Global Supply Chain Development – Workshop 9 (New Capabilities)
Executive Summary Video
The Appleton Greene Corporate Training Program (CTP) for Global Supply Chain Development is provided by Mr. Buck BS Certified Learning Provider (CLP). Program Specifications: Monthly cost USD$2,500.00; Monthly Workshops 6 hours; Monthly Support 4 hours; Program Duration 12 months; Program orders subject to ongoing availability.
If you would like to view the Client Information Hub (CIH) for this program, please Click Here
Learning Provider Profile
Mr Buck is an approved Senior Consultant at Appleton Greene and he has experience in management, production and globalization. He has achieved a Bachelor of Applied Science IET/MET in Concentration in Operations Management. He has industry experience within the following sectors: Biotechnology; Manufacturing; Aerospace; Logistics and Technology. He has had commercial experience within the following countries: China; United Kingdom; Ireland and United States of America, or more specifically within the following cities: Shanghai; London; Cork; Minneapolis MN and Chicago IL. His personal achievements include: founded a corporation in 1991 and sold it in 2018 for $400m; entrepreneur of the year Ernst & Young 1998; entrepreneur of the year Ernst & Young 2004; built global manufacturing infrastructure and lead acquisition of 16 companies. His service skills incorporate: strategic planning; leadership development; supply chain; executive mentoring and merger & acquisition.
MOST Analysis
Mission Statement
In general, a supply chain strategy should look at least three years into the organization’s future. However, that does not mean that the organization then will follow that plan for the next three years without changes or modifications. The global environment is far too dynamic to not make corrections to address major significant changes in an organization’s competitive landscape. To define and prioritize new global supply chain capabilities we suggest that the organization forms a cross-functional strategy team, including resources from sales, IT and finance, and organizes a two- or three- day off-site meeting to initiate the process. The off-site meeting starts with a review of the inputs collected so far. This includes customer requirements, internal supply chain assessment, global supply chain trends, competitive analysis, global supply chain technologies, and global supply chain risks. During the review process, a running list of all potential new supply chain capabilities that could be developed needs to be kept. To rank and prioritize the potential supply chain capabilities, the strategy team needs to determine the estimated impact of each new capability on the organization’s supply chain performance indicators (service levels, costs, inventory & working capital, ROI), as well as consider the human and financial resources necessary to implement each supply chain capability. Some organizations also add a “Probability of Delivery” factor to this evaluation matrix to include a factor describing the complexity and risk associated with each potential capability. Once the strategy team has established that the selected new supply chain capabilities will indeed enable the organization to achieve its goals & objectives and are feasible to implement within the given resource constraints, the team needs to establish a detailed project plan for the new supply chain capabilities selected. The overall project plan also needs to identify how the individual projects are interrelated to visualize that some projects with a lower ROI are actually enablers of projects with a significantly higher ROI.
Objectives
01. The Need for Supply Chain Innovation and Optimization: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
02. Supply Chain Competitive Analysis: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
03. Internal Analysis to Understand Supply Chain Deficiencies: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
04. Internal Evaluation Measures: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
05. Forming a Cross Functional Team to Analyze Supply Chain Capabilities: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
06. Understanding Supply Chain Capabilities and Their Impact: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
07. The Financial Side of Innovation in Supply Chain: departmental SWOT analysis; strategy research & development. 1 Month
08. Global Supply Chain Dynamics: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
09. Risks and Threats of Supply Chain Innovation: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
10. Applying the Theory of Constraints to Supply Chain: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
11. Measuring Progress in Supply Chain: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
12. Unearthing New Supply Chain Capabilities: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
Strategies
01. The Need for Supply Chain Innovation and Optimization: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
02. Supply Chain Competitive Analysis: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
03. Internal Analysis to Understand Supply Chain Deficiencies: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
04. Internal Evaluation Measures: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
05. Forming a Cross Functional Team to Analyze Supply Chain Capabilities: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
06. Understanding Supply Chain Capabilities and Their Impact: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
07. The Financial Side of Innovation in Supply Chain: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
08. Global Supply Chain Dynamics: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
09. Risks and Threats of Supply Chain Innovation: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
10. Applying the Theory of Constraints to Supply Chain: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
11. Measuring Progress in Supply Chain: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
12. Unearthing New Supply Chain Capabilities: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
Tasks
01. Create a task on your calendar, to be completed within the next month, to analyze The Need for Supply Chain Innovation and Optimization.
02. Create a task on your calendar, to be completed within the next month, to analyze Supply Chain Competitive Analysis.
03. Create a task on your calendar, to be completed within the next month, to analyze Internal Analysis to Understand Supply Chain Deficiencies.
04. Create a task on your calendar, to be completed within the next month, to analyze Internal Evaluation Measures.
05. Create a task on your calendar, to be completed within the next month, to analyze Forming a Cross Functional Team to Analyze Supply Chain Capabilities.
06. Create a task on your calendar, to be completed within the next month, to analyze Understanding Supply Chain Capabilities and Their Impact.
07. Create a task on your calendar, to be completed within the next month, to analyze The Financial Side of Innovation in Supply Chain.
08. Create a task on your calendar, to be completed within the next month, to analyze Global Supply Chain Dynamics.
09. Create a task on your calendar, to be completed within the next month, to analyze Risks and Threats of Supply Chain Innovation.
10. Create a task on your calendar, to be completed within the next month, to analyze Applying the Theory of Constraints to Supply Chain.
11. Create a task on your calendar, to be completed within the next month, to analyze Measuring Progress in Supply Chain.
12. Create a task on your calendar, to be completed within the next month, to analyze Unearthing New Supply Chain Capabilities.
Introduction
A supply chain is a network established between an organization and its suppliers to not only procure raw materials but to also produce items and distribute the specific goods to the final buyer in question. Supply chain has always been an area of keen interest to managers and global leaders, partially because of how it relates to the primary areas of business operations – production and selling.
The goal of almost any global supply chain today is to remove hindrances in the path and get the product into the hands of the end consumer. But this is just the basic idea behind it. Every supply chain is built on a set of lasting principles. These principles usually determine the success and authenticity of a supply chain.
A closer look would allow you to tell the differences between a supply chain model that is well thought out and a supply chain design that is brought together without extensive planning or contemplation, for that matter. This is where the idea of supply chain optimization comes into context. Supply chain optimization is about closely connecting the dots in your supply chain and ensuring that all ends are properly connected to one another.
What Is Supply Chain Optimization?
As the term itself suggests, supply chain optimization is the process of making and implementing improvements within your supply chain. These improvements aren’t just made to reduce glitches within the current supply chain, but they also focus on identifying changing market trends and working on them to provide solid output and service standards to customers. Most improvements in the supply chain are centered on raising profits, cutting costs and keeping customers happy where they can.
Your supply chain should be able to give your customers what they want, when they want it and, in the condition and quality they want. The ability to meet the above standards will give organizations the solid foundation set they require for an optimized supply chain globally. The next step in the optimization process is to determine areas where expenses can be cut down or reduced without sacrificing on the quality or standard of goods given to the end customer.
The success of a supply chain is usually measured through its ability to give customers the satisfying experience they require at the lowest cost possible. Customer satisfaction is the end goal, but it shouldn’t come at the cost of heightened expenses and debilitating costs. Organizations look to benefit from the best of both worlds here with reduced expenses and controlled costs.
Supply chain optimization can be achieved by addressing a number of factors, including:
• Physical location/placement of inventory
• Transportation costs
• Distribution tactics
• Manufacturing processes, and so on.
Since there are a number of specific points that organizations should tackle to optimize the design of their supply chain, it makes perfect sense for organizations to identify and follow different approaches for the task.
Local vs. Global Supply Chain Optimization Resources
The supply chain network established by your organization can effortlessly be optimized and bettered in two general methods: local supply chain optimization and global supply chain optimization. Both methods of supply chain optimization deal with firms operating at a global level. Do not be confused by the references to local and global because they aren’t dictated by geographical references per se.
The main difference between both global and international approaches to supply chain management lies in the approaches they follow and the scale and scope of the structure. In this section, we will look into the global and local approaches to supply chain optimization and take a better look at both before we jump into supply chain design among other things.
Local Supply Chain Optimization
Local supply chain optimization is a supply chain process that is focused on specific functions of the supply chain network. The local supply chain optimization process considers supply chain functions in their individuality without considering their impact on other parts of the supply chain.
Looking at steps and ideas of the supply chain in their individuality can generally be befitting to run a profound analysis. The analysis helps unearth specific glitches and mistakes in certain functions, which eventually makes it easier for organizations to not only reduce the problems but also come up with a strategy to minimize the damages caused by that specific function. All functions and steps of a supply chain process play an integral role in influencing the success of the supply chain. With due contemplation and active tracking, organizations can improve specific functions and trigger a domino effect of sorts.
For example, organizations would like to focus on the optimization of distribution processes so that stores always have a steady flow and supply of goods to provide to customers. The delivery process should ideally be spruced up to minimize the chances of late deliveries and to ensure that customers get the products they require at the right time, without any delays whatsoever. Ensuring a speedy delivery process might even mean sending trucks out to stores and different geographical locations, even if they aren’t filled to the core or to their capacity.
This specific process-oriented step might give you a benefit and might put you at a disadvantage as well. On the one hand, you will end up benefiting from the goal you have set for yourself, while on the other hand, this rapid increase can cause costs to increase and become a problem in the long run. Organizations need to keep a stringent check on the cost of distribution as well because, as we mentioned earlier, the primary goals of supply chain optimization also refer to getting the best outcomes possible without a drastic increase in costs.
As we can see from the example above, a localized optimization plan for your supply chain is not the best way or long-term solution moving forward. In fact, looking at things in specific, without the general idea of the impact they have on the supply chain, can halt progress and stall the effort you are putting into the supply chain.
Instead, local supply chain optimization is ideally considered as a way to find errors in individual processes and minimize them where you can. Do not take localized supply chain optimization methods as a sure shot means for improving the overall standard of your supply chain.
Global Supply Chain Optimization
As opposed to the concept of local supply chain optimization, the global approach is a more wholesome strategy that considers almost all components of the supply chain process. The global approach takes innumerable factors into consideration and takes a detailed look at the impact certain changes can have on each area of the supply chain.
The local approach for supply chain optimization falls short when put in comparison to the global approach. Global supply chain optimization is harder than the local process. Imagine the local approach to optimization as juggling one bottle at a time – it is obviously not very easy. The process of global optimization is the equivalent of juggling multiple bottles together; something which is even more difficult than the local equivalent.
Most organizations think of global supply chain optimization as a means to achieve perfection. Trying to keep all your processes performing at near perfect speeds can be unlikely. However, the optimization process is about finding the perfect balance between all areas of your supply chain. This can help your supply chain become more congruent and result-oriented.
The goals for both these approaches are the same – to cut costs, keep customers happy and raise profits in the long run. However, since organizations are more excited by the prospects of an across-the-board supply chain strategy than a restricted localized one, they prefer the benefits of global supply chain optimization over local.
Additionally, during the process of optimization, organizations should make sure that the savings made through the optimization process, either in the form of efficiency or reduced costs, should be more than the additional expenses incurred. The optimization is only justified when the above is the case.
Though global and local optimization might sound a bit intimidating to firms, there are certain techniques that can help organizations through this process. We look at these techniques in our next section.
Supply Chain Optimization Techniques
Briefly speaking, supply chain optimization is broken down into the following techniques:
1. Staying ahead of changes
2. Sticking to your strengths
3. Strengthening collaboration
4. Saving time & using technology
5. Searching for ways to improve
We study these techniques in greater detail below:
Staying Ahead of Changes
Having a supply chain model or design that is currently performing alright is not an indication of future success. The success or satisfactory results you’re enjoying currently will definitely not last forever, and there will come a time when you will have to innovate or predict the upcoming market trends and changes to remain in touch with them. Businesses need to stay aware of changes in the market to keep their work processes well tuned and to work optimally toward success in the supply chain.
To help you in this direction, POS systems can help keep an eye on your supply chain’s ability to handle volatile periods of demand from the market. The data generated through the POS systems can be used to predict future changes, and to also make your supply chain better than it is currently. Staying prepared for the future will help you achieve better results and will satisfy your customers without the need for you to extend your budget beyond what you can easily bear.
Sticking to Strengths
Today, all organizations and managers like to believe that they can handle things on their own, without help from other partners. After all, this is the guiding principle for organizations today. If you want things done right, you should probably get them done yourself, without trusting anyone else. However, this principle does not hold true in the supply chain and business world of today.
Even if you’re able to ace every step of your organization on your own, chances are that you will underperform somewhere in some process. This is where outsourcing comes to the rescue. There is no shame in outsourcing – in fact, the external help you get from outsourcing can help you complete tasks that are foreign to you and your team.
Organizations need to realize the importance of their core functions and focus on the strengths that they are good at. Being a jack of all trades has its limitations and can impede progress in the long run. Eventually, when it comes to your supply chain network, it is necessary for you to focus on the strength and see where outsourced help from third party vendors can fit in. Obviously, organizations should adhere to their due diligence standards and find vendors based on stringent measures to avoid being duped by unreliable vendors.
The use of reliable vendors to outsource supply chain tasks can help you cut down on costs and prioritize the most important areas of business. These are areas where you feel some ground work can be done to improve performance.
Strengthening Collaboration
Collaboration is a core component of your global supply chain and should be prioritized during your supply chain optimization process. Integrating your manufacturing processes with the delivery schedules of your suppliers can significantly help improve the control of inventory and can also ensure that the results you derive are more efficient and optimized.
Additionally, organizations can also improve their delivery patterns by studying and cross-referencing data from their end retailers. This data can help predict demand and can allow you to keep up with the pace of what customers expect.
With the power of collaboration tools and automated solutions in the supply chain today, the mountains of data available here can easily be deciphered. Ultimately, the interconnectedness between areas of your supply chain is bound to improve optimization and help each stakeholder remain in touch with the other.
Saving Time through Technology
We have already mentioned the importance of technology in the techniques above, and believe it is something that can actually help actualize results. You can incorporate supply chain management software operations here along with the data available across the supply chain ecosystem to derive sense out of different processes and data sets.
Customer experience can also be significantly improved through the use of technology. Customer feedback can be recorded and later be worked on to give customers the perfect experience, without the minor problem of gaps in communication.
POS technology can be grouped together with touch systems to give employees the ability to focus on efficiency and to better predict demand curves.
The list of technological advancements is endless, with the bottom line being just how significant it can be for organizations to use tech solutions for supply chain optimization.
Continuous Improvement
Supply chain optimization is a continuous improvement process that is achieved through consistent efforts and hard work. Organizations should remember not to become complacent with the status quo surrounding them. Suppliers and manufacturers shouldn’t be blindly trusted, and feedback from customers and other stakeholders should be taken seriously. There is always room for improvement, which organizations can follow to enhance their supply chain optimization.
Be sure to review the coordination between stakeholders from time to time. Enhanced collaboration can help achieve better results and lead you to the path to glory. Additionally, there is always room for improvement in supply chain practices. Supply chain processes should also be continually assessed and aligned together for the best results.
Step by Step Process for Supply Chain Optimization
The steps to build an optimized supply chain include:
Establishing a Supply Chain Council
The success of your supply chain is heavily dependent on the supply chain team you have in place within your organization. The leadership in place will not only determine the pace at which you proceed, but will also steer your supply chain in the right direction. Without the right individuals present to guide your supply chain forward, your organization would keep repeating the same mistakes and land itself in hot waters. Having a supply chain council can be the guiding light you need right now. Additionally, the objectives of all upper and lower-level employees can be aligned to ensure everyone is on the same page. This will allow your supply chain to work in synchronization with the rest of the business.
Syncing with Different Supplier Tiers
Suppliers are broken down into different tiers. Obviously, you source your products or raw materials from a supplier. Now, in most cases, the supplier you’re dealing with is also sourcing their goods from some other supplier. Sometimes they are dealing with raw materials, while other times, they have service providers offering them specialized services. The suppliers to your suppliers are known as tier 2 suppliers, and knowing more about them can be handy for your business. Additionally, if you feel that tier suppliers cannot be trusted, communicate this to your current supplier and explain the trickle-down effect to them. The poor performance of their suppliers will eventually reflect in your performance.
Streamlining Processes
Just having working processes is not enough if you want your organization to achieve a supply chain optimization model for the long run. Whenever you zoom in to the smaller details of your supply chain network, you will find that certain processes require straightening or are just not in the position you want them to be in.
Strengthening Supplier Relationships
Good supply chain optimization is not possible without strengthening relationships with suppliers and keeping them on board with your decisions. A healthy relationship with your suppliers can allow communication to flow both ways and can lead to some amazing results. A healthy supplier relationship includes setting goals, deciding on the right process to reach those goals and agreeing on the assessment methods in place. There should also be an established and proven message to manage the discrepancies in your relationships.
Considering Cost of Ownership
Business owners often make the big mistake of limiting their inference and investigation of a supplier to the cost that they provide. Only considering the price provided by a supplier and limiting all other factors is a mistake because prices are never an honest indication of what you will actually end up spending on their services.
The total cost of ownership, or TCO, is more than just the upfront cost of services and supplies and also includes the potential costs of transportation, warehousing and other related operational costs. Keeping a healthy relationship with your suppliers allows you to effectively calculate TCO and reduce expenses where it is possible for you to do so.
Cutting Inventory Levels
A popular business saying suggests ‘there’s no such thing as too much inventory’. Well, this saying does not hold true in the efficient and optimized supply chain environment of today. Keeping additional amounts of inventory can cost your business a significant amount of money. Think of all the excess space and storage you will need to keep your additional inventory. Inventory storage costs should be minimized for better management. Then, there are additional costs such as wastages and other expired goods due to excess holding periods. Additionally, inventory can also hide problems that your suppliers and supply chain partners are guilty of committing. These problems suddenly emerge when there is an inventory shortage, and you realize just how inefficient your services are.
