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Process Supply Chain
As a result of trends such as globalization of supply, increasing
competitive pressures, and dwindling product life cycles, supply chains
are being driven to transform and evolve.
Some characteristics of world class supply chain organizations include:
· Develop relationships that benefit its customers
· Products and services that exceed customer requirements
· High priority to quality and safety
· Quick and efficient response to sudden changes in the
· Attempt to optimize the entire supply chain
It is common for enterprises of a supply chain to operate
independently. Marketing, distribution, production planning,
manufacturing, and the purchasing organizations typically have their
own objectives and they are often conflicting. This prevents the
enterprises from providing the right products to the right customers at
the right time. All these areas are individually efficient enterprises,
but they lack coordination to produce required end results for the
A (supply) chain is only as strong as its weakest link. A typical
supply chain has many interfaces (ex: customer and supplier, sales and
manufacturing, etc). The best way to overcome problems between these
interfaces is to manage the supply chain efficiently. This makes the
organizations proactive, not reactive to changes in the marketplace.
So, in order to transform a supply chain, an organization needs to:
1. Determine the scope of its supply chain
Establish a supply chain team perform a “SWOT” analysis (i.e.
Strengths, Weaknesses, Opportunities, Threats) as it applies to the
supply chain. The corporate supply chain strategy should be aligned
with this information to determine long term goals and a strategy to
reach those goals. Current and then future state maps should be
developed to come up with a world-class supply chain after identifying
best in industry and world-class practices and comparing with existing
practices. Any core competencies of the organization should be
identified and exploited as well as processes needing improvement. At
then end, there should be a roadmap to the future.
2. Cultural change
In order to implement the “future state” supply chain process,
structures and business practices must be altered in line with the
supply chain goals. Suppliers need to be managed strategically (i.e.
long term contracts with its key suppliers). This means sharing
information such as inventory levels and production planning with
suppliers and you must try to build better trust and win their
commitment to the new process.
3. Integrate decision making with customers
Establish a supply chain decision-making process that is from the
customer’s viewpoint. Any changed or new processes should add value to
the customer. Customers should to be segmented based on their
specific needs. The customer demand should be the critical factor for
production planning. The production system should be flexible requiring
sophisticated demand planning tools which can reduce inventory cost,
improve customer service and increases sales and profits. The products
customization should be postponed late in the supply chain enabling the
organization to reduce safety inventory levels and respond to changing
demands. Also, the logistics network must be flexible enough to handle
a multitude of customer requirements. In some instances, partnerships
with third party logistics providers may be appropriate.
4. Develop a supply chain technology strategy
A world-class supply chain requires world-class technology and tools
for forecasting, production planning, and logistics decisions. They
must adequately support the supply chain planning activities.
This technology should be chosen by determining your organizations’
functional requirements, then matching them against available
technology that meets your functional and financial requirements.
5. Supply chain metrics
After the new processes and technology are implemented, performance
must be monitored. It is often useful to develop these metrics through
benchmarking. The measures should focus on progress towards the
organizations’ supply chain goals.
In the end, supply chain management is about having the right products,
at the right place, at the right time, at the right cost. To develop a
world class supply chain organization, it needs to start thinking “out
of the box” to have the willingness to shift to a new paradigm. Supply
Chain technology is critical to the success of this change. Reaching
this level of supply chain excellence isn’t easy but worth the effort.
LPA, LLC is a
Supply Chain software and consulting
business offering affordable, easy-to-implement solutions to complex
planning problems. Our Managing Partners have over 40 years of combined
Supply Chain and Information Systems experience.
Contact us today to receive a Brochure along with our
MS-Powerpoint ® Overview
slide show which describes our products general capabilities (we also
have a more detailed PSI
Planner "Guided Tour" slideshow available upon request).
After viewing the slide show, let us know if you'd also like
to schedule a LIVE WEB DEMO for a more detailed understanding
of its capabilities and how it can make your Supply Chain "Lean" by
improving your company's service levels and inventory turns (click on "News
and Events " for more details).
Our company also offers Supply Chain consulting services at
reasonable rates. We invite you to contact us for a consultation
regarding your specific needs.
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Process Supply Chain
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