The best way to improve a supply chain is by attacking it from the top to bottom. That means from the C-suite down. What many companies do is allow users to make suggestions from the bottom without a proper ROI performed (with clear time and cost savings) and whether their suggestions are in line with the company’s medium to long term strategies. You end up with dozens if not hundreds of request for changes usually addressing a user’s immediate issues not aligned with the company’s big picture. Sound wasteful?
Think about the amount of time your Supply Chain and IT experts will now spend addressing these new requests and whether they have added any substantial value to the supply chain, client satisfaction or your company’s key performance indicators.
Talented IT geeks will do cartwheels to show off their skills and create fancy custom built reports or tools which in the end only create more work to maintain in the future. Once you deviate from standard functionality in an IT system you will require more “experts” to maintain custom built solutions. Upgrading to a new version of your IT system becomes extremely painful as testing needs to include all the customized functionality. This self-created chaos is what I call improving a supply chain from the bottom up. It’s a very common practice. Don’t get me wrong, giving users IT tools to be innovative and improve their work lives is a noble practice but is a fragmented approach to improving the heart of your company.
Why attack a supply chain from the top to bottom? Simply put, a supply chain begins with massive chunks of processes and data from key departments that need to smoothly and efficiently flow until the end product is produced. Here are some key questions you need to ask yourself starting from the top and cascading throughout the supply chain.
- Are you clear on what products are the best cost performers and what products are in the pipeline for the future? Are these products rationalized and categorized In the IT systems so that users across the supply are able to prioritize their work on what is most important? Are you clear on your inventory projections for these products?
- Are your company Key performance metrics defined and do they drive your core business strategy? Is everyone working from one set of numbers derived from one IT system?
- Is forecasting bias and accuracy easily understood and adjusted on a monthly basis?
- Are your monthly demand and supply meetings (S&OP process) designed so that your executives can make clear decisions for the final S&OP monthly plan?
- Do you have a data mining strategy that uses standard functionality from your IT system to clearly report on one set of numbers?
- Do your demand and supply users collaborate together on your inventory strategy or are they separately driven?
- Are you measuring the right internal metrics (master production schedule, supplier performance) to support on time delivery for your customers?
- Is your customer promise dating process transparent to your customers and a rigorous internal process?
- Can you project your long term capacity and purchasing requirements using your IT tools?
- How well is your R&D process integrated with your production? Is it seamless?
- Are there major bottlenecks between sales and production, production and purchasing, Planning and shop floor, production and warehousing or production and quality? Are you continuously addressing them with the right decision makers?
As you can see there are many major areas to streamline and create an efficient Supply chain. Attacking these from the bottom up can be incredibly wasteful. Get your key decision makers in a room at least once a month and make sure all these areas are being addressed and prioritized. From top to bottom.
Terry Vermeylen brings 30+ years of experience in SAP and Supply Chain Process improvement. He has worked in Planning, Purchasing, Inventory Control, fixed multiple Forecasting issues and performed supplier audits in both North America and Europe. As an SAP professional he has worked and consulted for some of the worlds largest and most successful Aerospace and Pharmaceutical companies.