An effective supply chain is utterly integral to the overall success of a business. However, what we frequently see is the supply chain being boss, simply by being such an unwieldy beast. Instead of working for your business, you have become the feeders of this out of control beast. It shouldn’t be like that. Tables should be turned. The supply chain should be streamlined and effective so that it works for you, and copes with the modern demands of business.
However, getting the supply chain beast under control and working more effectively takes some careful thought and a strategic approach.
At the heart of making the supply chain more efficient is the principle of concurrent planning: rather than waiting for one action to feed the next, running them alongside each other simultaneously is more effective. This requires a fundamental shift in how you view the supply chain.
Instead of viewing the supply chain, as its name suggests, as a series of links with one area leading to another, you need to look at it as a holistic and inter-connected process. This enables you to bring together people, processes, and data, in the most effective way without wastage.
The reality is that time matters to the modern supply chain. In the realm of just-in-time deliveries and the customer being in control, you have to work with immense speed. This isn’t possible with antiquated or inefficient systems. For example, if it takes only 9 days to assemble a brand new Ford GT from over 5000 parts, why is it taking you weeks to bring a simpler product to completion? It’s down to a concurrent supply chain of robotics, smart technology, and efficient processes.
To make concurrent planning work, you have to have razor-sharp visibility throughout the supply chain. An efficient supply chain is one which can respond and flex as demand dictates – this is only possible with intense insight and cross-functional collaboration.
Visibility can be viewed as a removal of silos: removing the barriers which stop collaboration and cause inefficiency. It’s about connecting each of the different elements, or links, in your chain and fostering collaboration between them. The result is that decisions become more efficient and streamlined, and the entire process more responsive.
When visibility is actively introduced into a supply chain, you’re given the power to see where inefficiencies are occurring, and therefore the power to eliminate them. On an instant basis, you are given the ability to see where an error, issue, or problem is going to cause a cascade of problems and stop it in its tracks. If operational performance is increased and made more efficient, then it follows that financial performance will follow.
Additionally, with increased visibility, comes an increased chance to take a more ‘hands-off’ approach to the supply chain. Less effective supply chains are time consumers on a mammoth scale. They require fire-fighting on a constant basis. An efficient supply chain frees up man hours for other business functions and purposes.
Why It Matters
If the above isn’t enough to convince you of making changes due to the importance of an effective and efficient supply chain, let’s look at some statistics.
According to a comprehensive supply chain survey by Deloitte in 2014, a staggering 79% of companies with high-performing supply chains succeeded in achieving revenue growth which was greater than the average in their respective industries. Given the proliferation of new businesses due to the rapidly expanding world of ecommerce, combined with the reality that 4 out of every 10 businesses won’t last beyond the 5-year mark, this is pretty convincing evidence for making a more effective supply chain. Lack of effectiveness in the supply chain is a huge reason why many businesses fail.
However, businesses may not initially realise it as such. They are more likely to only perceive the shallow problem: the business is failing due to financial problems. But what is behind that? Is there an inefficient and ineffective supply chain? Or one which is effective and efficient?
Why Supply Chains are Ineffective
The vast majority of supply chains just kind of happen. They grow, expand, and change over time on a piecemeal basis without overall strategic thought. A supply chain is rarely consciously designed from the word go. A supply chain evolves as the business evolves.
The problem with this is that the supply chain of today rarely reflects the needs of today. And it’s terrible for shutting down overall visibility. Yet its impact is often underestimated.
Let’s look at how you can make the supply chain more effective.
- Strategy: It’s far from uncommon for the supply chain to be left out in the cold from overall business strategy. Supply chain strategy should be integrally linked with business strategy, and directly in line with commercial goals. The supply chain should support the overall commercial aims.
- Network Design: Careful consideration needs to be given to supply chain network design. Each stage of fulfilment needs to be considered as part of a whole, rather than independent parts. Careful network design allows for resilience and flexibility.
- Customer Service: Customer service is often viewed as an end-point issue only. However, for profitable growth throughout the business, customer service needs to be something which happens internally throughout the entire production and logistics process. The customer should always to be central to every facet.
- Supplier Performance: Gain visibility and get a clear insight into how each individual supplier is helping or hindering the business.
- Inventory Management: It’s critical to have a clear inventory policy that balances the level of stock held with the service level required. Inventory can tie up a large proportion of a company’s working capital and every opportunity should be taken to minimise stock holding.
Become a Driver of Success
By actively looking at and reviewing the entire supply chain process you can become the driver of your business success. Effectiveness within the supply chain is so integral to the bottom line, and your reputation, that it cannot be ignored.
For help creating a more effective supply chain, please get in touch.