Tactical supply chain planning is not a project – it should be a perpetual cycle, constantly evolving the performance of a supply chain. Supply chains have too many variable links that will thwart even the most robust of tactical plans if it isn’t in constant review. The configuration of a warehouse, the storage equipment in use, transport mode selection and manufacturing allocation are just some of the key elements of tactical design that need to be in perpetual assessment.
Supply Chain Planning and the Holy Grail
Supply chains are represented by a series of inter-dependent activities effectively ‘chained’ together in order to supply a demand. Within any supply chain, there will be a series of physical connections, such as logistics, warehousing and manufacturing, combined with non-physical activities such as purchasing, forecasting and order management.
With so many interdependent variables, all targeting the same ultimate goal, planning is critical. Supply chain planning attempts to achieve the holy grail – a perfectly synchronised supply chain.
However, as any experienced supply chain practitioner will tell you, perfect synchronisation in the real world is near impossible. Whilst advances in technology are making it easier for real-time sharing of supply chain data, the reality of the cultural, geographical, economic and political boundaries that any global supply chain must contend with will always act as a barrier for a perfectly synchronised chain. This is before you start to consider the potential variances in commercial objectives of individual organisations, or even variations in endpoint demand.
Operational and Tactical Supply Chain Planning Are Not the Same
The role of supply chain planning, at an operational level, is to strive for daily perfection, with the firm knowledge that true perfection is unattainable – it’s a mirage. The reality is that operational supply chain planning, on a day-to-day basis, is firefighting – dealing with the unexpected events that perpetually threaten to derail supply moving through the chain.
However, at a tactical level, the perfect supply chain can be designed. There are a thousand and one tools and approaches which allow a supply chain to be designed as near perfect as possible. Highly developed algorithms can pick the optimal path through the myriad of options to find the one path – the one chain – that ensures demand is met at the lowest cost against the quickest lead time.
No Supply Chain Plan Can Fully Predict the Future
Of course, none of these systems or approaches are clever enough to predict the future. What happens if there’s a natural disaster and supply is cut-off? What happens if there’re strikes, political unrest or simply breakdowns in supplier relationships? What happens if demand drops or increases? Or, as any supply chain planner will consider more likely, what if ‘John’ over at company x just keeps forgetting to book your shipments?
These are the things that make a perfect tactical supply chain plan a less than perfect operational supply chain. And these are the things that make the perfect supply chain a mirage. Any tactical supply chain plan will start to deteriorate, and fail, as it’s faced with real-world challenges. However, all too often the operations teams are just left to ‘do their best’ with whatever constraints and issues arise, until the next major tactical supply chain review – which could be years away.
Design, Deploy, Repeat.
Those that commission the tactical planning of supply chains all too often assume it’s a one-off exercise, or at best, an exercise to only be undertaken every few years. This isn’t the correct approach. Tactical supply chain planning is not a project, it should be a constant, ongoing process. Tactical planners should be constantly working in partnership with operational planning to remove persistent bottle-necks and to continuously strive to optimise cost and performance. They should design, deploy and repeat.
This is increasingly true as demand patterns in most supply chains are constantly in flux. The e-commerce boom, combined with increasingly tight margins, has seen many supply chains rapidly move from high volume, low frequency to high frequency and low volume. Companies simply don’t ‘pile it high and sell it cheap’ anymore. This has a big impact on warehouse configurations, storage equipment, labour, inventory, purchase volumes, manufacturing schedules and logistics operations. All of the areas which form part of tactical planning.
Who Should Do the Tactical Supply Chain Planning?
There should be constant feedback from the operational supply chain, enabling tactical changes to be designed and implemented. These tactical changes could be transport mode changes, supplier switching, inventory repositioning, inventory build or changes to production allocation.
It’s not reasonable to expect the same people who manage the operation day-to-day, undertaking all of the necessary firefighting to make sure supply is made, to also be able to take a back-seat and consider how the supply chain could be designed better. They may have some ideas, but true tactical supply chain design takes time, along with the analytical skill and tools to be able to undertake deep-dive analysis and scenario modelling.
How the Consultants at Paul Trudgian Can Help
Our supply chain consultancy team offers decades of tactical design experience reaching into every field of supply chain and logistics management, from warehouse design to portfolio planning. Marrying experience with membership of relevant professional bodies, such as the Chartered Institute of Logistics and Transport, our consultancy team reflect the latest thinking on supply chain and logistics development combined with the benefit of practical and varied industry experience. Whatever logistics or supply chain challenges you face, our supply chain experts are here to support you.