Planning for Demand
Having a simple idea of how the future will impact demand for your product can prove to be beneficial in the long run. Demand planning is an important part of running a business today and gives organizations an idea of the demand levels they should plan for. If you’re dealing in multiple products, you don’t want too much of a popular item. Additionally, you also don’t want to be shorthanded when more orders come for a popular product. Customer requests should never be rejected. A rejected customer is a possible avenue lost for your business.
Supply chain organizations can benefit from opening new doors and unearthing new opportunities for innovation and optimization. Optimization is the call of the hour today and supply chains and organizations can benefit from enhanced results.
Using Supply Chain Planning to Drive Competitive Advantage
Market research firm Gartner recently mentioned as part of a study, “Supply chain planning (SCP) is the forward-looking process of coordinating assets to optimize the delivery of goods, services and information from supplier to customer, balancing supply and demand.”
Supply Chain Planning or SCP covers every stakeholder from the second or third tier suppliers to the end customers. Once the stakeholders are understood, an optimized plan is created to cohesively improve the company’s production, sales and other operations. These steps ensure efficiency and cost effectiveness in the supply chain for a lasting period.
Efficiency in supply chain planning is bound to achieve three goals: increased sales, lower production costs and better supplier relationships. Companies like Dell and Walmart used the supply chain to good effect in the 80s to build their competitive advantage, and the same is being done by behemoths like Unilever and P&G today.
In this section, we mention some ways for you to leverage supply chain planning as a tool to achieve a competitive advantage in the market.
Engage in Real Time Supply Chain Planning
The current global COVID-19 pandemic has shown businesses just how the landscape surrounding them can change and shift in a very short time. How a business handles these quick shifts in the market will determine its flexibility and longevity in the industry.
Supply chain analytics solutions allow managers and leaders the ability to view real time data from every part of the business. From POS terminals in the supply chains and from the mines where suppliers extract raw materials, companies can gather data from all sources of their supply. Companies can use this large volume of contextual data to forecast shifts in the supply chain and determine changes in the market. These rapidly changing market demands will help organizations understand what is required of them in the moment and how they should go about it.
A change in demand expectations should be reflected in the requirements businesses have from suppliers. A look at these different sources of data and the analytics derived from them will give organizations a chance to create changing business parameters and implement new requirements.
Develop a Collaborative Supply Chain Strategy
Most large businesses have an expansive list of vendors, distributors and suppliers. These stakeholders usually work in silos, without any form of coordination between each other. All these partners should work in a collaborative environment to maximize the value of the supply chain and minimize discrepancies in the process. Communication is necessary for supply chains operating at a global level, where suppliers, manufacturers and customers are spread across the globe rather than being saturated and present in one area.
Additionally, developing a collaborative supply chain strategy that includes input from all stakeholders can offer good news for all stakeholders as well. The success of a company usually trickles down to all other stakeholders in the supply chain process. Suppliers get to benefit from the success of the company they’re providing goods to, as they eventually develop a positive rapport and can use the success of the company as a representation of their standards.
Building and maintaining strong relationships with suppliers is just as important as maintaining relationships with customers. Just like an organization needs to satisfy all customers, it also needs to ensure the trust and reliability of its suppliers. As such, an effective supply chain management strategy wishing to achieve competitive advantage for the organization should prioritize stakeholder communication across the board.
Additionally, including input from the stakeholders in your supply chain can also help generate a lot of positive ideas and clear out delays in the current supply chain process. Your suppliers probably know more about the intricate details of different industries than you do. Obviously, keeping their experience in mind, it is a given fact that they will be able to guide you better in specific industry related matters than you would be able to handle yourself. Hence, the positive rapport built through stakeholder relationships here will definitely help you achieve the competitive advantage you want to achieve.
Supplier relationships and other communication between stakeholders can be improved through the use of technological advances that give organizations a chance to remain in touch with all stakeholders at a given time. The advancements in technology have meant that video conferencing and other tools can bridge the geographical gap and give organizations a chance to develop a positive relationship without any hindrances whatsoever.
Adopt Automated Solutions
Back in 2019, a report released by McKinsey international reported on the user confidence in AI adoption in the supply chain. Artificial Intelligence has opened the doors to multiple avenues and made global supply chains more progressive than ever. This improvement has surely not gone unnoticed and has given organizations a chance to better their services and stand on the same pedestal as their competition.
Respondents for the survey conducted by McKinsey were asked to give answers to 33 uses of AI across different functions in the organizations, and the impact they would have on the costs and revenues of the organization as a whole. In the conclusion of the report McKinsey stated, “Aggregating across all of the use cases, 63 percent of respondents report revenue increases from AI adoption in the business units where their companies use AI, with respondents from high performers nearly three times likelier than those from other companies to report revenue gains of more than 10 percent.”
In supply chain management related questions, 14 percent of all respondents reported a cost decrease of 20 percent or more through the adoption of AI and other automated services. 16 percent of all respondents saw cost decreases between 10 and 19 percent, while over 30 percent of firms saw a decrease of 10 percent or less. As far as revenues were considered, 13 percent of all organizations surveyed as part of the project reported that the revenue increase due to AI adoption was over 10 percent, while 22 percent saw an increase between 6 and 10 percent, and 28 percent of the organizations saw a revenue increase of 5 percent or less.
The basic results from the survey reported that over 44 percent of all respondents realized amazing cost savings in all business units where AI technology was deployed. AI implementation had reduced cost savings by over 10 percent for most firms.
“The two functions in which the largest shares of respondents report cost decreases in individual AI use cases are manufacturing and supply-chain management. In manufacturing, responses suggest some of the most significant savings come from optimizing yield, energy, and throughput,” McKinsey explains. “In supply-chain management, respondents are most likely to report savings from spend analytics and logistics-network optimization.”
A number of automation solutions are now part of the supply chain and delivery industry. Automated solutions like collaborative robots reduce errors in the manufacturing process and decrease the time it takes organizations to fulfill orders and reduce waiting times. These benefits and automated solutions allow workers inside a firm to work more efficiently and get more work done in as less time as possible.
Implement Agile Processes
Implementing disruptive and innovative technologies can prove to be a major source of progress for the supply chain. However, just as the name itself suggests, these improvements are disruptive and can prove to be costly at times. When working with innovative solutions and disruptive management styles, it is best to implement agile process improvements because of their ability to seek and uncover incremental improvements in the process.
The full impact of implementing the agile process will not be experienced by organizations on the first day of implementation. Over the period of time, small and incremental changes and efforts work together to signal major improvements in the processes.
The benefits of the agile processes and mentalities will be felt in the form of lower costs and minimized disruptions as a result of market changes and other trends. Since employees are tasked with spearheading the process and leading the change forward, they take greater interest in the process and are more likely to accept the change brought as a result of it, rather than show resistance to it.
To obtain maximum value out of your supply chain, it is necessary for you to be aware of supply chain cost drivers and the impact they have on your business. Increasing costs in the supply chain are usually telltale signs of problematic cost drivers. Organizations looking to create a cost-effective and robust solution should address the root causes here rather than the symptoms that appear on the surface.
For instance, the labor costs in a warehouse might be drastically rising, but this might just be a symptom or a sign of another problem such as below par pick paths and picking errors in general. Replacing the current lot of employees with new unskilled labor will put you at a disadvantage without even considering treating the root cause that led to the situation. Once you understand the root cause behind the high labor rates, you can take measures to improve picking accuracy and reduce the unnecessary work involved. This will effectively address the root cause without any additional problems.
Short-term cost savings should never be attained by sacrificing your long term growth goals. Technologies like warehouse automation and others powered by AI can help improve services and give a smart return on investments.
Supply Chain Analytics to Help Improve Competition
Most organizations today use some form of supply chain software to manage logistics and procurement in the supply chain. But when it comes to planning, many still use spreadsheets and don’t utilize analytics that can actually give them the competitive advantage they are looking for.
To give you an idea of the concept, Ventana Research recently conducted a study on supply chain planning issues. The study found that:
• 58% of organizations had difficulty managing supply chain processes
• Only 47% had accurate supply chain plans
• 53% had no ability to evaluate trade-offs
• Spreadsheets were reinforcing functional silos
• Collaboration becomes difficult due to lack of proper processes and technology
From these stats, it is evident that relying on models such as spreadsheets for planning can significantly hinder the ability of your organization to compete in the market. There are a number of different supply chain analytics that help give you an idea of business intelligence and performance stats that can predict what the future will look like. Advanced analytics help you predict future trends with surprising accuracy. These analytics also help pit you against other competitors in the market and give you an idea of where you actually stand. In this section we explore some supply chain analytics and help you understand how to use them to evaluate competitive advantage.
Capacity Planning
Capacity planning is an analytic that allows you to match manufacturing and procurement capacity to the sales demand you have predicted for the coming seasons. The capacity planning process includes strategies such as:
• A lag strategy where you add additional capacity to the system once your current plan isn’t able to meet demand.
• A lead strategy that refers to producing goods with regards to the anticipated demand and output.
• The match strategy, which involves adjusting capacity to match the demand for the product and the incremental gains achieved as a result.
Each of these strategies has its own merits, but organizations should be able to choose one based on their situation. The answer to which one is best lies in your understanding of competitors, your market as a whole and the factors affecting demand.
Simulation and Scenario Analysis
The simulation and scenario analysis is one of the most crucial analytics when devising strategies for business scenarios. The Royal Dutch Shell company practiced simulation and scenario analysis and has since shaped their future in the right direction.
While not many companies can afford the high costs of the multidisciplinary approach that Shell follows, prescriptive analytics can give you the same results as required.
Optimization based scenario planning can be put through multiple simulations to understand the preparedness of a supply chain with regards to multiple scenarios and the kind of impact they might have.
Advanced S&OP
Advanced S&OP is a next generation sales and operation planning analytic that uses finances as well. The analytics technique looks at the financial bottom line to discuss multiple sales scenarios and look at the most profitable production output. A prescriptive analytics model is used to here to bridge the gap between sales and production departments. This form of modeling and analytics replaces the cumbersome process of manual S&OP.
Optimization
Optimization refers to the use of prescriptive methods to determine the optimal solution to different problems faced by the business. For example, it is complex for organizations to determine the perfect inventory strategy for a company involved in retailing through omni channels.
Inventory optimization can save the day for organizations following an omnichannel strategy. The first step is to use the prescriptive analytics model and accurately predict the organization’s demand. Once the model is infinitely validated, the next step is to find the optimal inventory strategy and ensure that it perfectly factors in for the effects of external factors.
Demand Shaping
Demand shaping is an analytics strategy where retailers and manufacturers apply methods to change the demand for their products, rather than just meet existing demand levels. A sales promotion or marketing strategy can be used to increase demand and sales. However, companies face a problem here as they aren’t usually prepared to manufacture and procure for promotions and discounted offers, because of which they eventually encounter lost sales and suffer from stock outs.
Demand shaping allows organizations to set demand through their own understanding and also plan for the shift in demand through appropriate planning measures.
Executive Summary
Chapter 1: The Need for Supply Chain Innovation and Optimization
Supply chain optimization is broken down into the following techniques:
Staying Ahead of Changes
Having a supply chain model or design that is currently performing alright is not an indication of future success. The success or satisfactory results you’re enjoying currently will definitely not last forever, and there will come a time when you will have to innovate or predict the upcoming market trends and changes to remain in touch with them. Businesses need to stay aware of changes in the market to keep their work processes well tuned and to work optimally toward success in the supply chain.
Sticking to Strengths
All organizations and managers today like to believe that they can handle things on their own, without help from other partners. After all, this is the guiding principle for organizations today. If you want things to be done right, you should probably get it done yourself, without trusting anyone else. However, this principle does not hold true in the supply chain and business world of today.
Even if you’re able to ace every step of your organization on your own, chances are that you will underperform somewhere in some process. This is where outsourcing comes to the rescue. There is no shame in outsourcing – in fact, the external help you get from outsourcing can help you complete tasks that are foreign to you and your team.
Strengthening Collaboration
Collaboration is a core component of your global supply chain and should be prioritized during your supply chain optimization process. Integrating your manufacturing processes with the delivery schedules of your suppliers can significantly help improve the control of inventory and can also ensure that the results you derive are more efficient and optimized.
Additionally, organizations can also improve their delivery patterns by studying and cross-referencing data from their end retailers. This data can help predict demand and can allow you to keep up with the pace of what customers expect.
Saving Time through Technology
We have already mentioned the importance of technology in the techniques above, and believe it is something that can actually help actualize results. You can incorporate supply chain management software operations here along with the data available across the supply chain ecosystem to derive sense out of different processes and data sets.
Customer experience can also be significantly improved through the use of technology. Customer feedback can be recorded and can later be worked on to give customers the perfect experience, without the minor problem of gaps in communication.
Continuous Improvement
Supply chain optimization is a continuous improvement process that is achieved through consistent efforts and hard work. Organizations should remember not to become complacent with the status quo surrounding them. Suppliers and manufacturers shouldn’t be blindly trusted, and feedback from customers and other stakeholders should be taken seriously. There is always room for improvement, which organizations can follow to enhance their supply chain optimization.
Be sure to review the coordination between stakeholders from time to time. Enhanced collaboration can help achieve better results and can lead you to the path to glory. Additionally, there is always room for improvement in supply chain practices. Supply chain processes should also be continually assessed and aligned together for the best results.
Step by Step Process for Supply Chain Optimization
The steps to build an optimized supply chain include:
Establishing a Supply Chain Council
The success of your supply chain is heavily dependent on the supply chain team you have in place within your organization. The leadership in place will not only determine the pace at which you proceed, but will also steer your supply chain in the right direction. Without the right individuals present to guide your supply chain forward, your organization would keep repeating the same mistakes and land itself in hot waters. Having a supply chain council can be the guiding light you need right now. Additionally, the objectives of all upper and lower-level employees can be aligned to ensure everyone is on the same page. This will allow your supply chain to work in synchronization with the rest of the business.
Syncing with Different Supplier Tiers
Suppliers are broken down into different tiers. Obviously, you source your products or raw materials from a supplier. Now, in most cases, the supplier you’re dealing with is also sourcing their goods from some other supplier. Sometimes they are dealing with raw materials, while other times they have service providers offering them specialized services. The suppliers to your suppliers are known as tier 2 suppliers, and knowing more about them can be handy for your business. Additionally, if you feel that tier suppliers cannot be trusted, communicate this to your current supplier and explain the trickle-down effect to them. The poor performance of their suppliers will eventually reflect in your performance.
Streamlining Processes
Just having working processes is not enough if you want your organization to achieve a supply chain optimization model for the long run. Whenever you zoom in to the smaller details of your supply chain network, you will find that there are certain processes that require straightening or are just not in the position you want them to be in.
Strengthening Supplier Relationships
Good supply chain optimization is not possible without strengthening relationships with suppliers and keeping them on board with your decisions. A healthy relationship with your suppliers can allow communication to flow both ways and can lead to some amazing results. A healthy supplier relationship includes setting goals, deciding on the right process to reach those goals and agreeing on the assessment methods in place. There should also be an established and proven message to manage the discrepancies in your relationships.
Considering Cost of Ownership
Business owners often make the big mistake of limiting their inference and investigation of a supplier to the cost that they provide. Only considering the price provided by a supplier and limiting all other factors is a mistake because prices are never an honest indication of what you will actually end up spending on their services.
Cutting Inventory Levels
A popular business saying suggests ‘there’s no such thing as too much inventory’. Well, this saying does not hold true in the efficient and optimized supply chain environment of today. Keeping additional amounts of inventory can cost your business a significant amount of money. Think of all the excess space and storage you will need to keep your additional inventory. Inventory storage costs should be minimized for better management. Then, there are additional costs such as wastages and other expired goods due to excess holding periods. Additionally, inventory can also hide problems that your suppliers and supply chain partners are guilty of committing. These problems suddenly emerge when there is an inventory shortage, and you realize just how inefficient your services are.
Planning for Demand
Having a simple idea of how the future will impact demand for your product can prove to be beneficial in the long run. Demand planning is an important part of running a business today and gives organizations an idea of the demand levels they should plan for. If you’re dealing in multiple products, you don’t want too much of an item that is unpopular. Additionally, you also don’t want to be shorthanded when more orders come for a product that is popular. Customer requests should never be rejected. A rejected customer is a possible avenue lost for your business.
Supply chain organizations can benefit from opening new doors and unearthing new opportunities for innovation and optimization. Optimization is the call of the hour today and supply chains and organizations can benefit from enhanced results.
Chapter 2: Supply Chain Competitive Analysis and Building an Advantage
Market research firm, Gartner recently mentioned as part of a study, “Supply chain planning (SCP) is the forward-looking process of coordinating assets to optimize the delivery of goods, services and information from supplier to customer, balancing supply and demand.”
Supply Chain Planning or SCP covers every stakeholder from the second or third tier suppliers to the end customers. Once the stakeholders are understood, an optimized plan is created to cohesively improve the company’s production, sales and other operations. These steps ensure efficiency and cost effectiveness in the supply chain for a lasting period.
Efficiency in supply chain planning is bound to achieve three goals, including increased sales, lower production costs and better supplier relationships. Companies like Dell and Walmart used the supply chain to good effect in the 80s to build their competitive advantage, and the same is being done by behemoths like Unilever and P&G today.
In this section we mention some ways for you to leverage supply chain planning as a tool to achieve competitive advantage in the market.
Engage in Real Time Supply Chain Planning
The current global COVID-19 pandemic has shown businesses just how the landscape surrounding them can change and shift in a very short time. How a business handles these quick shifts in the market will determine its flexibility and the longevity that it achieves in the industry.
