You will find this guidance helpful if you are looking to understand what is required in a modern, fully functioning supply chain, determine your current level of supply chain performance and the journey needed to improve and achieve supply chain excellence.
Few companies have achieved supply chain excellence. Those that have must keep learning, changing and investing or they quickly slip backwards. In today’s ever changing and challenging world it is easy to take the pressure off and revert to more comfortable practices. However, this inevitably affects supply chain cost and service and hampers your Route to Market initiatives. If your product does not reach the shelves; it does not sell, simple. A fully functioning, extended supply chain offers you a valuable competitive advantage.
What Your Supply Chain Needs
There are broadly two things that any organisation needs:
- A reference model that identifies all of the components that are required in a fully functioning supply chain.
- A clear understanding on the current supply chain performance. How well is your supply chain performing when compared to local, regional or international proven best practice? Secondly, what is the absolute level of supply chain performance as measured by a set of appropriate Key Performance Indicators (KPIs) such as service levels and cost.
The Enchange Supply Chain House
The Enchange Supply Chain House is a simple and easy to understand reference model which provides you with a clearly defined and proven understanding of your supply chain status and its potential.
- The Supply Chain House has been designed by a team of supply chain experts with considerable experience working with local, regional and international organisations and with supply chains of variable organisation and maturity.
- The Supply Chain House is based on the well-established SCOR model and has been enhanced by over 25 years of experience.
- The Enchange Supply Chain House shows you the components of your supply chain in the form of rooms and elements of a house. Your company may need a complete re-build or an extension constructed while other companies may only need basic redecoration.
Supply Chain House Components
PLAN – You should understand that planning applies to every room in the house and is one of the most important elements of the extended supply chain. Identifying your planning challenges should be a high priority for your organisation, and includes:
- Demand Planning and Review
- Supply Planning and Review
- Financial Planning
- Sales & Operational Planning – read more on our approach to S&OP.
- Weekly Control Cycles
- Demand Execution including Distribution Requirements Planning (DRP)
- Supply Execution including Replenishment Planning
SOURCE/PROCUREMENT – You should ensure you have the processes and procedures necessary to adjust your approach from a simple call-off behaviour to proactive collaboration with reliable and trusted suppliers, e.g.
- Global, Regional, National Sourcing
- Supplier Assessment and Development
- Supplier Management
- Service Level Agreements – Understand the importance of Service Level Agreements.
- Make versus Buy Decisions
- Procurement Processes
MAKE – If you have invested in manufacturing facilities you must continually strive to maximise the efficiency and reliability of the assets in support of your objectives. Under-utilising capacity simply wastes money so your assets must “sweat”. Considerations include:
- Manufacturing Footprint
- Asset Utilisation
- Maintenance Planning
- Factory Scheduling – Make your factory capabilities crystal clear and avoid wasteful debate with Sales & Marketing.
- Materials Management
- IWS, TQM, Kaizen, Lean and TPM Performance Improvement Systems
- Capex Planning and Execution
DELIVER – Supply chain solutions can be in-house or outsourced. You need to define and understand the different options open to you and the risks and benefits associated with each route, for example, outsourcing to a 3rd party vs in-house operation. You should consider the following:
- 3PL/4PL Tendering & Operations – Learn why m
- Customer SLAs
- Reverse Logistics
- Order to Cash
- Customer Service & Care
- Route to Market Integration
STRATEGY – As a critical first step you should carefully define your supply chain strategy so you know where you are, where you wish to be and how you will bring this aspiration to reality. The key elements of strategy development include:
- Market Definition
- Portfolio & SKU Segmentation – Read our practical guide to FMCG complexity reduction.
- KPIs, Balanced Scorecard, Benchmarking – see examples of supply chain KPIs and Balanced Scorecard development.
- Supply Chain Innovation
- Cost to Serve – read more on our Total Cost to Serve approach.
