Forrester Recommends Make/Move Logistics for Supply Chain Management in the Real-Time Economy

Forrester Recommends Make/Move Logistics for Supply Chain Management in the Real-Time Economy

CAMBRIDGE, Mass.–(BUSINESS WIRE)–Aug. 31, 1998–The increasing customer demand for customized products, strict inventory management, and real-time order status tracking is exposing weaknesses in traditional supply chain management systems. As products move from manufacturing to distribution to transportation, disconnected processes contribute to overstocked inventories, longer product wait times, and slower customer response. To overcome these inefficiencies, Forrester Research, Inc. (Nasdaq:FORR), believes that companies need to adopt “make/move logistics” — a strategy that fully integrates manufacturing, distribution, and logistics into a single process.

Make/move logistics combines individual production and logistics processes into a flexible flow that turns materials into products and moves them closer to the final customer. The make processes include all activities that convert materials into goods, assemble components into products, and package products into unique customer orders.These processes may take place across multiple locations and involve suppliers, contractors, and distributors. Move processes control the movement of goods through the supply chain and their storage when they are not in use. These processes drive fulfillment across all locations, making sure that raw materials reach production facilities, components arrive at assembly plants, and finished products are delivered to customers.

“By taking input information from order entry and planning systems, make/move logistics can create schedules that harmonize all the activities in a complex manufacturing and distribution sequence,” said Stacie S. McCullough, analyst in Forrester’s Packaged Application Strategies service and author of the Report, “Make/Move Logistics.” “By tightening the connections between production, distribution, and transportation, make/move logistics enables companies to intertwine customer- and product-specific processes to meet the demands of a dynamic trade environment.”

There are several preliminary steps that companies can take to smooth the transition to a make/move environment. First, companies should simplify their technology underpinnings, selecting one vendor for all make processes and another for all move processes. These decisions should be based largely on a vendor’s ability to deliver the critical features needed by a company’s specific make/move processes. Second, the two vendors should also have complementary architectures that support the same component platform. A component architecture will provide the flexibility needed in the future.

Finally, firms should also deconstruct their existing processes and reassemble the pieces into a systematic flow of activities that best meets the unique product, package, and delivery needs of each customer. This exercise should be accompanied by an effort to unify the fragmented management overseeing separate manufacturing and distribution processes. To ensure that these processes receive the necessary input from different business units, suppliers, and customers, companies should examine their information-sharing needs.

“Make/move logistics will make it easier for companies to treat global customers holistically, applying consistent pricing rules and service levels worldwide, while meeting unique product requirements at the regional level,” McCullough added. “Meanwhile, distribution-focused warehousing as we know it today will gradually become a thing of the past, replaced by processes and applications better suited to deal with the demands of dynamic trade.”

In the Report, “Make/Move Logistics,” Forrester found that 60% of the Fortune 1,000 firms interviewed used three or more software applications to manage their supply chain operations. Yet only 22% of the companies felt that their level of integration among these systems was adequate. Logistics problems also extend outside the company, since 80% of the companies outsource at least some of their logistics operations, with plans to outsource more in the future.

Forrester Research, Inc., is a leading independent research firm offering products and services that help its clients assess the effects of technology on their businesses. Forrester provides analysis and insight into a broad range of technology areas such as new media, computing, software, networking, telecommunications, and the Internet, and it projects how technology trends will affect businesses, consumers, and society. Forrester’s European research center, located in Amsterdam, Netherlands, brings the company’s unique perspective to new media developments in Europe. Additional information about Forrester Research can be found on the Web at www.forrester.com.

CONTACT: Forrester Research, Inc.

Michael Shirer, 617/806-6025

press@forrester.com

www.forrester.com

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