Simplifying Supply Chain Challenges

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The UK has a strong reputation for building quality products at competitive prices, thus raising exports and economic returns. Taking steps to increase our influence and manufacturing around the world requires targeted changes to strengthen supply chains and identify possible weaknesses. 

The supply chain has progressed from a local area to a global arena during the last two centuries. A good part of that status is due to the ability to virtually cross the globe in seconds with the Internet and truly move an item to the other side of the world in less than a day. The likelihood of a purely national supply chain in any country is not realistic because of the types of goods needed in the overall picture. Domestic producers are unable to compete with the lower price of various inputs from other countries, making imports an important part of the chain.

Every UK business should understand the elements and progress of its individual supply chain. Investors and buyers are more driven to support companies with backup plans to keep the chain moving even if one of the links is broken. A secondary benefit of preparedness is training a workforce ready to take over a particular task when needed.

Track and evaluate the performance of each supplier who is part of your chain supply. Monitor tangibles like the quality of inputs and intangibles like customer service and communication. If a weak link is identified, discuss the problem with the supplier and expect a resolution within a certain amount of time. If none is forthcoming, search for an alternative, reliable source for the item that will keep your business operating in a timely manner.

One large international conglomerate may have companies that are major suppliers of diverse, but critical, inputs to a number of UK manufacturers. Plans should be established to reduce the impact of an interruption in delivery, including supplementary storage of raw materials.

Establishing credibility as a reliable part of the supply chain is easier to do when we have a qualified workforce with key skills required.  Candidates are attracted to  organisations  who invest in their workforce and assist employees with the expense of obtaining specialised supply chain and logistics qualifications – e.g. CIPS (Chartered Institute of Purchasing and Supply), CILT (Chartered Institute of Logistics and Transport) – technical skills that will make us less dependent on other nations.  Affordable seminars designed to encourage managers and owners of small businesses to participate in new markets will also demonstrate our continued readiness and willingness to be economic leaders.

 

Understanding What Factors Are Important in Your Customer’s Supply Chain

Striking Similarities
A customer’s supply chain is probably not unlike that of your organization. Of course the ultimate product or service is different from yours, so the details will be too. But your customer’s supply chain framework and the management process behind it will be strikingly similar, mainly because the story is the same regardless of the industry or business.

All companies share the same basic need — to create value and keep their customers satisfied. As consumer expectations around service speed, quality, cost, and choice rise, competition ensues to try and meet consumer demand. Successful supply chain management organizes the process to make this happen in a way that keeps costs low while turning a profit.

Given that all companies react similarly to increased customer demand and tweak their supply chains accordingly, while the details may be different, the bottom line is not. The most important factors in your organization’s supply chain, therefore, are very likely the same as those that are important to your customer’s supply chain.

Protect Your Own Supply Chain with Integration
The integration of systems and people is imperative for a supply chain process to work. This integration must occur internally and externally, which means customers and their respective supply chains must be considered.

Without successful integration, gaps are sure to appear. These gaps are pitfalls that cause delays, errors and supply chain failures.

Benefits of Understanding Your Customer’s Supply Chain
Everyone agrees that focusing on the customer is a good thing – it can help gain understanding of the customer’s perspective and be instrumental in maintaining customer satisfaction. Merely lending an astute ear, however, will not transform a customer focus into desired profits.

Critical listening along with observation can help your organization identify structural solutions for more than just the customer link in your own supply chain. Gained insight can help your identify strengths and kinks in your customer’s supply chain, which will help your organization respond accordingly.

Modeling and Simulation – Avoiding Customer Focused
Change Mishaps

Making a change to your organization’s supply chain based solely on a reaction to something identified in that of your customer should never be taken lightly.

Modeling and simulation are often used to test the impact of decisions on supply chain performance before the change actually occurs. In the global transport world, modeling is helpful to anticipate fallout from anything from relocating warehouses or increasing the number of manufacturing plants. Modeling helps simulate a response to any suggested action born from analysis of what is important to your customer’s own supply chain.

Simulations are run with various conditional parameters provided via data warehousing and subsequent mining techniques, and the results can be analyzed to help arrive at an optimal solution. You may find that any change will carry significant costs, and your customer will be less than pleased to have them passed along.

It is essential that your organization be on board with alterations before forging a change based on a reaction to what’s going on in a customer’s supply chain. Modeling and simulations can help determine if any change makes sense for your organization or your supply chain.

Understanding Your Customer via the SCM Decision Making Processes
Decisions are made at three distinct levels for all organizations, with the ultimate goal of operating efficiently at a lower cost with optimum customer satisfaction. The understanding that these decisions are also made in your customer’s organization can help identify what factors are more important than others in their supply chain.

Strategic Level Decision-Making
Decisions made at this high-level generally impact the organization as a whole. With regards to SCM, they often revolve around manufacturing site choices, supplier partnerships, market shifts, and the products or services to be manufactured or delivered.

Knowledge of these large-scale issues can provide your organization with a basic understanding of what drives your customer’s strategic supply chain decision making.

Tactical Level Decision-Making
Decisions at this level focus on measures to maximize cost benefits. Examples include considering best practices for adoption or revising supplier purchasing strategies. It may be hard for an organization to have advanced insight into tactical level decisions made by your customer.

It is more likely that the results of these tactical decisions will be seen immediately after action was taken, or perhaps even later as the ripple effects of a tactical level decision are felt. Your organization is in a position to react to any changes made or decisions taken that impact your company’s own supply chain.

Operational Level Decision Making
Decisions made at the operational level are made on a daily basis and impact how products/services move through the supply chain. Production schedule changes or warehouse product movement are just some examples of the types of decisions that are made at this lower level.

Decisions made at this level to your customer’s supply chain may not necessarily impact that of yours. If an operational level decision, such as a schedule change directly impacts you, an open line of communication between you and your customer should be effective at addressing it.

If, however, there are kinks in the lines of communications resulting in your organization being ill-prepared for such issues as schedule changes, there is both an up and down side to this dilemma. The down side is that your company will need to scramble while under duress to react appropriately to any changes made. The up side, however, is that your organization will immediately identify a need for adjustment or modification of its own supply chain to be able to react to similar decisions in the future.

Analyzing Performance to Gain Insight into Your Customer’s Supply Chain
Conducting an analysis of how your business is performing in terms of meeting customer requirements will also provide an understanding of what is important to the customer. From these insights it should be easy to extrapolate the factors considered by your customer with regards to its supply chain.

Include the following measurements to adequately analyze your company’s performance with regards to your customer’s requirements:

  • Supply chain cycle time
  • Orders shipped complete and accurately
  • Shipments or services delivered within agreed upon timeframes
  • Costs to meet each customer’s requirements
  • Inventory levels
  • Accurate and timely communication of information regarding order or service status

Back to Basics
It bears repeating. Creating value and keeping the customer happy are the two basic principals by which all organizations operate. Understanding how your customer goes about achieving these two goals via their SCM process can help your organization understand what they value, and perhaps more importantly which factors are most important to their supply chain success.

Ultimately, this understanding will allow you to adjust or make modifications to how your own supply chain is managed, and lead your organization to success by creating your own value and achieving customer satisfaction.