Supply chain management is a pain in the inventory for all organizations that do any form of manufacturing. Spending time and energy managing parts, guesstimating whether there is enough on hand for next month, calculating how changes in customer demand will affect the supply chain, creating and recreating schedules — these and many other aspects of supply chain management are not the best use of human talent, talent that could be used for more productive work. This is a particularly important concern for organizations that set high standards for quality and customer responsiveness.

One Maryland company, however, has solved a lot of these problems. It's meeting shifting customer schedules and the ability to simulate alternative scenarios quickly and easily through the use of an innovative software package. Hughes Network Systems (HNS) designs and builds networks for a wide range of private and governmental customers. It has earned an enviable reputation among its customers, propelling it to the forefront of its industry. Today, ISO-9000-certified HNS is the world's leading provider of digital satellite communications, and an industry pioneer in the development of leading-edge commercial networking applications and services.

HNS manufactures its own network components, including printed circuit boards — one million of them in 1997 — along with 200,000 mechanical assemblies and other products. The size of Hughes' inventory provides a glimpse into the nature of the challenge: Each year, the company consumes some 550 million separate components.

Nowhere is quality more important than in manufacturing. HNS has invested heavily in state-of-the-art facilities for the design, fabrication and assembly of products. A simple philosophy guides its manufacturing: First-rate people, high-end automation and leading-edge technology mean unsurpassed quality of products and services.

In its ongoing quest to improve customer service, HNS routinely challenges itself with alternative scenarios designed to find more efficient, more effective ways of doing things. These situations frequently involve inventory and manufacturing capability: "We ask ourselves questions like, 'What if we got that order we've been pursuing? What parts would we have to buy, and in what time frame?'" explains Darwin Fox, products planning manager in HNS' Satellite Network division. "What if we got a cancellation — how would that impact inventory? What if we moved one project back and accelerated another — what would be the impact of that on inventory?"

The company used to do this type of analysis with paper and pencil and calculators. It was not unusual to need up to two weeks to do all the calculations and arrive at an answer. "It was truly frightening to hear those questions," Fox recalls. "I shuddered when someone came to me to ask, 'Suppose we pulled this job in from Dec. 1 to Sept. 1. What would we have to do?'"

To deal with this situation, Fox looked for a software package that could do these forms of simulation and which would work well with the company's existing products and methods. "The three main criteria we looked at were cost — we didn't want to spend a fortune; ease of installation — we didn't want to disrupt our operations, we wanted a product that was plug-and-play; and good 'what-if' capabilities." The program he found is webPLAN, from webPLAN Corp., of Chicago.

"We can now have an analysis completed in less than four hours that would take days in the paper and pencil days. The accuracy level has increased, and we have much more confidence in the results because we're dealing with much more contemporary data. Previously, the information was compiled over two weeks, and a lot can change in that timeframe," Fox explains.

One of the chief benefits HNS has obtained from using webPLAN has been that the amount of time spent in planning and considering alternative scenarios has been reduced by 50 percent. Company employees are able to spend less time "planning" and more time "executing." In fact, the company now is able to respond faster and more nimbly to customer requests, as well as information requests and "what-if" questions from top management. For example, the analysis of HNS's ability to meet delivery dates has been automated. Previously, every component of an order had to be physically scrutinized and cross-referenced with inventory.

HNS has been able to improve the accuracy of its own databases. "During the installation of webPLAN, we were very surprised to learn that there were parts of our own database which we didn't understand," Fox observes. "A lot of garbage has been cleaned out with the help of webPLAN. And I mean a lot of the garbage that was there that we didn't even know about."

Decision-making at HNS is more informed and more confident. In addition, internal and external reporting has improved. "We're now getting reports out of webPLAN in seconds which before, used to take — literally — months," Fox notes. When it comes to getting specific about the gains HNS has achieved through webPLAN, such as the speed by which response time has improved or actual amounts that have been saved by having a more flexible and efficient supply chain, Fox has the same sense of caution that characterizes HNS' other activities. He declines to discuss numbers. "Some of these things are difficult or potentially misleading to specify. I know it would be nice to have those numbers, but let's just say we're very pleased with all the benefits we've attained."

At some point in their history, all organizations with supply chains have to examine alternative scenarios for managing those suppliers. Dealing with these situations manually, when software alternatives are available, imposes a crushing (if sometimes hidden) cost on organizations. As Darwin Fox and HNS have found, good software solutions, intelligently implemented, can produce large benefits to organizations and to their customers.

Howard Karten is a freelance writer who can be reached at [email protected]