Supply chain analytics solutions allow managers and leaders the ability to view real time data from every part of the business. From POS terminals in the supply chains and from the mines where suppliers extract raw materials, companies can gather data from all sources of their supply. Companies can use this large volume of contextual data to forecast shifts in the supply chain and determine changes in the market. These rapidly changing market demands will help organizations understand what is required of them in the moment, and how they should go about it.
A change in demand expectations should be reflected in the requirements businesses have from suppliers. A look at these different sources of data and the analytics derived from them will give organizations a chance to create changing business parameters and implement new requirements.
Develop a Collaborative Supply Chain Strategy
Most large businesses have an expansive list of vendors, distributors and suppliers. These stakeholders usually work in silos, without any form of coordination between each other. All these partners should work in a collaborative environment to maximize the value of the supply chain and minimize discrepancies in the process.
Communication is necessary for supply chains operating at a global level, where suppliers, manufacturers and customers are spread across the globe rather than being saturated and present in one area.
Additionally, developing a collaborative supply chain strategy that includes input from all stakeholders can offer good news for all stakeholders as well. The success of a company usually trickles down to all other stakeholders in the supply chain process. Suppliers get to benefit from the success of the company they’re providing goods to, as they eventually develop a positive rapport and can use the success of the company as a representation of their standards.
Building and maintaining strong relationships with suppliers is just as important as maintaining relationships with customers. Just like an organization needs to satisfy all customers, it also needs to ensure the trust and the reliability of its suppliers. As such, an effective supply chain management strategy wishing to achieve competitive advantage for the organization should prioritize stakeholder communication across the board.
Additionally, including input from the stakeholders in your supply chain can also help generate a lot of positive ideas and clear out delays in the current supply chain process. Your suppliers probably know more about the intricate details of different industries than you do. Obviously, keeping their experience in mind, it is a given fact that they will be able to guide you better in specific industry related matters than you would be able to handle yourself. Hence, the positive rapport built through stakeholder relationships here will definitely help you achieve the competitive advantage you want to achieve.
Supplier relationships and other communication between stakeholders can be improved through the use of technological advances that give organizations a chance to remain in touch with all stakeholders at a given time. The advancements in technology have meant that video conferencing and other tools can bridge the geographical gap and give organizations a chance to develop a positive relationship without any hindrances whatsoever.
Adopt Automated Solutions
Back in 2019, a report released by McKinsey international reported on the user confidence in AI adoption in the supply chain. Artificial Intelligence has opened the doors to multiple avenues and has made global supply chains more progressive than they ever were. This improvement has surely not gone unnoticed and has given organizations a chance to better their services and stand on the same pedestal as their competition.
Respondents for the survey conducted by McKinsey were asked to give answers to 33 uses of AI across different functions in the organizations, and the impact they would have on the costs and revenues of the organization as a whole. In the conclusion of the report McKinsey stated, “Aggregating across all of the use cases, 63 percent of respondents report revenue increases from AI adoption in the business units where their companies use AI, with respondents from high performers nearly three times likelier than those from other companies to report revenue gains of more than 10 percent.”
In supply chain management related questions, 14 percent of all respondents reported a cost decrease of 20 percent or more through the adoption of AI and other automated services. 16 percent of all respondents saw cost decreases between 10 and 19 percent, while over 30 percent of the firms saw a decrease of 10 percent or less. As far as revenues were considered, 13 percent of all organizations surveyed as part of the project reported that the revenue increase due to AI adoption was over 10 percent, while 22 percent saw an increase between 6 and 10 percent, and 28 percent of the organizations saw a revenue increase of 5 percent or less.
The basic results from the survey reported that over 44 percent of all respondents realized amazing cost savings in all business units where AI technology was deployed. AI implementation had reduced cost savings by over 10 percent for most firms.
“The two functions in which the largest shares of respondents report cost decreases in individual AI use cases are manufacturing and supply-chain management. In manufacturing, responses suggest some of the most significant savings come from optimizing yield, energy, and throughput,” McKinsey explains. “In supply-chain management, respondents are most likely to report savings from spend analytics and logistics-network optimization.”
A number of automation solutions are now part of the supply chain and delivery industry. Automated solutions like collaborative robots reduce errors in the manufacturing process and decrease the time it takes organizations to fulfill orders and reduce waiting times. These benefits and automated solutions allow workers inside a firm to work more efficiently and get more work done in as less time as possible.
Implement Agile Processes
Implementing disruptive and innovative technologies can prove to be a major source of progress for the supply chain. However, just as the name itself suggests, these improvements are disruptive and can prove to be a costly endeavor at times. When working with innovative solutions and disruptive management styles, it is best to implement agile process improvements because of their ability to seek and uncover incremental improvements in the process.
The full impact of implementing the agile process will not be experienced by organizations on the first day of implementation. Over the period of time, small and incremental changes and efforts work together to signal major improvements in the processes.
The benefits of the agile processes and mentalities will be felt in the form of lower costs and minimized disruptions as a result of market changes and other trends. Since employees are tasked with spearheading the process and leading the change forward, they take greater interest in the process and are more likely to accept the change brought as a result of it, rather than show resistance to it.
Consider Cost Drivers and Their Impact on Business
To obtain maximum value out of your supply chain, it is necessary for you to be aware of supply chain cost drivers and the impact they have on your business. Increasing costs in the supply chain are usually telltale signs of problematic cost drivers. Organizations looking to create a cost-effective and robust solution should address the root causes here rather than the symptoms that appear on the surface.
For instance, the labor costs in a warehouse might be drastically rising, but this might just be a symptom or a sign of another problem such as below par pick paths and picking errors in general. Replacing the current lot of employees with new unskilled labor will put you at a disadvantage without even considering treating the root cause that led to the situation. Once you understand the root cause behind the high labor rates, you can take measures to improve picking accuracy and reduce the unnecessary work involved. This will effectively address the root cause without any additional problems.
Short-term cost savings should never be attained by sacrificing on your long term growth goals. Technologies like warehouse automation and others powered by AI can help improve services and give a smart return on investments.
Chapter 3: Internal Analysis to Understand Supply Chain Deficiencies
Performance management is usually defined as a measure to quantify the effectiveness and efficiency of operations in the supply chain. Most organizations tend to measure their supply chain based on measures such as innovation, learning, quality, market share, human resources and most importantly, customer satisfaction.
Supply chain analysis or performance measurement techniques serve as a quantification of how well the supply chain is currently performing and the measures that businesses can take to improve this performance over time.
The right measurement tools can help businesses:
• Check the position of the supply chain and where it currently stands and is headed to.
• Communicate the position of the supply chain to key stakeholders related to the supply chain. Communication of the supply chain is done both, internally and externally. Businesses communicate the position of the supply chain to internal stakeholders including employees to spur them forward. Internal communication is necessary to keep the team on board. Additionally, the position of the supply chain should also be communicated to external stakeholders including your suppliers, distributors and investors to give them an idea of how the supply chain is performing and the improvements that can be made over time to improve the situation. There are also certain legal requirements based on which organizations are required to discuss the status of their supply chain with external as well as internal stakeholders.
• Measuring the performance of the supply chain can help businesses identify just how far away the supply chain currently is from the objectives that are set for it. The distance of the supply chain from the ultimate objective can help managers track progress and manage the discrepancies in the best manner possible.
• Compel progress forward. The current measure of the supply chain also allows organizations to track progress and push it forward.
A supply chain performance system should have the following desirable characteristics to effectively manage and measure the success of the supply chain:
• Inclusiveness: The supply chain management system used should measure the inclusiveness of the supply chain. Through inclusiveness, the system should pertinently consider all related aspects.
• Universality: The management system in place should allow for comparison with companies in the industry to understand the strategic position of the supply chain with regards to the industry standards.
• Measurability: The data metrics used to manage the supply chain should be measurable and easily understandable for all sectors and stakeholders associated with the supply chain.
• Consistency: The performance management system used within the supply should be consistent with the goals of the organization and should also remain consistent through a specific time period to allow comparisons.
Kazemkhanlou et al provided a detailed list of characteristics that should preferably be found within a supply chain measurement system. These characteristics include:
• Be simple and easy to use
• Have a clear purpose
• Provide fast feedback
• Relate to performance improvement, not just monitoring
• Reinforce the firm’s strategy
• Relate to both, long-term and short-term objectives of the organization
• Match the firm’s organization culture
• Not be in conflict with one another
• Be integrated both, horizontally and vertically in the corporate structure
• Be consistent with the firm’s existing recognition and reward system
• Focus on what is important to customers
• Focus on what the competition is doing
• Lead to identification and elimination of waste
• Help accelerate organizational learning
• Evaluate groups not individuals for performance to schedule
• Establish specific numeric standards for most goals
• Reflect relevant non-financial information based on key success factors of each business
• Make a link to reward systems
• The financial and non-financial measures must be aligned and fit within a strategic framework
• Minimum deviations should exist between the organizational goals and measurement goals
Supply chain analysis can be performed using a number of methods and models, but the three we will discuss in this chapter include SCOR, the Balanced Scorecard Method and Benchmarking.
Chapter 4: Internal Evaluation Measures
In their own way, each organization should look to incorporate analytics based on the elements of their supply chain. There are various elements that combine to fully form the functional wheel of the supply chain.
The core elements and their functions are directly related to a supply chain through the internal supply chain, customers and suppliers.
• Procurement:
– Develop a procurement policy which is easy to implement and follow down the line.
– Source, purchase and contract rates and vendors for direct and indirect expenditures, services
and capital related to the supply chain.
– Procurement analysis to determine the feasibility and benefits of the procurement strategy to
the supply chain.
• Operations Planning:
– The planning process for sales and operations or S&OP planning
– Master scheduling of manufacturing to meet deadlines and plan effectively
– Planning capacity and materials to meet the requirements of the master schedule
– Inventory management policy for better management of resources
– Distribution plan for effective customer reach
• Logistics:
– Schedule the storage and movement of outbound materials going toward customers and inbound
materials and supplies coming from suppliers
– Reverse logistic storage and movement preparations
– Compliance with regulations and trade agreements during the import and export of all raw
materials and finished products. Government regulations should stringently be followed here for
ideal results
– Settlement of both, accounts payable and accounts receivable from time to time. This should be
incorporated in the materials receipts along with product delivery
• Tactical Marketing and Sales. This process is used to align the promotional marketing and sales activities of a firm with its capabilities to make and deliver goods:
– Tactical marketing and sales activities run based on the availability of products and the
supply of raw materials needed to manufacture them. Retail promotions with CPG and FMCG
businesses
– Order management
– Demand management process for the sales and operation processes
– Order management to set customer expectations right
Besides these core processes, there are three other elements that support the flow of the supply chain. The importance of these three support elements is usually determined by the type and size of the business in context. However, the activities exist within an organization, and their outputs are best recognized as internal parts of the supply chain. Responsibilities within these support processes include:
• Supply Network model:
– Consolidate the strategy of the supply chain from individual elements and their strategies
under the support and core elements. The number of individual strategies will heavily depend on
the importance of each element
– Supply chain management model design
– Supply chain mapping for future success
– Supply chain analysis
– Metrics and performance analysis
– Supply chain modeling and simulation for the future
• Supply Chain IT:
– Supply chain commercial software applications
– Supply Network Analysis and Planning (SNAP) applications
– Supply Chain Communications Network integration
– Investigate, design and implement viable Digital Supply Chains (DSC) solutions
• Supply Chains Finance and Legal:
– Management of working capital and cash flow
– Financing arrangements for selected suppliers and approval of credit for customers
– Governance, Risk and Compliance
– Governance requirements for dealing with external parties
– Identification of all risks within the supply chains to successfully manage and mitigate them
– Compliance with all related laws in the domestic and internal market. Keep a keen eye on
international and domestic laws and international trade agreements concerning supply chains (link
with Logistics compliance)
The internal supply chain is based on the structure highlighted above and the analysis performed on it takes inspiration from the individual structure that it boasts. Every supply chain is different in nature, which is why the structure usually varies from supply chain to supply chain.
We look at details related to internal supply chain analysis within the course manual that follows this executive summary.
Chapter 5: Forming a Cross Functional Team to Analyze Supply Chain Capabilities
A cross functional team is usually one which has members with different skill sets and from different departments but working toward a common objective or end result. Cross-functional teams are known to include people from different departments and areas within the organization, including employees from all levels of the hierarchy. There can also be participants from outside the company itself to lend an expert view and make the analysis even more thorough than it originally was. The primary motive bringing these teams coming together is the ability to be spot-on in their analysis and effectively review the performance of the supply chain in light of a number of metrics.
Cross functional teams in a supply chain bring varying perspectives with each member of the team chipping in about how certain decisions impact their performance and work. The supply chain is interconnected with a number of departments in the workplace. Even sales and marketing teams have to run promotions through supply chain managers because the company should be equipped to provide for the spike in demand before price promotions and discounts are launched.
Cross functional teams are mostly self-directed. They are assigned responsibilities and tasks by the upper management, but the approach they employ is one that they find befitting according to the various expertise of different team members. Each member tends to offer their own perspective to the mix, and gives a more ‘out of the box’ solution and suggestion that wouldn’t be achieved as part of a simple departmental team. This creative approach to performance management can unearth problems and solutions for them.
Cross functional teams are usually found in small businesses or startups, where owners are forced into incorporating such teams because of the limited number of employees available. Employees perform the limited number of tasks that come up.
Advantages of Cross Functional Teams
While it can be a bit daunting to build a cross functional team of employees from different departments and backgrounds, we have got some benefits of cross functional teams to motivate you. Run through these advantages and see how they can benefit you:
Gain Better Insights
Cross functional teams allow organizations to benefit from insights and feedback from all corners of the organization. This method of coordination and communication allows an opening for new perspectives and solutions. Teams can sit together and brainstorm ideas that they like to generate effective results.
The supply chain should regularly be appraised with feedback and recommendations from everyone. A cross functional team will help unearth problems and solutions that you previously didn’t expect and would open the doors to new progress in this regard.
Engaged Employees
Employee engagement levels seem to be dropping around us, a lot of which can be put on the increasing monotony in job functions. Monotony is also increased when employees are restricted to their social circles and don’t get to meet other people from different departments in the workplace and socialize with them.
Once you form cross functional teams in your organization, you can benefit from better engagement levels within employees. Employees are now more at peace with each other and discuss a variety of ideas and solutions. A strong leader can be put in charge of such cross functional teams to enhance collaboration and improve coordination. All team members from different departments will be able to hence feel comfortable in the meetings and chip in their ideas related to the discussion.
Spurring Innovation
It is popularly believed in business circles that cross functional teams are a good place to share innovative ideas and form long-term solutions. Employees can sit together and talk about ideas which are otherwise neglected. When different minds come together, they are able to generate a number of positive ideas that have a generally positive impact on the workplace and the people inside it. When a limited number of people from the same department come together to think of appraising the performance of the supply chain, they are bound to be limited in their thought process and won’t be able to take innovative decisions and expose problems.
Better Management Skills
Managers tend to develop their skills as well through cross functional teams. Individuals in cross functional teams are able to sit together and work under the guidance of the leader. The leader hence plays an even more important role, because they are now tasked with managing a diverse workforce.
Every department has their own set of norms and employees bring those norms together with them to the cross functional team. The manager is usually tasked with mixing all ideas, cultural preferences and other established norms together and creating an environment that is conducive for every worker from every department. Managers learn how to tackle diversity through these techniques and can take this into future pursuits.
Having studied the benefits of cross functional teams within this document, the course manual will go further and look at the strategies you should follow to develop cross functional teams of your own.
Chapter 6: Understanding Supply Chain Capabilities and Their Impact
Efficiency drove economic growth in the 20th century. The push for efficiency and cost effectiveness not only lowered the prices of products, but also meant that organizations were able to innovate and bring in new ideas to the mix without having to worry about repercussions. The prices of products from home appliances to automobiles significantly reduced and organizations were also able to innovate further and give new offerings to spoiled customers. In light of this, efficiency was the norm in the 20th century and there were many organizations that prided themselves based on their ability to lower costs and achieve efficiency in their dealings.
However, for efficiency to succeed in the modern economy, it needs two imperative factors to remain constant and ever-present. The continuous presence of these two factors is becoming much harder to ensure than it was in the previous century. The first factor that is required for efficiency to work and remain constant is predictability. For efficiency to successfully become a part of our daily lives, it is necessary that we ensure predictability. Businesses can only efficiently plan and manage all their resources if they know of the predictable and constant demand for these products. Additionally, besides the customer side of things and the demand factor, organizations also want to know about the raw materials that go into their products and how these raw materials will be provided to them. Not every organization today is satisfied with their raw materials procurement strategy and there is significant room for improvement here.
Businesses can only optimize their productions and manufacturing strategy to meet demand if they are sure of the constant delivery of goods and know that it can be trusted at all hours.
In the disruptive world environment and global structure of today, businesses aren’t able to solidify their selling strategy and effectively work on it. Demand patterns cannot be predicted and trade rifts mean that sourcing raw materials from other countries is always a tricky idea.
The recent COVID-19 pandemic and the global lockdown that was enforced as a result of it have highlighted the disruptive nature of the global market and the inability of the supply chain to match expectations and sudden demand spikes.
The demand for hand sanitizers, face masks and toilet paper was at a record high during the early onset of the COVID-19 pandemic. Such was the situation that shoppers would throng retail stores only to hoard as much of these items as they could. The sudden hoarding meant that retail stores ran out of goods to sell and there was a serious point in Australia and the United States where toilet paper ran short and manufacturers weren’t able to supply fresh batches.
Efficiency also requires one additional factor to fully succeed at helping businesses achieve their objectives – stability. The demand for goods and their prices will remain relatively stable for a number of years to come. Only when this information is guaranteed can organizations develop an efficient supply chain model without the hassles of infrequency and instability. However, since stability is not guaranteed anymore, organizations have to use other techniques and bear more costs to become more responsive. Efficiency is definitely good but that holds true only in markets that have stable demand and selling curves.
