6 Critical Elements of Successful Supply Chain Management
In 2020 successful supply chain management is more critical to the economy than ever before. Following on from the core components of supply chain management, we look towards the future and how we can ensure their ability to stay supremely agile and functional, whatever the demands.
To thrive in today’s tough economic circumstances, it is not enough for companies to merely embrace the core elements of supply chain management - they must focus on creating a future-proof and competitive supply chain that can operate as a holistic ecosystem.
Technology is a critical enabler, allowing companies to analyse and predict changes more effectively than in the past, with automation of tasks freeing supply chain staff from transactional work to focus on solving complex challenges which arise.
So what do you need to be thinking about to make your supply chain sustainable and successful?
By building a 'fit for purpose' supply chain as opposed to a 'one size fits all' model,your supply chain can evolve from choosing between being agile and responsive, efficient and low-cost, or innovation driven – and become all three. The ideal scenario is to align the supply chain with the company’s corporate strategy and operating model, determining which of the previously mentioned qualities are most important for successful execution. When these priorities are in conflict, the supply chain is set up to fail from a strategy perspective.
A modern supply chain needs to be data driven. More than ever, data is a key foundational building block rather than a supplement to a traditional model. It is critical that both transactional and master data are accurate. Additionally, analytics — descriptive, predictive and prescriptive — not only support decision making but can help guide the decisions in an evolved supply chain.
3. Focus On Your End Customer
Before investing in assets, processes, systems and people, you need to deeply understand the requirements of your end customers and ensure your end-to-end supply chain works in harmony to meet those requirements. For example, delivering an online shipment within 24 hours requires synchronising over many elements, such as planning, production, warehousing, sales and finally logistics to ensure it can happen. Customer satisfaction is everything, and the surest way to retain market share.
4. Full Integration
To be competitive in a data-driven world, supply chains need to be integrated across not just the company, but across suppliers, co-manufacturers, third-party logistics providers, customers and even consumers. Sensors on products, pallets, trucks, containers and more can enable real-time track-and-trace to facilitate this integration, with planning processes pulling data from both sides across the ecosystem to better forecast, plan and execute.
Innovation and supply chains should walk in parallel for optimally functioning supply chains. This means that when new products are developed, supply chain functions must be included in the conceptual stages to make sure the product design supports supply chain function.
For example: when designing products and packaging, consider how the product will be shipped to optimise those costs. If a car can be one inch narrower to avoid special road transport during delivery, the logistics cost savings can be enormous over a design change which could be inconsequential to the user.”
6. Performance Measurement
To objectively assess, manage and compare supply chain management performance requires a clear understanding of the processes involved and how they relate to the enterprise. A standard process framework for classifying and defining processes is a good starting point.
Process groups (supply chain planning, procurement, manufacturing/production) can then be broken down into processes, activities, and lower-level tasks where accountability and responsibility can be established. Once the processes are defined, you can establish performance measurements for cost effectiveness, staff productivity, process efficiency, cycle time and quality.
Similarly, KPIs should be established, based on operational objectives, and below KPIs the organisation should identify supporting indicators that enable leaders to delve deeper for keen insights into performance.
Consolidating all of these will allow for a supply chain that is flexible and scalable, not only in business growth but in times that require quick thinking to reroute and ensure survival in stressful times.