The margins for success in the supply chain management are being increasingly tightened. In order to succeed you need to optimise every facet of your business from quality and lead time, to cost and delivery. Optimisation can only occur with a proactive approach to each and every element.
Proactively examining every element of the supply chain enables you to predict and cater for different needs and likelihoods. The result is that business becomes more predictable, and profits should increase. However, despite a proactive approach to the supply chain making sound sense, both practically and economically, many businesses within the supply chain don’t take this approach. Or certainly aren’t as proactive as they could be.
How Can You Tell How Proactive a Supply Chain is?
Of course, you may have a good ‘hunch’. When problems occur, how well does your chain respond? Does it respond seamlessly and quickly without overwhelming problems? Do you find a cascade of problems frequently develops? Do you struggle to know where a problem came from? However, it’s not enough to just have an idea about how proactive or reactive your supply chain is – you need to do something about it. Management needs to be proactive to enable a proactive chain.
A proactive supply chain is one which can halt a problem in its tracks, rather than simply fire-fight. This means having foresight and an educated approach to predicting problems. To determine whether your supply chain is proactive, or reactive, let’s look at some key points:
Has your entire chain evolved over time? Supply chains now aren’t linear, but instead are a complex network of relationships and layers. This should be governed by a culture which is, at its heart, proactive and actively eliminates waste whilst identifying solutions.
What technology do you have on board? Technology has evolved immeasurably within the supply chain industry. Is yours providing insight in real-time, streamlining processes, and reducing waste? Are different elements of the chain more efficient, and automated? Technology is essential for driving proactivity.
Where are the weak spots? Have you identified the ‘weakest links in the chain’ and then modelled what will happen if your worst case scenario happens? Identifying the worst that can happen enables you to proactively improve problem areas, and work out contingencies to prevent a cascade of problems through the chain.
How well do you know your supply chain areas and routes? Supply chains now are operating in a global marketplace like never before. Whilst this brings opportunities and cost-efficiencies, it also widens the playing field for problems outside of your control. How good is your visibility of every aspect of your supply chain, and how well do you understand the geographical and political issues surrounding your supply routes? Again, what is your contingency plan should something happen?
Do you use your hunch, or real quantifiable data? That hunch and intuition might have served you well before, but is it really up to the challenge of such a tightly pressed market? With technology at your fingertips you should have valuable real-time data in order to qualify everything from which routes you take to which packaging you use.
Is your supply chain flexible and optimised? Is there optimisation throughout every stage in the supply chains processes ensuring efficiency and safeguarding against problems?
These questions will help you identify how proactive your supply chain is. Assuming there is room for improvement, what can you do about it?
Creating a Proactive Supply Chain
If your supply chain is reactive, or not as proactive as you’d like it to be, there are a number of steps you can take to improve its responsiveness and ability to flex and cope in the face of problems. In reality, this is an ongoing process of optimisation. There are always ways in which efficiencies can be achieved, and a more proactive approach sought. They all should happen within the following framework:
Create partnerships and collaboration: If you view, and therefore treat, your suppliers within a setting of collaboration and partnership then a more proactive supply chain is possible simply because of openness. Collaboration fosters openness and insight – invaluable for taking a proactive approach to potential problems, as well as taking advantage of opportunities.
Define visions: Not only must you have your own organisational vision, but the supplier relationships should also have a shared vision with you. This ensures you are both ‘singing from the same hymn sheet’ and are therefore most likely to get what you expect.
Share values: A proactive chain is a responsive chain, but that responsiveness needs to happen near-automatically, in the way that you would expect and desire. If you and your supplier partnerships have the same values (for example in terms of quality) then problems are halted higher up the chain before they have dire consequences.
Value your supplier relationships: Purely transactional relationships are unlikely to be able to be proactive. If you take the time to nurture each supplier relationship then being proactive and ‘on the ball’ suddenly becomes more personal, and therefore more likely to happen in your best interests. Nurturing the supply relationship also provides you with insight in to where and when any problems may occur.
Create a culture of proactivity: As with all elements of business, proactivity needs to be led from the top. By working together with a multi-layered approach, different elements of the chain and responsibility within the organisation can identify problem spots and where proactivity is needed.
Review, analyse and amend: In order for a supply chain to remain proactive, you will need to continually review the different areas and elements, analyse them, and update them if necessary. Data is crucial to a proactive approach in the long-term.
By taking a systematic approach to your entire chain you can identify how truly proactive your chain is, and importantly, where improvements can be made. Proactive supply chains can weather storms, both literally and figuratively, and this is essential to maintain and improve profits.