When comparing efficiency with responsiveness, we can clearly tell that responsiveness is better and more suited for the 21st Century. Responsiveness is what drives the economy forward and gives customers a chance to benefit from rapid deliveries whenever and wherever they require them.
The change in eras can also be identified through the nature and operations of the companies that stole the show light across both centuries – 20th and 21st. The big companies of the 20th Century were all efficient in their manufacturing processes and followed a model based on efficiency; the examples of GM, Ford, US Steel, Whirlpool and Kodak spring to mind here due to their ability to efficiently save costs. However, if we take a look at the big companies of today’s world or the major names in the 21st Century, most companies are known for their responsiveness and their ability to reach customers where and when they want.
Companies like Amazon, Alibaba, Apple, Google, Facebook, Tencent and Starbucks are all known for their responsive operations. While these 21st century companies do need to be efficient in their processes, they also realize that success in this rapidly changing world is better achieved through the use of responsive strategies.
The success of supply chains in the world today is hugely influenced by their ability to sense demand curves and adjust to them when they can. Low prices aren’t always the deciding factor today – as is the case with Apple. People want quality, experience and timely delivery among other factors, even if they have to pay more for the same product. Apple and Starbucks may not always have the cheapest smartphones and coffee, but they’ll be the preferred choice of masses as long as they provide quality over quantity and meet customer expectations.
Chapter 7: Supply Chain Tech Innovations and Their Financial Side
Organizations today basically have two types of financing options or sources of finance available to them – internal sources and external sources of finance. The choice between these sources of finance is made based on a number of factors including:
• The scale of the innovation or new capability that is to be picked up
• The requirements for organizations today
• The rate of financing
• The internal finances available to organizations
Internal Sources of Finances
Internal sources of finance usually include the following options:
• Short term working capital and
• Long term fixed capital
We discuss each of these sources in the option below:
Retained Profits
Almost all organizations, regardless of the industry that they operate in, return some of their profits on a period basis. These retain profits are usually maintained in a separate capital account, and can be used to fund new innovations within the organization or can be used during times of emergency when the business is not performing as well and is unable to record a profit. Retained profits can develop into a sizable amount with the passage of time which can come in handy for organizations looking to expand their resources and improve their business standards.
Most organizations save up their retained profits with a future objective in mind. If you have been setting aside retained profit to invest in your supply chain later, then you can do so in innovative capabilities without a second thought. However, an opportunity cost arises if you’ve been setting aside retained profit for some other cause but are now lured by the possibility of new innovations in the supply chain.
Sale of Assets
Selling assets to generate new capabilities and open new avenues is another internal source of finance that most organizations follow at the time of selling an asset. This is again a somewhat desperate measure and should be sought as a last resort than the initial response to a situation.
Your assets play a pivotal role in your operational and production processes, which is why you should realize the impact caused by their absence, before deciding to proceed with the sale. Any hasty decision taken in the heat of the moment can cost you a lot here.
Reducing Working Capital
New supply chain capabilities that increase your operational costs can be met by reducing the working capital in general and by being more frugal in your other decisions. The ability to save daily costs elsewhere will help finance new capabilities in the supply chain. While this might be sufficient for short term projects or processes, it isn’t a sustainable model to follow in the long run.
External Sources of Finance
Almost all primary sources of finance or capital for a business come through external means. The very nature of capital is defined through its acquisition from external means and modes. External sources of finance include all financing acquired from outside of the business and for which the business itself was unable to provide sufficient resources.
External sources of finance which can come in handy for incorporating innovations within the supply chain model include:
Bank Funding
Bank funding or financing is the first source of external financing seen within organizations. Bank funding includes funds and finance taken from an external financial institute, most often a bank for meeting and finding an end to cash crunches.
Bank funding is also available for long term loans that are needed to signal future growth curves and are also required to spell major innovations in the supply chain. The funding you acquire from the bank should definitely exceed the cost of the new capability you are about to incorporate in your supply chain.
Equity Shares
While small business owners might not be able to benefit from this option straightaway, equity shares are a good way to generate finance for investing in new supply chain capabilities. A share is exactly what the name suggests. It is a provision of participation in a company from external investors who benefit from dividends in return for their investment.
Ordinary Shares
Ordinary shareholders get a dividend based on the prosperity and success of the company. The dividends paid to ordinary shareholders will be generally high if the profits are higher. Similarly if the company does not make a profit during a period, the share prices will also dip and the ordinary shareholders will get no dividend from the company. Companies can get some much needed finance through this method, while selling a specific amount of shares in the open market.
Preference Shares
Preference shares are sold to investors that take little risk and require constant payments in return for the investments they make. The return should be in line with the percentage fixed with the preference shareholders at the time of selling the shares. These shares rank lower on the risk profile, hence charge less than others.
Debentures
Debentures come under long term loans or source of finance obtained by issuing a debenture. These come with a fixed rate and aren’t tied to the profit of the organization; neither does the organization have to hand over some control over to the lending party.
Debenture holders however do maintain some right over the business, as they can sell off assets if the interest payments to them aren’t made in time. This long-term line of credit can either be beneficial or messy based on the approach a business considers to adopt.
The sources of finance and your ultimate choice from them will differ based on the capability you are willing to pick up and the current situation of your supply chain. With ever increasing and the rapid pace at which it is being adapted, organizations are in a race against time to be more proficient in their dealings and add more automation to their supply chain, even if it comes at the cost of external finance.
Chapter 8: Risks and Threats of Supply Chain Innovation
Supply chain integration can be a challenge to undertake for most manufacturers today. Knowing some of the common challenges faced by other organizations and working on the integration process can help you handle things in a smoother and more professional manner.
Some of the challenges that most businesses face during global supply chain tech integration include:
Failure to Secure Support from Top Management
This is by far one of the most common problems faced by global supply chains today when they look to incorporate supply chain technology into their processes. Since supply chain processes have a serious impact on the objectives and finances of an organization, it is necessary for businesses to acquire sponsorship and leadership from the top management.
C-level executives from the top management can run the value-chain, sponsor projects, drive enterprise-wide accountability, achieve cross-departmental and cross-functional commitment and also allocate proper resources to insure the successful implementation of technology. One tried and trusted solution here is to create an executive steering committee than ensures the perfect allocation of resources and ensures that all obstacles in the path to proper implementation are removed.
Limited or No Cross-Functional Representation
Organizations should deploy a broad team empowered enough to make planning and implementation decisions on their own. The presence of all teams on board will ensure successful supply chain deployment and routine improvements over time. This team should comprise of the ultimate stakeholders that use the new technology and the secondary users that will benefit through the flow and information processing. It is also necessary for the implementation team to have IT representation, so that the technical aspects of system integration can be addressed. Collaboration is necessary, which is why the inbound and outbound movement of data should be guaranteed.
Compatibility Issues with Legacy Systems
Fewer sectors are as excited about the prospects of enterprise technology as supply chain. The industry has long been berated for its inconsistency and lack of development, and technology now offers an avenue for it to escape this criticism. Most managers end up making the dreaded mistake of replacing all systems with new ones. They then start the implementation process from there onwards. As we have mentioned earlier, the process of implementing technology in your global supply chain process is a journey rather than a destination. You can’t view it as an overnight change, since it is a gradual process of updates.
As a result of the slow and gradual nature of the process, business managers should try to boost their current systems. The digital revolution of today is all about tapping into external resources or solutions and augmenting your existing IT infrastructure with the resources and solutions you find elsewhere. This saves your internal team from a complete revamp and gives them an opportunity to focus on more strategic initiatives, while a third party can look after the challenges of migrating toward technology.
Wrong Process or Practice
Organizations need to get their homework done before they initiate the implementation process in the supply chain. Prior to the start of the implementation process, it is critical for companies to initiate and conduct research toward the right processes and methods. The new technology should be supported with the right processes.
A successful way to approach the technology revamp is to talk with other businesses that have successfully applied the technology within their supply chains. Many supply chain providers have incorporated relevant operation management systems in their organizations and will be willing to tell you all about the processes you should and shouldn’t follow.
Inaccurate Information
Timely data and accurate information are responsible for the success of almost all supply chains. Supply chains succeed due to their ability to provide accurate information across the board for members to benefit and learn from. Many of the initial benefits that come with supply chain technology automation will be neutered through the presence of inaccurate and untimely data on your systems. Hence, before you integrate a new software process into your supply chain, you should ensure that the data related to that application is clean and structured in all possible ways.
The course manual mentions a number of other challenges and threats of supply chain innovation as well.
Chapter 9: Global Supply Chain Dynamics
Risks in the global supply chain market are broken down into either internal or external risks. Internal risks are related to happenings within your own organization, whereas external risks are related to conditions outside of your organization. We look through both these risks in greater detail within this chapter.
Internal Driven Supply Chain Risks
Internal driven supply chain risks are easier to tackle and handle because of how they originate from within your premises. Internal risks come under the direct supervision of managers and require prompt action to ensure that risk mitigation is finalized in a proper manner.
Internal risks include:
• Manufacturing Risks: Manufacturing risks are caused by basic disruptions to the internal processes and operations in your organization. These risks basically include unplanned stops and disruptions in the manufacturing process. Manufacturing is a key part of every product’s supply chain, and proper supply can best be ensured through the flawless production of goods without a stop. Once manufacturing stops, the entire supply chain is bound to come to a halt as well.
• Business Risks: Business risks are risks caused due to the change in key management personnel, business processes, reporting structures and other business coordination methods. Once things are streamlined in a supply chain process, it is necessary that they continue in the given order. Every disruption or change in the order of things will be greeted with a certain amount of downtime and lack in efficiency.
• Planning and Control Risks: Planning and control risks are caused by an inadequate standard of planning and assessment inside an organization. These risks are also initiated by the change in management or key business processes. Once these key business processes are changed, the planning and control standards previously in place all go to waste. Ineffective management can lead to a drop in efficiency across the board.
• Cultural Risks: Cultural risks are a result of the culture in place within an organization. Most organizations have a toxic culture to hide and delay negative information that can impact workflow processes. Such businesses are never able to build resilience and are slow to react when they are impacted by unexpected delays and events. Cultural risks can only be averted through a shakeup of the entire management system.
• Mitigation and Contingency Risks: These risks are caused due to a lack of contingency or mitigation planning. As we have studied earlier in this chapter, businesses can achieve a competitive advantage through their resilience.
External Driven Supply Chain Risks
External risks are related to conditions outside of your organization. These risks are influenced by upstream or downstream events in the supply chain.
• Demand Risks: Demand risks are caused due to unpredictable fluctuations in end-customer demand. These can lead to unpredictability and wastages.
• Supply Risks: Supply risks are caused by undue expectations in the delivery of materials. From raw materials to parts, delays in supply can lead to delays in the entire supply chain model.
• Environmental Risks: Environmental risks come from outside the supply chain and are usually related to the social, governmental, climate and economic factors in your country. These risks also include the threat of terrorism and can negatively impact the procurement and delivery of products. These are beyond your control and cannot be managed.
• Business Risks: There are external business risks as well such as the instability at a supplier’s firm. Suppliers with an unstable business structure or unable to continue an uninterrupted flow of goods, which can often lead to irreversible problems in the supply chain. The sale and purchase of supplier companies can also negatively hinder the chain.
• Physical Plan Risks: Physical plant risks usually relate to risks at the supplier’s physical facility. Lack of regulatory compliance or lack of proper measures at their plant can lead to disruptions within your supply chain.
The understanding of internal and external risks is important for running a competitive analysis of your supply chain for better risk assessment.
Chapter 10: Measuring Progress in the Supply Chain
The supply chain, as we have already read earlier, is an important part of the business environment today and organizations have no option but to strengthen it for success. In order to ensure maximum productivity, profits and operational success, the workings of the supply chain must be analyzed from time to time and all rusty links should be removed.
The question remains on how to perform a supply chain analysis, which we simplify in the steps below:
Step One: Map Your Supply Chain
Mapping a supply chain is a good way to identify the weak links in your supply chain and take steps to prevent them from showing up. A supply chain map would allow the supply chain manager to identify all resources in the supply chain including the people, information, resources and all other activities involved in the supply chain.
This simple map can be designed in the form of a flowchart, which helps provide a full overview of the company’s supply chain, and shows the flow of materials and products. The communication between different links of the chain can be improved to ensure optimal understanding of objectives and to minimize the chances of failure.
Step Two: Analyze Your Market
Your supply chain isn’t the only one operating in your market or industry, which is why there are bound to be a number of other competitors and organizations you can look at or take inspiration from. By looking at the market you will be able to tell just how well your suppliers and processes are priced.
Also, you can compare the results of your SCOR and BSC processes above with those of your competitors in the market to determine how you compare to others.
Step Three: Determine Inefficiencies
The entire purpose of an analysis is to find inefficiencies in your supply chain and cut them out. Once you have mapped your supply chain, you should take the steps required to identify inefficiencies. If you identify through benchmarking that your competitors get better rates for raw materials from local producers, then it will be beneficial for you to deal with these suppliers rather than have the goods shipped in from somewhere globally.
Can any of your products reach customers faster? Is there are a more cost-effective and frugal technique to save money on supplied raw materials? Can you lower your shipping costs? Answers to these questions will help guide you forward.
Also, take a stringent look at your logistics and delivery network and identify areas where you can up your game. The supply chain analysis process will identify the presence of inefficiencies in the system. What you need to do now is take the right steps forward and minimize these efficiencies.
Step 4: Adapt
As soon as you find inefficiencies and implement solutions to improvise and overcome the situation, the next best thing is to adapt. Adapt to the changes in your supply chain and ensure that you aren’t letting the complexities of change throw you off your end goal. Consumer demand trends change on a whim, and you should be ready to anticipate these changes if you want to keep making profits.
Step 5: Repeat
A supply chain analysis is not a one-time process that you manage and forget. Instead, it is a continuous process that should be managed and repeated from time to time for effective results. Global supply chains today sit right in the eye of the storm and are disrupted by all volatile geographical and political happenings.
Managers need to take charge of the analysis process and ensure that all corners are covered. An analysis can succeed if there is enough focus on future growth potential and on reducing inefficiencies that plague the organization currently.
Chapter 11: Applying the Theory of Constraints to Supply Chain
According to theorist and novelist, Dr. Eliyahu Goldratt every real system or process has at least one or more constraint that stops the activity from achieving higher levels of output and better performance overall.
The presence of constrains in the supply chain can limit the performance of the chain and can stop it from achieving the success that it is bound to achieve.
Typical examples included in the theory of constraints include:
1. Machine capacity
2. Sales saturation
3. Limited demand
4. Raw materials shortage
These are all problems related to the supply chain, and while Goldratt eventually proposed the theory for operations management, it holds true for the supply chain as well. In each case outlined above, the constraint in question directly limits the output of the entire process and pushes it backwards. To overcome the problems faced by these constraints, Goldratt processed and recommended a Theory of Constraints, which was based on five steps:
• Identify the limiting constraint
• Exploit the constraint with existing resources
• Subordinate and align all associated activities
• Alleviate the constraint by putting in additional resources and equipment
• Repeat this same process to identify other constraints
A System-Wide Approach
One of the key principles of TOC is that the process considered the entire system, and does not look at just one process in its individuality. Looking at the entire system in detail can help identify the real constraint without delay.
Any improvement made in the system or in the supply chain process, other than the constraint will waste resources and will eventually make the supply chain results worse than what they are currently.
Dr. Goldratt felt so strongly about this that he is specifically quoted to have said, “Any improvements made anywhere besides the bottleneck are an illusion.” For instance, in a healthcare facility operating in the healthcare sector, the problem of reduced quality of care in the emergency department cannot be solved by adding more beds to the facility. Additionally, adding sales executive to your company’s sales team will not solve the problem if there just aren’t enough people willing to buy the product you’re selling to them.
Identify Unique Constraints
One of the core principles highlighted within the theory of constraints is that there aren’t hundreds of constraints within one system to affect output. In fact, there are only a few constraints that affect output in systems at any given point in time. The trick to solving problems within the system or the supply chain is to identify that particular constraint and come up with a strategy to solve it. While this is apparent in a product line, it is another complex task for supply chain managers. The complexity of the identification process is why organizations today use a number of metrics to identify constraints within processes.
Organizations and managers also need to realize that upgrading or changing one aspect of the system is bound to impact the whole process. An adjustment to one aspect will impact the whole system, leading to a number of conflicts and issues.
The step-by-step guide for understanding the theory of constraints with regards to the supply chain is mentioned within the elaborate course manual.
Chapter 12: Unearthing New Supply Chain Capabilities
There are certain capabilities that supply chain operators in the modern economy should develop, regardless of the industry they operate in. Some of these desired capabilities include:
Demand Management
Demand management is a planning process that is excessively used to forecast, plan and manage the demand of the goods and services manufactured or sold by the business. The demand management process includes a defined list of processes, capabilities and behaviors for organizations that deal in all kinds of processes.
The outcomes achieved through the demand management process are a reflection of the programs and policies incorporated by the business to improve customer demand. These outcomes are also influenced by the competition available to users and the availability of products available to your own. Certain sale and marketing promotions will result in higher demand for a specific product.
Order Management
Knowledge and skills are both necessary to manage the scheduling and receipt of customer orders. An integrated order management system includes both these requirements and is usually based on these modules:
• Product information including the description of the product, the attributes, the quantities required and the locations that will be identified for distribution
• Inventory available to promise and the sourcing schedules to be followed
• Customers and prospects
• Marketing promotions and pricing
• Vendors purchasing and receiving
• Financial processing of payments
• Order processing process
• Order entry and customer service standards including the return and refund of goods
The true essence of supply chain management capabilities focuses on the fact that enhanced supply chain performance and waste reduction can only be achieved through higher integration and cooperation between both, internal and external supply chain processes. These goals usually include time compression, waste reduction, unit cost reduction and flexible response.
