-planning multiple times per day based on demand signals and what-if scenarios. SanDisk used daily and weekly planning cycles to incrementally adapt alongside these variables, ensuring that the right amount of product is built and delivered to customers on time.
The integrated plan includes the number of units in each segment, promotional plans, how inventory is structured by channel, and how it’s planned back to supply and onto the shop floor, ultimately providing real-time visibility across SanDisk’s entire organization.
Western Digital's Shiva Esturi comments: “JDA has allowed us to be more agile. Leveraging JDA’s advanced planning systems to forecast demand, we have developed a realistic supply plan that drives the integrated business planning process. Now, as a result, we can be very quick to give an answer and change direction.”
As a result of its work with JDA, SanDisk has achieved the following:
- The SanDisk supply chain capabilities are built on a combination of advanced planning systems and strong manufacturing execution, which together allow nearly two million SanDisk brand products and five thousand stock keeping units to ship each day, while delivering world-class service to both its commercial and retail customers.
- With help from JDA, SanDisk transformed weekly, manual planning into daily, automated planning cycles that rapidly align the supply chain to changing market needs.
- Over the course of the project and prior to its acquisition by Western Digital, SanDisk grew from USD $2.31 billion in annual revenues in 2006 to USD $5.56 billion in 2015 (compound annual growth rate of 9.18 percent).
- SanDisk improved on-time delivery performance to customers by more than 10 percentage points, and consistently delivered greater than 95 percent on-time delivery performance to commit date.
Manish Bhatia, Executive Vice President, Silicon Operations, Western Digital, adds: “SanDisk’s supply chain capabilities were built on a combination of fundamental operations research modelling, advanced optimization planning systems and strong manufacturing execution. SanDisk’s end-to-end vertical integration and commitment to supply chain excellence have played a major role in establishing the company as a trusted leader in flash storage solutions for nearly three decades."
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NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”