I am starting a new series called "Eye Opener Series" that will bring out facts, methods and thoughts which have the potential to transform the business operations if utilized well. The first one is on my favorite topic Supply Chain. Read on...
Managing the supply chain and finances are the core factors that determine the success of any organization. For ages, executives keep on experimenting with different approaches to optimize their supply chain and cash flow. Since managing cash flow is not one of my strong areas, I will keep my post focused on supply chain needs.
So what are those Critical Dimensions or Key Performance Indicators that drive the agility and maturity of a supply chain? Most of them are quite obvious and most of the organizations keep a religious watch on this but even then those companies make only the 10% of all those organizations that can benefit much more if they streamline their processes, capabilities and compliance related stuff connected with SCM. Let us look at some of the critical dimensions in this respect:
- Supply Chain Visibility: End to end supply chain visibility is the first major need to make it more agile and mature. It is highly recommended to use a commercially available best of breed (or ERP) solution to monitor line level statuses in orders, on hand inventory and those assets that are not stationary and this includes field inventory, service equipment, containers etc. Certain visibility initiatives like financing triggers, warning alerts on events that drive inventory stocking, tracking actual total landed cost as sales order progresses etc. are the hot initiatives in this area
- Automation Level: It is not just automation of order entry to picking to shipping and from forecasting to demand to plan to build/procure but also end to automation of all systems that complements your main system of reporting and transactions. It includes systems like PLM or B2C order capturing portals that are input systems as well as Business Intelligence tools that act as the output systems to your main transaction system. The more the automation, more mature and agile is supply chain
- Logistics Agility: Processes such as using nearest warehouse to the customer, supplier drop ship, transit order re-direction or grouping shipments in same route play a major role in streamlining the supply chain. Organizations need to keep on thinking on new actions in this space and plan to execute them frequently
- Business to Business Collaboration: Customers and Suppliers are 2 businesses that one must collaborate with. This will not only keep the inventory to the minimum level but also will help in improving fill rates and reduce stock-outs. Identify the processes where collaboration will help the organization most and take actions accordingly
- Risk Management: Supply chain resiliency is one of the most critical factors in maintaining the agility of supply chain and it is seen that though most of the organizations are worried about this but do not take substantial actions in this area. It is important to manage supply chain resiliency to risk related events. Also, employ network design and inventory optimization tools to quantify supply chain risk and create short-term and long-term crisis response plans
- Compliance in Trade: The more manual hand-offs are present in the processes, more are the chances of inconsistency in compliance of trade laws. Also, not having a single source of truth and independent databases for import and export data per country will also contribute to non compliance ultimately impacting the supply chain processes. It is high time to have one single enterprise wide trade compliance platform that is automated and integrated with all the related processes
- Competitive Resourcing: The times of in-house resourcing are now ripe and the success of outsourcing story has proven that while the in-house resources in certain areas are more costly, they also are less efficient that their BPO counterparts. Need is to evaluate carefully, where exactly this initiative is required and what are the tangible or non tangible benefits expected and take an informed decision. The good part is that most BPOs come with their own collaboration and visibility techniques and also share their best practices that they picked from their customer across the globe and this makes move a “check and mate” move to improve the supply chain maturity
So, let the brain adrenaline start jumping and flowing through these ideas and I am sure that better managing these critical dimensions will certainly improve the global supply chain maturity which is the immediate need of at least a Best in Class organization.