- Post M&A Supply Chain Integration
HR/PEOPLE – People are still the most important asset in any company, albeit sometimes under-appreciated. A major source of competitive advantage when people are managed and developed correctly, we consider:
- Performance Management & Reward
- SC Training & Development
- Succession Planning
DIGITAL / IT – Whilst Information Technology (IT) has always been important in supply chains, ‘Digital’ is quickly becoming a key driver of innovation in extended supply chain management. Whatever you are investing in Digital today may be insufficient to support and secure your future business.
- Supply Chain Analytics – learn more about our supply chain analytics solutions.
- End-to-end Supply Chain Visibility
- Automated Production Wheels – read our case study on stabilising production plan with analytics.
- Supply Chain Partner Integration including Automated / Semi-automated Stock Replenishment
- Data & Information Management
- Systems Optimisation
- ERP, WMS, Planning and Order Capture Tools
Whatever the current status of your supply chain, the Enchange Supply Chain House provides the reference framework for you to develop the supply chain that secures your future. For the vast majority of organisations it will also enable you to make significant performance improvements, now.
Supply Chain Performance – What is your SCORe?
The first step in your journey to supply chain excellence should be to answer this question:
- How well is your supply chain performing compared to your competitors and international best proven practice?
We have developed a Supply Chain Diagnostic process that assesses supply chain performance in a collaborative process that also includes deployment of Proprietary Diagnostic Tools. We quickly:
- Assess current supply chain performance
- Recommend specific improvements
- Develop an Action Plan to deliver the improvements, and
- Produce a Business Case to support the Plan
The Supply Chain Diagnostic will assess the components of your Supply Chain House into the following categories:
Basic. At Operating Company level, there is likely to be a functional organisation in place that supports primary & secondary supply chain processes with a limited degree of effectiveness. Some supply chain processes, procedures or controls may be lacking. Limitations: Because the organisation takes a functional view, functions may become efficient while not improving the overall effectiveness of the supply chain.
Intermediate Low. At Operating Company level, a ‘Supply Chain Organisation’ is likely to be in place and generally effective in supporting efficient and measured primary and secondary supply chain processes. Limitations: Because a supply network consists of multiple organisations, maximising the performance of organisations in isolation will suffer similar problems as at level one, albeit at a higher level of performance.
Intermediate High. The Operating Company generally has an integrated supply chain with seamless and effective key processes and data/information flow amongst the majority of make, source, deliver partners. Additionally, an Area or Regional supply chain organisation is likely to be in place and effective in supporting efficient and measured supply chain processes across many end markets at overall identifiable lowest cost.
Leading Edge. In addition to the partnership model of Intermediate, the Supply Chain ‘Raw Material to Shelf’ is considered as one seamless process, made up of various sub processes which may or may not be owned and under the control of the enterprise (Operating Company) but where all strategic partners in the process participate in collaborative long-term planning. Full disclosure of information allows for realisation of savings and efficiencies for the benefit of all the participants in the chain.
Deliverables include the following:
- The assessment categories are agreed in advance with each client.
- They can be broadly based across the supply chain or focus on one area within the supply chain e.g. Plan.
Clients often say that there is never a good time to start assessing the supply chain and make necessary adjustments. We disagree. The time to assess your supply chain is NOW. You need to understand the areas of weakness and schedule the improvements around operations. If you operate a seasonable business, change can be scheduled outside of peak periods. Change in more linear businesses presents a challenge but Enchange is highly experienced at making lasting change under any conditions.
Once we have completed a Supply Chain Diagnostic and understood your objectives, we can usually start making a change to your business within a number of weeks.
Other tools and methodologies we use
At Enchange we use a number of proven supply chain methodologies, solutions and pragmatic tools. A selection is presented as follows:
- Sales & Operational Planning (S&OP). Understand the characteristics, purpose and benefits of S&OP. Learn more about our approach to S&OP implementation.
- Strategy Map. Understand the use of this powerful management process and tool.
- Balanced Scorecard and KPIs. See examples of supply chain KPIs and Balanced Scorecard development.
What you should do now
- If you are looking for help with achieving sustainable supply chain improvement, claim you Free Supply Chain Session. During this free phone consultation one of our supply chain experts will discuss your supply chain challenges and suggest possible approaches to achieve your goals.