Methods to optimise critical supply chains
Methods to optimise critical supply chains
Supply chains are more complex today and this trend will continue with the globalisation of businesses.
A study in Europe a few years ago revealed that 80 per cent of the chief financial officers surveyed, cited supply chain failures as one of the most important risks their businesses face; only losing key staff to their competitors was rated higher.
In today's global environment, customers are demanding increased customisation of their products, requiring supply chains to be highly flexible and optimised, not only in the forward, but also in the reverse supply chain (returns and repairs).
Supply chains must adapt to these demands and serve their external and internal customers. They must become:
- Multi-channel: Supporting current and future sales channels.
- Flexible: New models to increase service with improved cost/cash-flows.
- Expandable: Optimising network to handle changed volumes by location.
- Customer-centric: Having the right product, in the right quantity, at the right place and right time.
- Effective: Delivering your products and services to the agreed customer expectations.
- Market/customer optimised: Supporting segmented and customised assortment of products and services.
Transforming the supply chain requires focusing on people, processes and systems and aligning them to your business strategy.
After developing their supply chain strategy and aligning it to the corporate goals, building an effective organisation is essential to ensure successful delivery of customers' objectives, and achieving operational and financial results.
The following building blocks are a balanced approach to achieve organisational effectiveness in your supply chain:
- Create a clear vision for the new organisation: Ensure that each member of the organisation understands the vision and what it means to the overall success of the business. Communicate often and set expectations for the transformation.
- Map all critical processes: Develop a detailed list of all supply chain processes that the new organisation is accountable for. Understand and promote cross-functional/cross-enterprise integration to eliminate silos and share best practices.
Identify expected results from each process, understand key performance levers and root cause for shortfalls focusing on eliminating non-value added activities.
- Develop clear job descriptions: Comprehensive inventory of skills, competencies and behaviours should be completed to evaluate current talent needs and help with the development of existing talent.
- Design a balanced management system: A balanced scorecard would ensure successful execution and manage business performance.
- Develop a performance and behavioural-based reward system: It must not only include individual and organisational performance targets, but it must also include rewarding the types of behaviour desired to achieve organisational excellence.
The organisation's leadership and members become a high-performing, collaborative, innovative and motivated team geared towards delivering customer and operational excellence.
Anand is the managing director and Yajat Bindal a principal consultant at Cedar Management Consulting International.