Waste reduction is achieved by harmonizing your operations, minimizing constant duplications and enhancing the quality of the end result. Time compression is usually focused on reducing the order-to-cycle time by accomplishing production and logistics in a shorter time period to save unimaginable costs.
True supply chain capabilities can only be unearthed by limiting costs and meeting the standards required by customers. A supply chain business looking to explore the horizons of supply chain management should begin with a thorough analysis of their current standing and an understanding of what is required to improve performance further. The steps mentioned in this article along with an understanding of the choice between efficiency and responsiveness will guide you forward.
Capacity Planning:
Capacity Planning or CP is essential for determining the perfect utilization of resources in the supply chain and also plays a significant role in influencing decision making in the supply chain. Capacity planning is a technique in play today that measures and identifies the overall production capacity of an organization, and what can be done to improve or limit it.
Capacity Planning is utilized for more capital intense resources such as machinery, labor, plant and much more. The planning process helps organizations meet all future growth objectives and fluctuating demand standards, without sacrificing on quality. A supply chain that plans capacity succeeds in the long run and can achieve long-term goals.
Capacity planning is also used as an analytic to match manufacturing and procurement capacity to the sales demand you have predicted for the coming seasons. The capacity planning process includes strategies such as:
• A lag strategy where you add additional capacity to the system once your current plan isn’t able to meet demand.
• A lead strategy that refers to producing goods with regards to the anticipated demand and output.
• The match strategy which involves adjusting capacity to match the demand for the product and the incremental gains achieved as a result.
The executive summary has now built your understanding of the course and can now act as a guiding light for the preceding course manual. Move over to the elaborate manual for more detailed guidance.
Curriculum
Global Supply Chain Development – Workshop 9 – New Capabilities
- The Need for Supply Chain Innovation and Optimization
- Supply Chain Competitive Analysis
- Internal Analysis to Understand Supply Chain Deficiencies
- Internal Evaluation Measures
- Forming a Cross Functional Team to Analyze Supply Chain Capabilities
- Understanding Supply Chain Capabilities and Their Impact
- The Financial Side of Innovation in Supply Chain
- Global Supply Chain Dynamics
- Risks and Threats of Supply Chain Innovation
- Applying the Theory of Constraints to Supply Chain
- Measuring Progress in Supply Chain
- Unearthing New Supply Chain Capabilities
Distance Learning
Introduction
Welcome to Appleton Greene and thank you for enrolling on the Global Supply Chain Development corporate training program. You will be learning through our unique facilitation via distance-learning method, which will enable you to practically implement everything that you learn academically. The methods and materials used in your program have been designed and developed to ensure that you derive the maximum benefits and enjoyment possible. We hope that you find the program challenging and fun to do. However, if you have never been a distance-learner before, you may be experiencing some trepidation at the task before you. So we will get you started by giving you some basic information and guidance on how you can make the best use of the modules, how you should manage the materials and what you should be doing as you work through them. This guide is designed to point you in the right direction and help you to become an effective distance-learner. Take a few hours or so to study this guide and your guide to tutorial support for students, while making notes, before you start to study in earnest.
Study environment
You will need to locate a quiet and private place to study, preferably a room where you can easily be isolated from external disturbances or distractions. Make sure the room is well-lit and incorporates a relaxed, pleasant feel. If you can spoil yourself within your study environment, you will have much more of a chance to ensure that you are always in the right frame of mind when you do devote time to study. For example, a nice fire, the ability to play soft soothing background music, soft but effective lighting, perhaps a nice view if possible and a good size desk with a comfortable chair. Make sure that your family know when you are studying and understand your study rules. Your study environment is very important. The ideal situation, if at all possible, is to have a separate study, which can be devoted to you. If this is not possible then you will need to pay a lot more attention to developing and managing your study schedule, because it will affect other people as well as yourself. The better your study environment, the more productive you will be.
Study tools & rules
Try and make sure that your study tools are sufficient and in good working order. You will need to have access to a computer, scanner and printer, with access to the internet. You will need a very comfortable chair, which supports your lower back, and you will need a good filing system. It can be very frustrating if you are spending valuable study time trying to fix study tools that are unreliable, or unsuitable for the task. Make sure that your study tools are up to date. You will also need to consider some study rules. Some of these rules will apply to you and will be intended to help you to be more disciplined about when and how you study. This distance-learning guide will help you and after you have read it you can put some thought into what your study rules should be. You will also need to negotiate some study rules for your family, friends or anyone who lives with you. They too will need to be disciplined in order to ensure that they can support you while you study. It is important to ensure that your family and friends are an integral part of your study team. Having their support and encouragement can prove to be a crucial contribution to your successful completion of the program. Involve them in as much as you can.
Successful distance-learning
Distance-learners are freed from the necessity of attending regular classes or workshops, since they can study in their own way, at their own pace and for their own purposes. But unlike traditional internal training courses, it is the student’s responsibility, with a distance-learning program, to ensure that they manage their own study contribution. This requires strong self-discipline and self-motivation skills and there must be a clear will to succeed. Those students who are used to managing themselves, are good at managing others and who enjoy working in isolation, are more likely to be good distance-learners. It is also important to be aware of the main reasons why you are studying and of the main objectives that you are hoping to achieve as a result. You will need to remind yourself of these objectives at times when you need to motivate yourself. Never lose sight of your long-term goals and your short-term objectives. There is nobody available here to pamper you, or to look after you, or to spoon-feed you with information, so you will need to find ways to encourage and appreciate yourself while you are studying. Make sure that you chart your study progress, so that you can be sure of your achievements and re-evaluate your goals and objectives regularly.
Self-assessment
Appleton Greene training programs are in all cases post-graduate programs. Consequently, you should already have obtained a business-related degree and be an experienced learner. You should therefore already be aware of your study strengths and weaknesses. For example, which time of the day are you at your most productive? Are you a lark or an owl? What study methods do you respond to the most? Are you a consistent learner? How do you discipline yourself? How do you ensure that you enjoy yourself while studying? It is important to understand yourself as a learner and so some self-assessment early on will be necessary if you are to apply yourself correctly. Perform a SWOT analysis on yourself as a student. List your internal strengths and weaknesses as a student and your external opportunities and threats. This will help you later on when you are creating a study plan. You can then incorporate features within your study plan that can ensure that you are playing to your strengths, while compensating for your weaknesses. You can also ensure that you make the most of your opportunities, while avoiding the potential threats to your success.
Accepting responsibility as a student
Training programs invariably require a significant investment, both in terms of what they cost and in the time that you need to contribute to study and the responsibility for successful completion of training programs rests entirely with the student. This is never more apparent than when a student is learning via distance-learning. Accepting responsibility as a student is an important step towards ensuring that you can successfully complete your training program. It is easy to instantly blame other people or factors when things go wrong. But the fact of the matter is that if a failure is your failure, then you have the power to do something about it, it is entirely in your own hands. If it is always someone else’s failure, then you are powerless to do anything about it. All students study in entirely different ways, this is because we are all individuals and what is right for one student, is not necessarily right for another. In order to succeed, you will have to accept personal responsibility for finding a way to plan, implement and manage a personal study plan that works for you. If you do not succeed, you only have yourself to blame.
Planning
By far the most critical contribution to stress, is the feeling of not being in control. In the absence of planning we tend to be reactive and can stumble from pillar to post in the hope that things will turn out fine in the end. Invariably they don’t! In order to be in control, we need to have firm ideas about how and when we want to do things. We also need to consider as many possible eventualities as we can, so that we are prepared for them when they happen. Prescriptive Change, is far easier to manage and control, than Emergent Change. The same is true with distance-learning. It is much easier and much more enjoyable, if you feel that you are in control and that things are going to plan. Even when things do go wrong, you are prepared for them and can act accordingly without any unnecessary stress. It is important therefore that you do take time to plan your studies properly.
Management
Once you have developed a clear study plan, it is of equal importance to ensure that you manage the implementation of it. Most of us usually enjoy planning, but it is usually during implementation when things go wrong. Targets are not met and we do not understand why. Sometimes we do not even know if targets are being met. It is not enough for us to conclude that the study plan just failed. If it is failing, you will need to understand what you can do about it. Similarly if your study plan is succeeding, it is still important to understand why, so that you can improve upon your success. You therefore need to have guidelines for self-assessment so that you can be consistent with performance improvement throughout the program. If you manage things correctly, then your performance should constantly improve throughout the program.
Study objectives & tasks
The first place to start is developing your program objectives. These should feature your reasons for undertaking the training program in order of priority. Keep them succinct and to the point in order to avoid confusion. Do not just write the first things that come into your head because they are likely to be too similar to each other. Make a list of possible departmental headings, such as: Customer Service; E-business; Finance; Globalization; Human Resources; Technology; Legal; Management; Marketing and Production. Then brainstorm for ideas by listing as many things that you want to achieve under each heading and later re-arrange these things in order of priority. Finally, select the top item from each department heading and choose these as your program objectives. Try and restrict yourself to five because it will enable you to focus clearly. It is likely that the other things that you listed will be achieved if each of the top objectives are achieved. If this does not prove to be the case, then simply work through the process again.
Study forecast
As a guide, the Appleton Greene Global Supply Chain Development corporate training program should take 12-18 months to complete, depending upon your availability and current commitments. The reason why there is such a variance in time estimates is because every student is an individual, with differing productivity levels and different commitments. These differentiations are then exaggerated by the fact that this is a distance-learning program, which incorporates the practical integration of academic theory as an as a part of the training program. Consequently all of the project studies are real, which means that important decisions and compromises need to be made. You will want to get things right and will need to be patient with your expectations in order to ensure that they are. We would always recommend that you are prudent with your own task and time forecasts, but you still need to develop them and have a clear indication of what are realistic expectations in your case. With reference to your time planning: consider the time that you can realistically dedicate towards study with the program every week; calculate how long it should take you to complete the program, using the guidelines featured here; then break the program down into logical modules and allocate a suitable proportion of time to each of them, these will be your milestones; you can create a time plan by using a spreadsheet on your computer, or a personal organizer such as MS Outlook, you could also use a financial forecasting software; break your time forecasts down into manageable chunks of time, the more specific you can be, the more productive and accurate your time management will be; finally, use formulas where possible to do your time calculations for you, because this will help later on when your forecasts need to change in line with actual performance. With reference to your task planning: refer to your list of tasks that need to be undertaken in order to achieve your program objectives; with reference to your time plan, calculate when each task should be implemented; remember that you are not estimating when your objectives will be achieved, but when you will need to focus upon implementing the corresponding tasks; you also need to ensure that each task is implemented in conjunction with the associated training modules which are relevant; then break each single task down into a list of specific to do’s, say approximately ten to do’s for each task and enter these into your study plan; once again you could use MS Outlook to incorporate both your time and task planning and this could constitute your study plan; you could also use a project management software like MS Project. You should now have a clear and realistic forecast detailing when you can expect to be able to do something about undertaking the tasks to achieve your program objectives.
Performance management
It is one thing to develop your study forecast, it is quite another to monitor your progress. Ultimately it is less important whether you achieve your original study forecast and more important that you update it so that it constantly remains realistic in line with your performance. As you begin to work through the program, you will begin to have more of an idea about your own personal performance and productivity levels as a distance-learner. Once you have completed your first study module, you should re-evaluate your study forecast for both time and tasks, so that they reflect your actual performance level achieved. In order to achieve this you must first time yourself while training by using an alarm clock. Set the alarm for hourly intervals and make a note of how far you have come within that time. You can then make a note of your actual performance on your study plan and then compare your performance against your forecast. Then consider the reasons that have contributed towards your performance level, whether they are positive or negative and make a considered adjustment to your future forecasts as a result. Given time, you should start achieving your forecasts regularly.
With reference to time management: time yourself while you are studying and make a note of the actual time taken in your study plan; consider your successes with time-efficiency and the reasons for the success in each case and take this into consideration when reviewing future time planning; consider your failures with time-efficiency and the reasons for the failures in each case and take this into consideration when reviewing future time planning; re-evaluate your study forecast in relation to time planning for the remainder of your training program to ensure that you continue to be realistic about your time expectations. You need to be consistent with your time management, otherwise you will never complete your studies. This will either be because you are not contributing enough time to your studies, or you will become less efficient with the time that you do allocate to your studies. Remember, if you are not in control of your studies, they can just become yet another cause of stress for you.
With reference to your task management: time yourself while you are studying and make a note of the actual tasks that you have undertaken in your study plan; consider your successes with task-efficiency and the reasons for the success in each case; take this into consideration when reviewing future task planning; consider your failures with task-efficiency and the reasons for the failures in each case and take this into consideration when reviewing future task planning; re-evaluate your study forecast in relation to task planning for the remainder of your training program to ensure that you continue to be realistic about your task expectations. You need to be consistent with your task management, otherwise you will never know whether you are achieving your program objectives or not.
Keeping in touch
You will have access to qualified and experienced professors and tutors who are responsible for providing tutorial support for your particular training program. So don’t be shy about letting them know how you are getting on. We keep electronic records of all tutorial support emails so that professors and tutors can review previous correspondence before considering an individual response. It also means that there is a record of all communications between you and your professors and tutors and this helps to avoid any unnecessary duplication, misunderstanding, or misinterpretation. If you have a problem relating to the program, share it with them via email. It is likely that they have come across the same problem before and are usually able to make helpful suggestions and steer you in the right direction. To learn more about when and how to use tutorial support, please refer to the Tutorial Support section of this student information guide. This will help you to ensure that you are making the most of tutorial support that is available to you and will ultimately contribute towards your success and enjoyment with your training program.
Work colleagues and family
You should certainly discuss your program study progress with your colleagues, friends and your family. Appleton Greene training programs are very practical. They require you to seek information from other people, to plan, develop and implement processes with other people and to achieve feedback from other people in relation to viability and productivity. You will therefore have plenty of opportunities to test your ideas and enlist the views of others. People tend to be sympathetic towards distance-learners, so don’t bottle it all up in yourself. Get out there and share it! It is also likely that your family and colleagues are going to benefit from your labors with the program, so they are likely to be much more interested in being involved than you might think. Be bold about delegating work to those who might benefit themselves. This is a great way to achieve understanding and commitment from people who you may later rely upon for process implementation. Share your experiences with your friends and family.
Making it relevant
The key to successful learning is to make it relevant to your own individual circumstances. At all times you should be trying to make bridges between the content of the program and your own situation. Whether you achieve this through quiet reflection or through interactive discussion with your colleagues, client partners or your family, remember that it is the most important and rewarding aspect of translating your studies into real self-improvement. You should be clear about how you want the program to benefit you. This involves setting clear study objectives in relation to the content of the course in terms of understanding, concepts, completing research or reviewing activities and relating the content of the modules to your own situation. Your objectives may understandably change as you work through the program, in which case you should enter the revised objectives on your study plan so that you have a permanent reminder of what you are trying to achieve, when and why.
Distance-learning check-list
Prepare your study environment, your study tools and rules.
Undertake detailed self-assessment in terms of your ability as a learner.
Create a format for your study plan.
Consider your study objectives and tasks.
Create a study forecast.
Assess your study performance.
Re-evaluate your study forecast.
Be consistent when managing your study plan.
Use your Appleton Greene Certified Learning Provider (CLP) for tutorial support.
Make sure you keep in touch with those around you.
Tutorial Support
Programs
Appleton Greene uses standard and bespoke corporate training programs as vessels to transfer business process improvement knowledge into the heart of our clients’ organizations. Each individual program focuses upon the implementation of a specific business process, which enables clients to easily quantify their return on investment. There are hundreds of established Appleton Greene corporate training products now available to clients within customer services, e-business, finance, globalization, human resources, information technology, legal, management, marketing and production. It does not matter whether a client’s employees are located within one office, or an unlimited number of international offices, we can still bring them together to learn and implement specific business processes collectively. Our approach to global localization enables us to provide clients with a truly international service with that all important personal touch. Appleton Greene corporate training programs can be provided virtually or locally and they are all unique in that they individually focus upon a specific business function. They are implemented over a sustainable period of time and professional support is consistently provided by qualified learning providers and specialist consultants.
Support available
You will have a designated Certified Learning Provider (CLP) and an Accredited Consultant and we encourage you to communicate with them as much as possible. In all cases tutorial support is provided online because we can then keep a record of all communications to ensure that tutorial support remains consistent. You would also be forwarding your work to the tutorial support unit for evaluation and assessment. You will receive individual feedback on all of the work that you undertake on a one-to-one basis, together with specific recommendations for anything that may need to be changed in order to achieve a pass with merit or a pass with distinction and you then have as many opportunities as you may need to re-submit project studies until they meet with the required standard. Consequently the only reason that you should really fail (CLP) is if you do not do the work. It makes no difference to us whether a student takes 12 months or 18 months to complete the program, what matters is that in all cases the same quality standard will have been achieved.
Support Process
Please forward all of your future emails to the designated (CLP) Tutorial Support Unit email address that has been provided and please do not duplicate or copy your emails to other AGC email accounts as this will just cause unnecessary administration. Please note that emails are always answered as quickly as possible but you will need to allow a period of up to 20 business days for responses to general tutorial support emails during busy periods, because emails are answered strictly within the order in which they are received. You will also need to allow a period of up to 30 business days for the evaluation and assessment of project studies. This does not include weekends or public holidays. Please therefore kindly allow for this within your time planning. All communications are managed online via email because it enables tutorial service support managers to review other communications which have been received before responding and it ensures that there is a copy of all communications retained on file for future reference. All communications will be stored within your personal (CLP) study file here at Appleton Greene throughout your designated study period. If you need any assistance or clarification at any time, please do not hesitate to contact us by forwarding an email and remember that we are here to help. If you have any questions, please list and number your questions succinctly and you can then be sure of receiving specific answers to each and every query.
