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Supply chains: “For people who don’t know which direction to go, there is only one direction: to stay where they are”
Mehmet Murat ildan is not a supply chain professional, and I doubt he’s been quoted in this publication before, but the contemporary playwright’s commentary on the folly of undirected endeavour feels pertinent to our industry as a whole.
Without direction – without a robust view of what we are trying to achieve – there is a risk that any effort or cash spent is wasted.
In June’s edition of Focus, Vikram Singla introduced the functional specialities of Supply Chain & Operations Management.
The first of these, ‘Direction’, focusses on developing plans to operate your end-end supply chain.
When you google ‘Direction’, Google responds ‘Where do you want to go?’
Google asks a very reasonable question, and one which is usually relatively easy to answer. There is typically a vision, an ‘end-game’, but the ‘how’ can sometimes feel difficult to unpick.
What I can’t do here is give you the answers for your supply chain – each operation is bespoke to its aims and values. I will, however, present some questions which you should be asking your colleagues, and yourself, when you are reviewing your supply chain strategy.
- Determining requirements
What is it that your supply chain needs to achieve?
Who are the key customers?
What are the SLAs / deliverables?
How do you measure success?
- Research available resources
What technology can you use to help unlock your ambitions?
Should your operation be in-house, or should you consider a third-party logistics (3PL) partner?
- Identifying gaps in demand
Is the capacity of your existing operation limiting your growth or ambition?
Is there untapped demand that you can expand your supply chain to satisfy?
- Production scheduling
What are the order lead times, minimum ordering quantities (MOQs) and shelf lives of your products or components?
What is the risk of stocking-out of an item?
- Capacity Planning
Do you need to plan for peak, or can you temporarily change your processes to support short-term spikes in demand?
If you’re facing a downturn in demand, what changes can you make to ensure that you’re not paying for underutilised capacity?
- Supplier identification
Price is a critical part of supplier selection, but it should only be one part of your decision making process.
How do the supplier’s values fit with yours?
Does the supplier have scalability, and the potential to grow with your business?
Is the supplier able to demonstrate a proven track record of delivering results in a comparable situation?
- Demand forecasting
How accurate is your historical data?
Are there any considerations which mean that your historical data might not be representative?
What growth factors do you need to apply?
In his article this month, Dave Manning talks about integrated business planning (IBP) in detail, and how the process can be used to build a robust end-end supply chain. His piece sets us up for next month’s article on Delivery, which will cover day-day operational management and short-medium term planning.
With a slightly different focus, Neil Randon’s piece ‘The Nut Behind The Wheel’ focuses on something close to my own heart – the importance of investing in our people. Although I hope that Neil is preaching to the converted, I found the piece a refreshing reminder of where our priorities should sit written from a perspective that was new to me.
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