There are a few ways to create a world class supply chain. When I talk about Supply Chain I’m starting at the Sales and Operations Plan and integrating all key functions to make that plan a success.
I’ve recently completed participating in a project based on the principals of the Oliver Wight system of Sales and Operational Planning excellence. What I admire about this methodology is that it is a very holistic approach and not only focuses on IT based improvements but also addresses core business fundamentals which every company should address on a regular basis. This methodology also focuses on integrating S&OP and Financial data to produce a solid business plan for senior executives. Since approximately only 5% of companies worldwide attain Class A Oliver Wight certification it is a very demanding process that can produce excellent results.
When I was at Pratt and Whitney Aircraft Canada more than 12 years ago, our VP of Operations brought in Japanese Kaizen experts that had worked at companies such as Toyota in Japan. With the multiple and continuous improvements that this method brought, we gained enormous efficiencies in the supply chain and in some cases reduced engine lead times from 24 to 4 months. That VP, Louis Chenevert went on to become Chairman and CEO of United Technologies and his initiative to start a serious Kaizen program certainly helped vault him into that position.
Jack Welch of GE made Six Sigma famous and supply chains became more efficient as defects and variability were driven out of processes. Employees become Black Belts to lead and implement quality improvements which include statistical process control to drastically reduce defect levels. I’ve worked in Six Sigma workshops of which some led to implementing SAP information technology tools to improve the process. Six Sigma workshops utilize excellent analytical methods to help a team solve problems at the root cause. This leads into the next tool that can drastically improve a Supply Chain.
SAP is an ERP System that integrates multiple functions across supply chains and drives out non value added functions for employees thus allowing them to focus on more strategic initiatives. With technology advancing at an extremely rapid pace ERP systems are becoming a requirement for medium to large companies in order to compete on a Global market. Implementing or improving a system such as SAP can drive drastic efficiencies throughout the supply chain as critical data and transactions are accessible to many employees at a faster pace, in order to make collaborative decisions across the company. New tools such as SAP Hanna crunches huge amounts of data providing the ability to create critical dashboards for executives. These dashboards can provide Sales and Operation metrics in real time enabling quicker financial analysis and key decision making.
These are a few tools a CEO has at his or her disposal to make a Supply Chain more efficient in order to compete in a Global market place. I’ll write about how some of these tools can be used together in another article. Many companies combine these methods in a project to reap maximum benefits.