Time Management
It takes approximately 1 Year to complete the Global Supply Chain Development corporate training program, incorporating 12 x 6-hour monthly workshops. Each student will also need to contribute approximately 4 hours per week over 1 Year of their personal time. Students can study from home or work at their own pace and are responsible for managing their own study plan. There are no formal examinations and students are evaluated and assessed based upon their project study submissions, together with the quality of their internal analysis and supporting documents. They can contribute more time towards study when they have the time to do so and can contribute less time when they are busy. All students tend to be in full time employment while studying and the Global Supply Chain Development program is purposely designed to accommodate this, so there is plenty of flexibility in terms of time management. It makes no difference to us at Appleton Greene, whether individuals take 12-18 months to complete this program. What matters is that in all cases the same standard of quality will have been achieved with the standard and bespoke programs that have been developed.
Distance Learning Guide
The distance learning guide should be your first port of call when starting your training program. It will help you when you are planning how and when to study, how to create the right environment and how to establish the right frame of mind. If you can lay the foundations properly during the planning stage, then it will contribute to your enjoyment and productivity while training later. The guide helps to change your lifestyle in order to accommodate time for study and to cultivate good study habits. It helps you to chart your progress so that you can measure your performance and achieve your goals. It explains the tools that you will need for study and how to make them work. It also explains how to translate academic theory into practical reality. Spend some time now working through your distance learning guide and make sure that you have firm foundations in place so that you can make the most of your distance learning program. There is no requirement for you to attend training workshops or classes at Appleton Greene offices. The entire program is undertaken online, program course manuals and project studies are administered via the Appleton Greene web site and via email, so you are able to study at your own pace and in the comfort of your own home or office as long as you have a computer and access to the internet.
How To Study
The how to study guide provides students with a clear understanding of the Appleton Greene facilitation via distance learning training methods and enables students to obtain a clear overview of the training program content. It enables students to understand the step-by-step training methods used by Appleton Greene and how course manuals are integrated with project studies. It explains the research and development that is required and the need to provide evidence and references to support your statements. It also enables students to understand precisely what will be required of them in order to achieve a pass with merit and a pass with distinction for individual project studies and provides useful guidance on how to be innovative and creative when developing your Unique Program Proposition (UPP).
Tutorial Support
Tutorial support for the Appleton Greene Global Supply Chain Development corporate training program is provided online either through the Appleton Greene Client Support Portal (CSP), or via email. All tutorial support requests are facilitated by a designated Program Administration Manager (PAM). They are responsible for deciding which professor or tutor is the most appropriate option relating to the support required and then the tutorial support request is forwarded onto them. Once the professor or tutor has completed the tutorial support request and answered any questions that have been asked, this communication is then returned to the student via email by the designated Program Administration Manager (PAM). This enables all tutorial support, between students, professors and tutors, to be facilitated by the designated Program Administration Manager (PAM) efficiently and securely through the email account. You will therefore need to allow a period of up to 20 business days for responses to general support queries and up to 30 business days for the evaluation and assessment of project studies, because all tutorial support requests are answered strictly within the order in which they are received. This does not include weekends or public holidays. Consequently you need to put some thought into the management of your tutorial support procedure in order to ensure that your study plan is feasible and to obtain the maximum possible benefit from tutorial support during your period of study. Please retain copies of your tutorial support emails for future reference. Please ensure that ALL of your tutorial support emails are set out using the format as suggested within your guide to tutorial support. Your tutorial support emails need to be referenced clearly to the specific part of the course manual or project study which you are working on at any given time. You also need to list and number any questions that you would like to ask, up to a maximum of five questions within each tutorial support email. Remember the more specific you can be with your questions the more specific your answers will be too and this will help you to avoid any unnecessary misunderstanding, misinterpretation, or duplication. The guide to tutorial support is intended to help you to understand how and when to use support in order to ensure that you get the most out of your training program. Appleton Greene training programs are designed to enable you to do things for yourself. They provide you with a structure or a framework and we use tutorial support to facilitate students while they practically implement what they learn. In other words, we are enabling students to do things for themselves. The benefits of distance learning via facilitation are considerable and are much more sustainable in the long-term than traditional short-term knowledge sharing programs. Consequently you should learn how and when to use tutorial support so that you can maximize the benefits from your learning experience with Appleton Greene. This guide describes the purpose of each training function and how to use them and how to use tutorial support in relation to each aspect of the training program. It also provides useful tips and guidance with regard to best practice.
Tutorial Support Tips
Students are often unsure about how and when to use tutorial support with Appleton Greene. This Tip List will help you to understand more about how to achieve the most from using tutorial support. Refer to it regularly to ensure that you are continuing to use the service properly. Tutorial support is critical to the success of your training experience, but it is important to understand when and how to use it in order to maximize the benefit that you receive. It is no coincidence that those students who succeed are those that learn how to be positive, proactive and productive when using tutorial support.
Be positive and friendly with your tutorial support emails
Remember that if you forward an email to the tutorial support unit, you are dealing with real people. “Do unto others as you would expect others to do unto you”. If you are positive, complimentary and generally friendly in your emails, you will generate a similar response in return. This will be more enjoyable, productive and rewarding for you in the long-term.
Think about the impression that you want to create
Every time that you communicate, you create an impression, which can be either positive or negative, so put some thought into the impression that you want to create. Remember that copies of all tutorial support emails are stored electronically and tutors will always refer to prior correspondence before responding to any current emails. Over a period of time, a general opinion will be arrived at in relation to your character, attitude and ability. Try to manage your own frustrations, mood swings and temperament professionally, without involving the tutorial support team. Demonstrating frustration or a lack of patience is a weakness and will be interpreted as such. The good thing about communicating in writing, is that you will have the time to consider your content carefully, you can review it and proof-read it before sending your email to Appleton Greene and this should help you to communicate more professionally, consistently and to avoid any unnecessary knee-jerk reactions to individual situations as and when they may arise. Please also remember that the CLP Tutorial Support Unit will not just be responsible for evaluating and assessing the quality of your work, they will also be responsible for providing recommendations to other learning providers and to client contacts within the Appleton Greene global client network, so do be in control of your own emotions and try to create a good impression.
Remember that quality is preferred to quantity
Please remember that when you send an email to the tutorial support team, you are not using Twitter or Text Messaging. Try not to forward an email every time that you have a thought. This will not prove to be productive either for you or for the tutorial support team. Take time to prepare your communications properly, as if you were writing a professional letter to a business colleague and make a list of queries that you are likely to have and then incorporate them within one email, say once every month, so that the tutorial support team can understand more about context, application and your methodology for study. Get yourself into a consistent routine with your tutorial support requests and use the tutorial support template provided with ALL of your emails. The (CLP) Tutorial Support Unit will not spoon-feed you with information. They need to be able to evaluate and assess your tutorial support requests carefully and professionally.
Be specific about your questions in order to receive specific answers
Try not to write essays by thinking as you are writing tutorial support emails. The tutorial support unit can be unclear about what in fact you are asking, or what you are looking to achieve. Be specific about asking questions that you want answers to. Number your questions. You will then receive specific answers to each and every question. This is the main purpose of tutorial support via email.
Keep a record of your tutorial support emails
It is important that you keep a record of all tutorial support emails that are forwarded to you. You can then refer to them when necessary and it avoids any unnecessary duplication, misunderstanding, or misinterpretation.
Individual training workshops or telephone support
Please be advised that Appleton Greene does not provide separate or individual tutorial support meetings, workshops, or provide telephone support for individual students. Appleton Greene is an equal opportunities learning and service provider and we are therefore understandably bound to treat all students equally. We cannot therefore broker special financial or study arrangements with individual students regardless of the circumstances. All tutorial support is provided online and this enables Appleton Greene to keep a record of all communications between students, professors and tutors on file for future reference, in accordance with our quality management procedure and your terms and conditions of enrolment. All tutorial support is provided online via email because it enables us to have time to consider support content carefully, it ensures that you receive a considered and detailed response to your queries. You can number questions that you would like to ask, which relate to things that you do not understand or where clarification may be required. You can then be sure of receiving specific answers to each individual query. You will also then have a record of these communications and of all tutorial support, which has been provided to you. This makes tutorial support administration more productive by avoiding any unnecessary duplication, misunderstanding, or misinterpretation.
Tutorial Support Email Format
You should use this tutorial support format if you need to request clarification or assistance while studying with your training program. Please note that ALL of your tutorial support request emails should use the same format. You should therefore set up a standard email template, which you can then use as and when you need to. Emails that are forwarded to Appleton Greene, which do not use the following format, may be rejected and returned to you by the (CLP) Program Administration Manager. A detailed response will then be forwarded to you via email usually within 20 business days of receipt for general support queries and 30 business days for the evaluation and assessment of project studies. This does not include weekends or public holidays. Your tutorial support request, together with the corresponding TSU reply, will then be saved and stored within your electronic TSU file at Appleton Greene for future reference.
Subject line of your email
Please insert: Appleton Greene (CLP) Tutorial Support Request: (Your Full Name) (Date), within the subject line of your email.
Main body of your email
Please insert:
1. Appleton Greene Certified Learning Provider (CLP) Tutorial Support Request
2. Your Full Name
3. Date of TS request
4. Preferred email address
5. Backup email address
6. Course manual page name or number (reference)
7. Project study page name or number (reference)
Subject of enquiry
Please insert a maximum of 50 words (please be succinct)
Briefly outline the subject matter of your inquiry, or what your questions relate to.
Question 1
Maximum of 50 words (please be succinct)
Maximum of 50 words (please be succinct)
Question 3
Maximum of 50 words (please be succinct)
Question 4
Maximum of 50 words (please be succinct)
Question 5
Maximum of 50 words (please be succinct)
Please note that a maximum of 5 questions is permitted with each individual tutorial support request email.
Procedure
* List the questions that you want to ask first, then re-arrange them in order of priority. Make sure that you reference them, where necessary, to the course manuals or project studies.
* Make sure that you are specific about your questions and number them. Try to plan the content within your emails to make sure that it is relevant.
* Make sure that your tutorial support emails are set out correctly, using the Tutorial Support Email Format provided here.
* Save a copy of your email and incorporate the date sent after the subject title. Keep your tutorial support emails within the same file and in date order for easy reference.
* Allow up to 20 business days for a response to general tutorial support emails and up to 30 business days for the evaluation and assessment of project studies, because detailed individual responses will be made in all cases and tutorial support emails are answered strictly within the order in which they are received.
* Emails can and do get lost. So if you have not received a reply within the appropriate time, forward another copy or a reminder to the tutorial support unit to be sure that it has been received but do not forward reminders unless the appropriate time has elapsed.
* When you receive a reply, save it immediately featuring the date of receipt after the subject heading for easy reference. In most cases the tutorial support unit replies to your questions individually, so you will have a record of the questions that you asked as well as the answers offered. With project studies however, separate emails are usually forwarded by the tutorial support unit, so do keep a record of your own original emails as well.
* Remember to be positive and friendly in your emails. You are dealing with real people who will respond to the same things that you respond to.
* Try not to repeat questions that have already been asked in previous emails. If this happens the tutorial support unit will probably just refer you to the appropriate answers that have already been provided within previous emails.
* If you lose your tutorial support email records you can write to Appleton Greene to receive a copy of your tutorial support file, but a separate administration charge may be levied for this service.
How To Study
Your Certified Learning Provider (CLP) and Accredited Consultant can help you to plan a task list for getting started so that you can be clear about your direction and your priorities in relation to your training program. It is also a good way to introduce yourself to the tutorial support team.
Planning your study environment
Your study conditions are of great importance and will have a direct effect on how much you enjoy your training program. Consider how much space you will have, whether it is comfortable and private and whether you are likely to be disturbed. The study tools and facilities at your disposal are also important to the success of your distance-learning experience. Your tutorial support unit can help with useful tips and guidance, regardless of your starting position. It is important to get this right before you start working on your training program.
Planning your program objectives
It is important that you have a clear list of study objectives, in order of priority, before you start working on your training program. Your tutorial support unit can offer assistance here to ensure that your study objectives have been afforded due consideration and priority.
Planning how and when to study
Distance-learners are freed from the necessity of attending regular classes, since they can study in their own way, at their own pace and for their own purposes. This approach is designed to let you study efficiently away from the traditional classroom environment. It is important however, that you plan how and when to study, so that you are making the most of your natural attributes, strengths and opportunities. Your tutorial support unit can offer assistance and useful tips to ensure that you are playing to your strengths.
Planning your study tasks
You should have a clear understanding of the study tasks that you should be undertaking and the priority associated with each task. These tasks should also be integrated with your program objectives. The distance learning guide and the guide to tutorial support for students should help you here, but if you need any clarification or assistance, please contact your tutorial support unit.
Planning your time
You will need to allocate specific times during your calendar when you intend to study if you are to have a realistic chance of completing your program on time. You are responsible for planning and managing your own study time, so it is important that you are successful with this. Your tutorial support unit can help you with this if your time plan is not working.
Keeping in touch
Consistency is the key here. If you communicate too frequently in short bursts, or too infrequently with no pattern, then your management ability with your studies will be questioned, both by you and by your tutorial support unit. It is obvious when a student is in control and when one is not and this will depend how able you are at sticking with your study plan. Inconsistency invariably leads to in-completion.
Charting your progress
Your tutorial support team can help you to chart your own study progress. Refer to your distance learning guide for further details.
Making it work
To succeed, all that you will need to do is apply yourself to undertaking your training program and interpreting it correctly. Success or failure lies in your hands and your hands alone, so be sure that you have a strategy for making it work. Your Certified Learning Provider (CLP) and Accredited Consultant can guide you through the process of program planning, development and implementation.
Reading methods
Interpretation is often unique to the individual but it can be improved and even quantified by implementing consistent interpretation methods. Interpretation can be affected by outside interference such as family members, TV, or the Internet, or simply by other thoughts which are demanding priority in our minds. One thing that can improve our productivity is using recognized reading methods. This helps us to focus and to be more structured when reading information for reasons of importance, rather than relaxation.
Speed reading
When reading through course manuals for the first time, subconsciously set your reading speed to be just fast enough that you cannot dwell on individual words or tables. With practice, you should be able to read an A4 sheet of paper in one minute. You will not achieve much in the way of a detailed understanding, but your brain will retain a useful overview. This overview will be important later on and will enable you to keep individual issues in perspective with a more generic picture because speed reading appeals to the memory part of the brain. Do not worry about what you do or do not remember at this stage.
Content reading
Once you have speed read everything, you can then start work in earnest. You now need to read a particular section of your course manual thoroughly, by making detailed notes while you read. This process is called Content Reading and it will help to consolidate your understanding and interpretation of the information that has been provided.
Making structured notes on the course manuals
When you are content reading, you should be making detailed notes, which are both structured and informative. Make these notes in a MS Word document on your computer, because you can then amend and update these as and when you deem it to be necessary. List your notes under three headings: 1. Interpretation – 2. Questions – 3. Tasks. The purpose of the 1st section is to clarify your interpretation by writing it down. The purpose of the 2nd section is to list any questions that the issue raises for you. The purpose of the 3rd section is to list any tasks that you should undertake as a result. Anyone who has graduated with a business-related degree should already be familiar with this process.
Organizing structured notes separately
You should then transfer your notes to a separate study notebook, preferably one that enables easy referencing, such as a MS Word Document, a MS Excel Spreadsheet, a MS Access Database, or a personal organizer on your cell phone. Transferring your notes allows you to have the opportunity of cross-checking and verifying them, which assists considerably with understanding and interpretation. You will also find that the better you are at doing this, the more chance you will have of ensuring that you achieve your study objectives.
Question your understanding
Do challenge your understanding. Explain things to yourself in your own words by writing things down.
Clarifying your understanding
If you are at all unsure, forward an email to your tutorial support unit and they will help to clarify your understanding.
Question your interpretation
Do challenge your interpretation. Qualify your interpretation by writing it down.
Clarifying your interpretation
If you are at all unsure, forward an email to your tutorial support unit and they will help to clarify your interpretation.
Qualification Requirements
The student will need to successfully complete the project study and all of the exercises relating to the Global Supply Chain Development corporate training program, achieving a pass with merit or distinction in each case, in order to qualify as an Accredited Global Supply Chain Development Specialist (AGSCDS). All monthly workshops need to be tried and tested within your company. These project studies can be completed in your own time and at your own pace and in the comfort of your own home or office. There are no formal examinations, assessment is based upon the successful completion of the project studies. They are called project studies because, unlike case studies, these projects are not theoretical, they incorporate real program processes that need to be properly researched and developed. The project studies assist us in measuring your understanding and interpretation of the training program and enable us to assess qualification merits. All of the project studies are based entirely upon the content within the training program and they enable you to integrate what you have learnt into your corporate training practice.
Global Supply Chain Development – Grading Contribution
Project Study – Grading Contribution
Customer Service – 10%
E-business – 05%
Finance – 10%
Globalization – 10%
Human Resources – 10%
Information Technology – 10%
Legal – 05%
Management – 10%
Marketing – 10%
Production – 10%
Education – 05%
Logistics – 05%
TOTAL GRADING – 100%
Qualification grades
A mark of 90% = Pass with Distinction.
A mark of 75% = Pass with Merit.
A mark of less than 75% = Fail.
If you fail to achieve a mark of 75% with a project study, you will receive detailed feedback from the Certified Learning Provider (CLP) and/or Accredited Consultant, together with a list of tasks which you will need to complete, in order to ensure that your project study meets with the minimum quality standard that is required by Appleton Greene. You can then re-submit your project study for further evaluation and assessment. Indeed you can re-submit as many drafts of your project studies as you need to, until such a time as they eventually meet with the required standard by Appleton Greene, so you need not worry about this, it is all part of the learning process.
