The supply chain, on a macro scale, is in a phase of extreme flux largely thanks to the advent of technology. Our sense of normal has moved away from the supply chain of the past, and it’s sometimes difficult to feel the supply chain rests on solid foundations. This article considers the fundamental truths of the supply chain, and how they affect our differing roles within the industry.
Whilst the pace of change in supply chain is still unwavering, and absolutely inevitable, there are elements of the supply chain which remain the same and form the foundations of how the supply chain operates. Here are ten truths of supply chain management:
(1) The Supply Chain is Inherently a Physical Being
Of course, there are elements within the supply chain which are tertiary; the reality is that at its most fundamental level the supply chain is about physical goods on a vast scale. Cubic volumes, manufacturing rates, and the physical processes of creating goods and moving them from point A to point B is the bedrock of what the supply chain does. Everything else, technology included, bows to this. At the end of the day, when everything else is stripped away, the supply chain is an intensely physical industry.
Therefore, no matter what changes the supply chain goes through the fundamental premise remains: it’s about solving the problem of physical manufacture and movement, at the lowest possible cost, in the greatest possible volume, in a way which maximises profit.
(2) The Supply Chain Number Crunches on a Vast Scale
Everything in the supply chain, and certainly the state of the bottom line, comes down to quantitative measures and number crunching on an enormous scale. Analysis is the lifeblood of each and every supply chain function. Using this intelligent information is the difference between success and failure. Being able to harness the power of the qualitative nature of the supply chain gives us the cutting edge, especially given that margins are tighter than ever.
Therefore, there is no real solution but to ensure you utilise smart technology to make sense and ease of the number crunching.
(3) The Supply Chain is Cross-Functional and Inherently Interdependent
The supply chain is like a matrix with materials, goods, money and time all interacting and interdependent on a complex and ever-changing landscape. Multiple business faces come into play, each with their own agenda and responsibilities. Each can be vastly different, such as the difference between marketing a product, and the logistics of raw materials, but each is interdependent with each other, and time-dependent. This makes for a hugely complex industry.
Collaboration will therefore always be a central truth to the supply chain.
(4) Sales and Operation Planning is the Route to Success
Sales and Operation Planning is absolutely crucial to the success of the entire supply chain, and requires a constant dedication to re-evaluation and an ability to change as needed. There will always be conflicts between the differing needs of various business functions, and Sales and Operation Planning is the means of navigating these conflicts on an ongoing basis.
(5) It’s a Thankless Job
Yes, that’s the reality. The supply chain only really features on anyone’s radar when things go wrong. If you get them right you hear nothing, but are presented with ever tighter objectives. However, getting it right is essential, so it is important to take your recognition from your own understanding, rather than seek praise. At the end of the day, it’s a cost no one wants to bear, and your responsibility is to reduce that cost.
(6) The Supply Chain Must be Sustainable
This is quite a newbie on the block, but it is certainly a truth of the modern supply chain. The ethics and social responsibility matter – whilst still keeping costs as low as possible. Corporate Social Responsibility is here to stay and the supply chain is the grass roots of how to make it a reality. Given that the supply chain is fundamentally the energy-guzzling and labour-heavy part of the process, this is a tall order. Fortunately, sustainability also impacts our bottom-line positively, and we’re adept at managing it.
(7) You Can Change the Name, But Not the Nature
The supply chain will always be the supply chain, although every once in a while someone tries to give it a new name! The terminology gets chopped and changed, but the nature of the beast remains the same. However, it is the underdog of the terminology field, and we will forever need to strive to put it on a level footing with functions such as finance.
(8) Matrix-Management is Integral to Success
The cross-functional nature of the supply chain, with its myriad of complexities, means that the supply chain is inherently an unwieldy beast which is hard to tame. However, that doesn’t mean we shouldn’t attempt to get, and maintain, control. This requires smart analysis and a complex management approach.
Therefore, for efficient and excellent operation of the supply chain, communication is paramount.
(9) We’ve a Long Way to Go on Recognising Talent
In many ways, the supply chain has been slow to recognise the value of a truly diverse labour force. We are still viewed as white-male, and this speaks more of our weakness than our strength. It’s a harsh truth but one that we need to face head on. We need to welcome the talent available to us that comes from diversity.
(10) The Supply Chain is Exciting
From the text books and the jargon it may seem anything but, but the reality is that the supply chain is ever-dynamic and an ever-interesting field in which to operate. There is nothing that remains unchanged in the supply chain, despite these 10 truths. Therefore, whilst the foundations remain the same, the daily playing out of life in the supply chain will forever be changing. We master one element, tame it through technology, and then we quickly need to move on to the next area.
Understanding these ten truths of the supply chain enables us to embrace the dynamic nature needed to take the supply chain forward in to the future.