When marking project studies, Appleton Greene is looking for sufficient evidence of the following:
Pass with merit
A satisfactory level of program understanding
A satisfactory level of program interpretation
A satisfactory level of project study content presentation
A satisfactory level of Unique Program Proposition (UPP) quality
A satisfactory level of the practical integration of academic theory
Pass with distinction
An exceptional level of program understanding
An exceptional level of program interpretation
An exceptional level of project study content presentation
An exceptional level of Unique Program Proposition (UPP) quality
An exceptional level of the practical integration of academic theory
Preliminary Analysis
Our coursework for supply chain new capabilities discusses the varying impact of new capabilities on the supply chain and how businesses can prepare for them. The availability of new supply chain capabilities allows organizations to expand their operations and continuously embark on a journey of improvement and success.
A typical supply chain can continuously be improved through measures directed at measuring progress, forming cross-functional teams for growth, and improving the overall standards of tech innovations in the chain.
This preliminary analysis takes you through the strategizing process for new capabilities in the supply chain. We will study the numerous ways to measure progress for a supply chain, along with the different internal and external strategies.
Supply chain analysis can be performed using a number of methods and models, but the three we will discuss in this chapter include SCOR, the Balanced Scorecard Method and Benchmarking.
SCOR Framework – The Supply Chain and Operations Reference
The Supply Chain Council established SCOR or the Supply Chain Operations Reference model as the go-to approach for comparing and evaluating supply chain performances and activities.
The Supply Chain Council or SCC mentioned it to be a “unique framework that links business process, metrics, best practices and technology into a unified structure to support communication among supply chain partners and to improve the effectiveness of supply chain management and related supply chain improvement activities.”
The SCOR model comes with six primary processes for evaluation: Planning, Sourcing, Making, Returning, Enabling and Delivering.
The SCOR reference model is based on 4 major areas of evaluation or sectors. These include:
• Performance: Standard metrics to not only describe and define the performance and strategic goals of the supply chain.
• Processes: Standard description of process relationships and management processes related to them.
• Practices: Management decisions and positive practices that lead to better performance from different processes in the supply chain.
• People: The skills required to perform tasks in the supply chain, and how the current crop fits into it.
Performance
The first SCOR section of performance focuses on metrics related to performance attributes. SCOR recognizes 5 major performance attributes. These include:
Reliability
The reliability performance attribute addresses and analyzes the ability of a supply chain to consistently perform tasks in a reliable manner, just the way they’re required. Reliability focuses predominantly on the outcomes of a process and how they significantly influence the objectives of the supply chain network. Typical metrics used to measure and determine the reliability of a supply chain network include: the right quantity, the right quality, on time delivery. Reliability is an attribute that focuses on the customer and is known to be a key performance indicator for the supply chain.
Responsiveness
The responsiveness of a supply chain relates to the speed and pace at which tasks in the supply chain are performed and processed. Responsiveness is a measure of the speed and efficiency of the supply chain and how an organization is able to effectively run its operations with an eye on the metric.
The SCOR KPI or key performance indicator for responsiveness in the supply chain is the order fulfillment cycle time. Responsiveness is measured through the time it takes for an organization to fulfill orders. Comparisons with the industry competitors and benchmarks can determine if the order fulfillment rate is where it needs to be or if it’s less than what it should be.
Agility
The agility performance management attribute relates to the ability of a supply chain to respond to rapid changes in the market. The agility of a supply chain is measured through its ability to change in the face of common disruptions coming from the external world. The agility attribute also describes the ability of a supply chain to respond to external factors such as an increase or decrease in demand, natural disasters, labor issues, acts of terror, supply blockages and much more. The recent COVID-19 pandemic was an unprecedented situation and caught many organizations off guard. However, organizations with better agility were able to respond to the situation in a better manner than others. The key performance indicators or KPIs outlined for agility by SCOR include flexibility, value-at-risk and adaptability.
Cost
The cost attribute deals with the cost it takes to operate the process. Typical costs related to the process here include material, labor costs and transportation costs, among many more. Supply chains aren’t just supposed to be agile and responsive, but they should be able to get the desired results at minimal costs. The ability of a supply chain to save costs can also go in its favor during times of disruption.
The KPI used by the SCOR framework to measure cost is the total cost to serve. Cost is an internal attribute focused on internal processes.
Assets
SCOR looks at the Asset Management Efficiency attribute to discuss and describe the ability of a supply chain to efficiently utilize assets. Asset management strategies followed by supply chain businesses include inventory reduction and outsource vs. insource. Metrics that are used here for asset management are capacity utilization and inventory days. Additionally, the KPIs outlined by the SCOR performance indicator include cycle time, cash-to-cash period and return on fixed assets. Asset management efficiency is an internal attribute related to profitability.
Processes
The second SCOR section of performance focuses on metrics related to process attributes. SCOR recognizes 6 major processes as part of this section.
These include:
Plan
The planning process is the first in line and describes the activities associated with building plans to successfully manage the supply chain. The planning process usually deals with gathering resources, requirements and other information related to the supply chain. The process also examines the supply chain capabilities and understands the gaps that currently exist in the supply chain. Once they are unearthed, organizations can take corrective action to fill these gaps and build a mediation strategy.
Source
The source or sourcing process is self-explanatory and deals with the ordering and scheduling of deliveries for the supply chain. The sourcing process also deals with receipts of goods and services incurred by the business as part of the sourcing process. The sourcing process includes the issuance of POs or purchase orders and the receiving, validation and storage of goods available within the supply chain.
Make
The ‘make’ process describes the activities that usually go into the manufacturing process for the conversion of raw materials into finished goods. ‘Make’ includes all kinds of material conversions like maintenance, overhaul, assembly, repair, chemical processing, remanufacturing, refurbishment and all other common names of processes that convert raw materials into finished goods. As a general rule of thumb, processes coming under the process of ‘make’ are recognized by the fact that one or more items go in, and one or more items come out of the process.
Delivery
The delivery process in a supply chain is directly associated with the maintenance, creation and fulfillment of all orders placed by customers. The delivery process plays an important role in the supply chain as it embodies the validation, receipt and creation of all customer orders. The process also includes processes to schedule orders received from customers and to pick, pack and ship the contents of the order to the customer. The customer is invoiced as well during this delivery process.
Return
The return process is fairly simple and includes the activities generally associated with the reverse flow of goods in the organization. The return process usually embodies the identification of the need to reverse the goods originally sold by the company. The process also includes scheduling the return from the customer, the availability of receipts to process the return process and other refurbishment processes to manage the return in the best manner possible.
Enable
Processes that deal with enabling the supply chain are usually related to management and fall under that scope. Managers act as enablers and enable the supply chain to operate without flaws in a comprehensive and detailed manner. Enabling processes in the supply chain include performance management reviews, the management of business rules, data management, facilities management, resource management, supply chain network management, contract management, risk management and regulatory compliance management. All of these are different facets of the management process that cannot be neglected or ignored at any cost.
Practices
The third SCOR section includes practices outlined by the SCC based on input from experts and practitioners from a number of industries. According to directions by the SCC, practices listed within the SCOR are usually for identification purposes online. The SCC believes that further research and analytics are required to understand the full impact of a practice and implement it within a supply chain.
People
The fourth and final SCOR section is based on people and the standards that should be implemented to manage talent within the supply chain. The key elements in place within the people section are skills, experiences, trainings and aptitudes:
Skill
Skill is the capacity of people in a supply chain to deliver results that are pre-determined with minimal amounts of time and energy. Skills are further shaped by aptitudes, experiences, competency levels and trainings. Examples of skills required in the supply chain include: import/export regulations, master scheduling, risk mitigation and production planning.
Experience
Experience is the knowledge or ability that people acquire by actively participating or observing the tasks being done by others. Experience is gained when people in the supply chain work in different situations that require different skills. The ability to respond to different scenarios in different ways is what makes supply chain professionals stand out. Examples of experience include cross docking, hazardous material handling and cycle counting.
Aptitude
Aptitude is an ability to perform a task at a certain level that is either natural, developed or acquired from experience. Aptitude complements experience to build the skill level of people in the supply chain. Examples of aptitude in the supply chain include accuracy in predictions, analytical brilliance and natural leadership skills.
Training
Training is a certain behavior or skill type that is influenced through instructions and other guidance. Examples of training in the supply chain include certifications such as the SCOR-S and other training modules prepared to hone on-the-job skills of the employees working in your organization.
Perhaps the biggest benefit going in favor of the SCOR model is that you can benchmark the results from this system with results from more than 1000 companies and industries. Since benchmarking is all about comparing and identifying areas you have faltered in, this is of great assistance to expand and improve your supply chain.
The SCOR model also helps with documenting, evaluating and analyzing your entire supply chain. This holds especially true for external analysis as it standardizes results from thousands of companies and can solve problems of both complexity and communication.
Advantages of the SCOR Model
Certain advantages of the SCOR system include:
• Significant knowledge improvement of all employees working on a project or on a supply chain line together
• Standardized documentation of all records and metrics for measuring progress
• Benchmarking and comparing your results with those of the best companies
• Enhanced communication between stakeholders inside and outside the firm. The model also helps improve communication between members tasked with looking after supply chain processes in your workplace
• Defined measures to help build on each other
• All processes measured in the model are defined through relations
Disadvantages of the SCOR Model
Certain disadvantages of the SCOR model include:
• Not all processes are included within the model
• High abstraction rate
• Individual measures are included after the third hierarchy level
• Performance measurement is overall difficult and can be a bit complex to manage
• Businesses do not have enough flexibility to change measures when needed
• It takes significant workload and time to fully apply the model and use it in practice
• Constant actualization can often prove to be tricky
Balanced Scorecard Method
The balanced scorecard method or the BSC approach was first minted by David P Norton and Robert S. Kaplan in the year 1992. Both founders of this approach described it in the following way:
“The balanced scorecard includes financial measures that tell the results of actions already taken. And it complements the financial measures with operational measures on customer satisfaction, internal processes, and the organization’s innovation and improvement activities — operational measures that are the drivers of future financial performance.”
The BSC method suggests that organizations should develop and implement a balanced list of measures to give management the room and space to determine the current standing of the organization. The measures the management team should take into consideration should look at different perspectives related to the supply chain, including the four mentioned below:
• Financial perspective
• Internal business perspective
• The customer perspective
• Innovative and learning perspective fostered within the culture
According to research strategists, these measures are used to define the suitability of different processes within the context of the business. However, a company can definitely remove all the clutter by directly linking their supply chain practices with a performance management system. After doing so, they will be in a relatively better position to achieve the supply chain initiatives in mind. In order to ensure a competitive advantage for organizations looking to work on these lines, a ‘modified balanced scorecard’ was created by Brewer and Speh in 2000.
Supply Chain Management Goals
The true essence of supply chain management goals is that enhanced supply chain performance and waste reduction can only be achieved through higher integration and the cooperation between both internal and external supply chain processes. These goals usually include time compression, waste reduction, unit cost reduction and flexible response.
Waste reduction is achieved by harmonizing your operations, minimizing constant duplications and enhancing the quality of the end result. Time compression is usually focused on reducing the order-to-cycle time by accomplishing production and logistics in a shorter time period to save unimaginable costs.
Customer Benefits
If the supply chain ends up achieving the goal we have mentioned previously, it will end up creating a world of ease and benefits for customers. These achievements should generally be passed on to customers, but organizations should know whether customers realize these benefits and just how that realization can be enhanced. Thus, it is equally important to understand the demands of customers along with the requirements of the supply chain to effectively churn out results.
Financial Benefits
If the supply chain management goals we started with are achieved and the benefits trickle down to the customers, financial success will be achieved in its true form. The best known financial benefits here are lower costs with higher profit margins, higher rate of returns on assets, revenue growth and enhanced cash flow results. The financial benefits you extract are highly dependent on the factors we discussed earlier.
Improved financial status is the end result that most companies look for through better supply chain management. A process that starts with limiting flaws in the SCM process can eventually end up enhancing your revenue generation and improving your profitability and liquidity.
Improvements in Supply Chain Management
This final area adds a more dynamic and necessary element to the framework. This section accounts for the fact that companies need to continuously incorporate new changes and innovations into their supply chain management process. By sharing knowledge between supply chains and by making continuous improvements in data flows, companies can keep giving customers consistent value.
Companies should also explore new substitutes or threats to their manufacturing products. These threats need to be managed in their infancy so that the debilitating impact they have is limited to some extent. Additionally, all latest technologies should be followed with a keen eye to ensure optimal inference and to maintain a competitive advantage. Results from SCM measures and benchmarking can best be experienced if the business is ready to incorporate and improve these steps in the long run.
Advantages of Supply Chain Balanced Scorecard
The supply chain balanced scorecard comes with a range of advantages. These include:
• A wide range of metrics available
• Amazing flexibility to adapt metrics
• Successful model for setting the basics of your benchmarking process
• Management can work on the results to strengthen the outputs
• Elongated and thorough procedure to generate metrics
Disadvantages of Supply Chain Balanced Scorecard
• Does not coordinate with the processes of the supply chain
• Interfaces aren’t optimized as a result
• Causes and effects aren’t really visible
• Lack of synchronization in results
Both these supply chain management systems offer a decent analysis of benchmarking across industries. You can compare results with those of established industries to evaluate your standing in the industry.
Steps for Completing a Supply Chain Analysis
Businesses in the contemporary world are always looking for strategies and ideas to help their supply chains grow and move forward. One of the best ways to do so is by examining your processes from time to time and analyzing the strategic flaws, if any, that are found in them.
As part of these analytics, businesses should also strategize and analyze their supply chain processes and understand where it stands.
The supply chain, as we have already read earlier, is an important part of the business environment today and organizations have no option but to strengthen it for success. In order to ensure maximum productivity, profits and operational success, the workings of the supply chain must be analyzed from time to time and all rusty links should be removed.
The question remains on how to perform a supply chain analysis, which we simplify in the steps below:
Step One: Map Your Supply Chain
Mapping a supply chain is a good way to identify the weak links in your supply chain and take steps to prevent them from showing up. A supply chain map would allow the supply chain manager to identify all resources in the supply chain, including the people, information, resources and all other activities involved in the supply chain.
This simple map can be designed in the form of a flowchart, which helps provide a full overview of the company’s supply chain, and shows the flow of materials and products. The communication between different links of the chain can be improved to ensure optimal understanding of objectives and to minimize the chances of failure.
Step Two: Analyze Your Market
Your supply chain isn’t the only one operating in your market or industry, which is why there are bound to be a number of other competitors and organizations you can look at or take inspiration from. By looking at the market, you will be able to tell just how well your suppliers and processes are priced.
Also, you can compare the results of your SCOR and BSC processes above with those of your competitors in the market to determine how you compare to others.
Step Three: Determine Inefficiencies
The entire purpose of an analysis is to find inefficiencies in your supply chain and to cut them out. Once you have mapped your supply chain, you should take the steps required to identify inefficiencies. If you identify through benchmarking that your competitors get better rates for raw materials from local producers, then it will be beneficial for you to deal with these suppliers rather than have the goods shipped in from somewhere globally.
Can any of your products reach customers faster? Is there are a more cost-effective and frugal technique to save money on supplied raw materials? Can you lower your shipping costs? Answers to these questions will help guide you forward. Also, take a stringent look at your logistics and delivery network and identify areas where you can up your game. The supply chain analysis process will identify the presence of inefficiencies in the system. What you need to do now is take the right steps forward and minimize these efficiencies.
Step 4: Adapt
As soon as you find inefficiencies and implement solutions to improvise and overcome the situation, the next best thing is to adapt. Adapt to the changes in your supply chain and ensure that you aren’t letting the complexities throw you off your end goal. Consumer demand trends change on a whim, and you should be ready to anticipate these changes if you want to keep making profits.
Step 5: Repeat
A supply chain analysis is not a one-time process that you manage and forget. Instead, it is a continuous process that should be managed and repeated from time to time for effective results. Global supply chains today sit right in the eye of the storm and are disrupted by all volatile geographical and political happenings.
Managers need to take charge of the analysis process and ensure that all corners are covered. An analysis can succeed if there is enough focus on future growth potential and on reducing inefficiencies that plague the organization currently.
Advantages of Cross-functional Teams for Internal Supply Chain Analysis
While it can be a bit daunting to build a cross-functional team of employees from different departments and backgrounds, we have got some benefits of cross-functional teams to motivate you. Run through these advantages and see how they can benefit you:
Gain Better Insights
Cross-functional teams allow organizations to benefit from insights and feedback from all corners of the organization. This method of coordination and communication allows an opening for new perspectives and solutions. Teams can sit together and brainstorm ideas that they like to generate effective results.
The supply chain should regularly be appraised with feedback and recommendations from everyone. A cross-functional team will help unearth problems and solutions that you previously didn’t expect and would open the doors to new progress in this regard.
Engaged Employees
Employee engagement levels seem to be dropping around us, a lot of which can be put on the increasing monotony in job functions. Monotony is also increased when employees are restricted to their social circles and don’t get to meet other people from different departments in the workplace and socialize with them.
Once you form cross-functional teams in your organization, you can benefit from better engagement levels within employees. Employees are now more at peace with each other and discuss a variety of ideas and solutions. A strong leader can be put in charge of such cross-functional teams to enhance collaboration and improve coordination. All team members from different departments will be able to hence feel comfortable in the meetings and chip in their ideas related to the discussion.
Spurring Innovation
It is popularly believed in business circles that cross-functional teams are a good place to share innovative ideas and form long-term solutions. Employees can sit together and talk about ideas that are otherwise neglected. When different minds come together, they are able to generate a number of positive ideas that have a generally positive impact on the workplace and the people inside it. When a limited number of people from the same department come together to think of appraising the performance of the supply chain, they are bound to be limited in their thought process and won’t be able to take innovative decisions and expose problems.
Better Management Skills
Managers tend to develop their skills as well through cross-functional teams. Individuals in cross-functional teams are able to sit together and work under the guidance of the leader. The leader hence plays an even more important role because they are now tasked with managing a diverse workforce.
Every department has its own set of norms, and employees bring those norms together with them to the cross-functional team. The manager is usually tasked with mixing all ideas, cultural preferences and other established norms together and creating an environment that is conducive for every worker from every department. Managers learn how to tackle diversity through these techniques and can take this into future pursuits.
Strategies to Develop Cross-functional Teams
Having looked at the benefits of cross-functional teams, we now look at the strategies you should follow to develop cross-functional teams of your own.
Assemble the Right Staff
While the project usually dictates staff members that you should have in your team, make sure that you have the right members. The performance management process will require people from different departments who’re in line with the company’s objectives and understand what is best required of them.
Each team member must add value to the process and should bring a separate skill set. Someone from the procurement department should be able to identify and point out discrepancies in shipping or transporting that are increasing cycle times and are limiting the efficacy of the supply chain.
Organizations should also try to pick confident employees with good communication skills so that they are able to honestly study and appraise projects. Team members that require micro-management and need to have their hands held for successful completion of tasks aren’t good candidates for a cross-functional team.
Have a Leader
While teams can be formed without assigning the leadership role to someone, it is best for every cross-functional team to have a leader figure or a liaison between departments. The leader should be able to maintain control over meetings and burden the responsibility that has been put on their shoulders.
A team leader needs to discover possible problems within the supply chain and give autonomy to members when it comes to discussing solutions. The leader shouldn’t be an excessively dominating or aggressive personality as that would kill the purpose of the meeting and would shut down opinions from different people. Without the presence of a leader, the cross-functional team would be a rudderless ship left to sink.
Communication
Good communication between all team members is an absolute prerequisite for a cross-functional team to succeed. This does fall down on the leader and how successful they are at breaking the ice and getting different employees to adjust with each other. Obviously, people from different departments might not know as much about each other as they know about people from their own department. Hence, there is bound to be some friction and difficulty in the process.
The best plan of action is to host some team building activities. Don’t just focus on the problems and analysis of your supply chain; instead, create an environment where everyone feels comfortable chipping in with ideas.
Continuous Analysis
The beauty of cross-functional teams is that the problems and hurdles faced are usually felt during the first analysis. Since supply chain performance appraisal is a continuous process, the team gets to know each other and can work to analyze different factors related to the supply chain. With better synergy between all members involved in the team, the analysis will be more thorough and creative with time.
Challenges Faced by Cross-functional Teams
We do understand that cross-functional teams can be highly effective at finding problems related to the supply chain and effectively solving them. However, there are certain challenges faced in forming them as well, which should be overcome for a successful appraisal.
Misaligned Priorities
Employees within cross-functional teams tend to focus on things that directly impact them and evaluate these factors based on their own analysis, rather than what these factors mean for the cumulative good of the organization. Someone from the marketing team would give lower priority to the reservations of the manufacturing team related to infrequent supply schedules. However, the marketing department will be more concerned with the schedule of delivery to customers and would want no problems in that, something not related to the manufacturing side of the business.
Too Little Communication
Cross-functional teams that do not communicate with each other and have too little communication are bound to suffer. Such teams are never able to break through the initial hurdle of diversity and move forward. As mentioned earlier, managers play an important role here as they influence communication between all team members and ensure that everyone is at peace.
Lack of Trust
Since all members in cross-functional teams are new to each other, there is a lack of established trust. Team members do not trust each other easily. Hence, they aren’t able to get the communication standard and efficiency they require. For synergy to be formed between a cross-functional team, it is necessary that they trust each other and are able to rely on the outcomes presented by another member.
Technology Disconnect
There is a massive technology disconnect between members of different teams. Some teams are more prone to using technology and enjoying its benefits, while others wouldn’t be aware of such systems. Manufacturing teams are usually inept at using tech solutions for communication and project management, which is why they might not be able to effectively use them.
Managers should try a hybrid solution here and accommodate the needs of every member based on their departmental backgrounds and reservations. Everyone should be allowed to voice their opinion and register their problems.
Advantages and Benefits of Supply Chain New Tech Capabilities
Global businesses that rely on technology for their supply chain operations can benefit from software a number of automated solutions.
A good supply chain management software solution can:
• Help control and reduce the costs associated with your global supply chain
• Alleviate the risks of supply chain inefficiencies such as logistical errors and late shipments
• Improve the delivery of goods to customers, and enable better customer service standards. Customer satisfaction is eventually enhanced, and customers feel more at ease
• Help with the decision-making and forecasting of resources
Supply chain software can also help a global supply chain by:
• Automating all major processes in the business, such as invoicing, order processing and shipment tracking. Businesses are able to save a lot of time and effort as a result of this automation and can reduce administrative costs as well.
• Identifying all excess materials or processes without any sufficient use or need for them. Once these excess processes and materials are identified, businesses are able to indulge in possible cost-saving measures and improve their warehousing and manufacturing efforts.
• Improving the process of inventory management and ensuring a more effective and flawless demand planning process.
• Improving the responsiveness of a supply chain to unforeseen events and disruptions, including staff absences, machine failures, urgent customer orders, missing goods and human error, among many others.
• Providing a management reporting and analysis tool at your fingertips. The information sharing achieved as a result of a software solution can bring partners in a supply chain together and can cut down on whatever silos are present inside the supply chain.
• Providing visibility across the entire network. A software solution can enhance visibility between storage, suppliers, distribution centers and production plans. Everyone has a better understanding of where the business stands and can take corrective action to remedy processes that aren’t ideal.
• Support enhanced communication and collaboration between suppliers, partners and distributors inside the supply chain.
This preliminary analysis will help you develop an understanding of measures of progress within the supply chain and the ideal way to implement new capabilities.
Course Manuals 1-12
Course Manual 1: The Need for Supply Chain Innovation and Optimization
Optimization and innovation are two words thrown around a lot these days. These are buzzwords of sort that are mentioned without the inherent understanding of what they mean and the ideas they reflect.
That said, supply chain innovation and optimization is one concept that you absolutely need to know when running a successful supply chain. The world of supply chain is ever expanding, and innovation allows you to optimize and eventually build a competitive advantage, which should be your end goal.
We start our course manual on ‘Supply Chain New Capabilities’ by carefully studying the concept of supply chain innovation and how it drives optimization. New capabilities in any industry are only unearthed through dedication to innovation and creative ideas and by deriving optimization and perfection from these changes.
What Is a Supply Chain?
A supply chain is a network established between an organization and its suppliers to not only procure raw materials, but to also produce items and distribute the specific goods to the final buyer in question. The supply chain has always been an area of keen interest to managers and global leaders, partially because of how it relates to the primary areas of business operations – production and selling.
The goal of almost any global supply chain today is to remove hindrances in the path and get the product into the hands of the end consumer. But this is just the basic idea behind it. Every supply chain is built on a set of lasting principles. These principles usually determine the success and authenticity of a supply chain.
A closer look would allow you to tell the differences between a supply chain model that is well thought out and a supply chain design that is brought together without extensive planning or contemplation for that matter. This is where the idea of supply chain optimization comes into context. Supply chain optimization is about closely connecting the dots in your supply chain and ensuring that all ends are properly connected to one another.
What Is Supply Chain Optimization?
As the term itself suggests, supply chain optimization is the process of making and implementing improvements within your supply chain. These improvements aren’t just made to reduce glitches within the current supply chain, but they also focus on identifying changing trends in the market and working on them to provide solid output and service standards to customers. Most improvements in the supply chain are centered on raising profits, cutting costs and keeping customers happy where they can.
Your supply chain should be able to give your customers what they want, when they want it and, in the condition and quality they want. The ability to meet the above standards will give organizations the solid foundation set they require for an optimized supply chain globally. The next step in the optimization process is to determine areas where expenses can be cut down or reduced without sacrificing on the quality or standard of goods given to the end customer.
The success of a supply chain is usually measured through its ability to give customers the satisfying experience they require at the lowest cost possible. Customer satisfaction is the end goal, but it shouldn’t come at the cost of heightened expenses and debilitating costs. Organizations look to benefit from the best of both worlds here; reduced expenses and controlled costs.
Supply chain optimization can be achieved by addressing a number of factors, including:
• Physical location/placement of inventory
• Transportation costs
• Distribution tactics
• Manufacturing processes, and so on.
Since there are a number of specific points that organizations should tackle to optimize the design of their supply chain, it makes perfect sense for organizations to identify and follow different approaches for the task.
Local vs. Global Supply Chain Optimization Resources
The supply chain network established by your organization can effortlessly be optimized and bettered in two general methods: local supply chain optimization and global supply chain optimization. Both methods of supply chain optimization deal with firms operating at a global level. Do not be confused by the references to local and global, because they aren’t dictated by geographical references per se.
The main difference between both, global and international approaches to supply chain management, lies in the approaches they follow and the scale and scope of the structure. In this section, we will look into the global and local approaches to supply chain optimization and take a better look at both before we jump into supply chain design among other things.
Local Supply Chain Optimization
Local supply chain optimization is a supply chain process that is focused on specific functions of the supply chain network. The local supply chain optimization process considers supply chain functions in their individuality, without considering the impact they can have on other parts of the supply chain.
Looking at steps and ideas of the supply chain in their individuality can generally be befitting to run a profound analysis. The analysis helps unearth specific glitches and mistakes in certain functions, which eventually makes it easier for organizations to not only reduce the problems, but to also come up with a strategy to minimize the damages caused by that specific function. All functions and steps of a supply chain process play an integral role in influencing the success of the supply chain. With due contemplation and active tracking, organizations can improve specific functions and trigger a domino effect of sorts.
For example, organizations would like to focus on the optimization of distribution processes so that stores always have a steady flow and supply of goods to provide to customers. The delivery process should ideally be spruced up to minimize the chances of late deliveries and to ensure that customers get the products they require at the right time, without any delays whatsoever.
Ensuring a speedy delivery process might even mean sending trucks out to stores and different geographical locations, even if they aren’t filled to the core or to their capacity. This specific, process oriented step might give you a benefit and might put you at a disadvantage as well. On the one hand, you will end up benefiting from the goal you have set for yourself, while on the other hand, this rapid increase can cause costs to increase and become a problem in the long run. Organizations need to keep a stringent check on the cost of distribution as well, because as we mentioned earlier, the primary goals of supply chain optimization also refer to getting the best outcomes possible without a drastic increase in costs.
As we can see from the example above, a localized optimization plan for your supply chain is not the best way forward or the best long-term solution moving forward. In fact, looking at things in specific, without the general idea of the impact they have on the supply chain, can halt progress and stall the effort you are putting into the supply chain.
Instead, local supply chain optimization is ideally considered as a way to find errors in individual processes and minimize them where you can. Do not take localized supply chain optimization methods as a sureshot means for improving the overall standard of your supply chain.
Global Supply Chain Optimization
As opposed to the concept of local supply chain optimization, the global approach is a more wholesome strategy that considers almost all components of the supply chain process. The global approach takes innumerable factors into consideration and takes a detailed look at the impact certain changes can have on each area of the supply chain.
The local approach for supply chain optimization falls short when put in comparison to the global approach. Global supply chain optimization is harder than the local process. Imagine the local approach to optimization as juggling one bottle at a time – it is obviously not very easy. The process of global optimization is the equivalent of juggling multiple bottles together, something which is even more difficult than the local equivalent.
Most organizations think of global supply chain optimization as a means to achieve perfection. Trying to keep all your processes performing at near perfect speeds can be unlikely. However, the optimization process is about finding the perfect balance between all areas of your supply chain. This is something that is desirable and can help your supply chain become more congruent and result-oriented.
The goals for both these approaches are the same – to cut costs, keep customers happy and raise profits in the long run. However, since organizations are more excited by the prospects of an across-the-board supply chain strategy than a restricted localized one, they prefer the benefits of global supply chain optimization over local.
Additionally, during the process of optimization, organizations should make sure that the savings made through the optimization process, either in the form of efficiency or reduced costs, should be more than the additional expenses incurred. The optimization is only justified when the above is the case.
Though global and local optimization might sound a bit intimidating to firms, there are certain techniques that can help organizations through this process. We look at these techniques in our next section.
Supply Chain Optimization Techniques
Briefly speaking, supply chain optimization is broken down into the following techniques:
1. Staying ahead of changes
2. Sticking to your strengths
3. Strengthening collaboration
4. Saving time & using technology
5. Searching for ways to improve
We study these techniques in greater detail below:
Staying Ahead of Changes
Having a supply chain model or design that is currently performing alright is not an indication of future success. The success or satisfactory results you’re enjoying currently will definitely not last forever, and there will come a time when you will have to innovate or predict the upcoming market trends and changes to remain in touch with them. Businesses need to stay aware of changes in the market to keep their work processes well tuned and to work optimally toward success in the supply chain.
To help you in this direction, POS systems can help keep an eye on your supply chain’s ability to handle volatile periods of demand from the market. The data generated through the POS systems can be used to predict future changes, and to also make your supply chain better than it is currently. Staying prepared for the future will help you achieve better results and will allow your customers to feel satisfied without the need for you to extend your budget beyond what you can easily bear.
Sticking to Strengths
All organizations and managers today like to believe that they can handle things on their own, without help from other partners. After all, this is the guiding principle for organizations today. If you want things to be done right, you should probably get it done yourself, without trusting anyone else. However, this principle does not hold true in the supply chain and business world of today.
Even if you’re able to ace every step of your organization on your own, chances are that you will underperform somewhere in some process. This is where outsourcing comes to the rescue. There is no shame in outsourcing – in fact, the external help you get from outsourcing can help you complete tasks that are foreign to you and your team.
Organizations need to realize the importance of their core functions and focus on the strengths that they are good at. Being a jack of all trades has its limitations and can impede progress in the long run. Eventually, when it comes to your supply chain network, it is necessary for you to focus on the strength and see where outsourced help from third party vendors can fit in. Obviously, organizations should adhere to their due diligence standards and find vendors based on stringent measures to avoid being duped by unreliable vendors.
The use of reliable vendors to outsource supply chain tasks can help you cut down on costs and prioritize areas of the business that hold most importance to you and where you feel some ground work can be done to improve performance.
Strengthening Collaboration
Collaboration is a core component of your global supply chain and should be prioritized during your supply chain optimization process. Integrating your manufacturing processes with the delivery schedules of your suppliers can significantly help improve the control of inventory and can also ensure that the results you derive are more efficient and optimized.
Additionally, organizations can also improve their delivery patterns by studying and cross-referencing data from their end retailers. This data can help predict demand and can allow you to keep up with the pace of what customers expect.
With the power of collaboration tools and automated solutions in the supply chain today, the mountains of data available here can easily be deciphered. Ultimately, the interconnectedness between areas of your supply chain is bound to improve optimization and help each stakeholder remain in touch with the other.
Saving Time through Technology
We have already mentioned the importance of technology in the techniques above, and believe it is something that can actually help actualize results. You can incorporate supply chain management software operations here along with the data available across the supply chain ecosystem to derive sense out of different processes and data sets.
Customer experience can also be significantly improved through the use of technology. Customer feedback can be recorded and can later be worked on to give customers the perfect experience, without the minor problem of gaps in communication.
POS technology can be grouped together with touch systems to give employees the ability to focus on efficiency and to better predict demand curves.
The list of technological advancements is endless, with the bottom line being just how significant it can be for organizations to use tech solutions for supply chain optimization.
Continuous Improvement
Supply chain optimization is a continuous improvement process that is achieved through consistent efforts and hard work. Organizations should remember not to become complacent with the status quo surrounding them. Suppliers and manufacturers shouldn’t be blindly trusted, and feedback from customers and other stakeholders should be taken seriously. There is always room for improvement, which organizations can follow to enhance their supply chain optimization.
Be sure to review the coordination between stakeholders from time to time. Enhanced collaboration can help achieve better results and can lead you to the path to glory. Additionally, there is always room for improvement in supply chain practices. Supply chain processes should also be continually assessed and aligned together for the best results.
Step by Step Process for Supply Chain Optimization
The steps to build an optimized supply chain include:
Establishing a Supply Chain Council
The success of your supply chain is heavily dependent on the supply chain team you have in place within your organization. The leadership in place will not only determine the pace at which you proceed, but will also steer your supply chain in the right direction. Without the right individuals present to guide your supply chain forward, your organization would keep repeating the same mistakes and land itself in hot waters. Having a supply chain council can be the guiding light you need right now. Additionally, the objectives of all upper and lower-level employees can be aligned to ensure everyone is on the same page. This will allow your supply chain to work in synchronization with the rest of the business.
Syncing with Different Supplier Tiers
Suppliers are broken down into different tiers. Obviously, you source your products or raw materials from a supplier. Now, in most cases, the supplier you’re dealing with is also sourcing their goods from some other supplier. Sometimes they are dealing with raw materials, while other times they have service providers offering them specialized services. The suppliers to your suppliers are known as tier 2 suppliers, and knowing more about them can be handy for your business. Additionally, if you feel that tier suppliers cannot be trusted, communicate this to your current supplier and explain the trickle-down effect to them. The poor performance of their suppliers will eventually reflect in your performance.
Streamlining Processes
Just having working processes is not enough if you want your organization to achieve a supply chain optimization model for the long run. Whenever you zoom in to the smaller details of your supply chain network, you will find that there are certain processes that require straightening or are just not in the position you want them to be in.
Strengthening Supplier Relationships
Good supply chain optimization is not possible without strengthening relationships with suppliers and keeping them on board with your decisions. A healthy relationship with your suppliers can allow communication to flow both ways and can lead to some amazing results. A healthy supplier relationship includes setting goals, deciding on the right process to reach those goals and agreeing on the assessment methods in place. There should also be an established and proven message to manage the discrepancies in your relationships.
Considering Cost of Ownership
Business owners often make the big mistake of limiting their inference and investigation of a supplier to the cost that they provide. Only considering the price provided by a supplier and limiting all other factors is a mistake because prices are never an honest indication of what you will actually end up spending on their services.
The total cost of ownership, or TCO as it is known, is more than just the upfront cost of services and supplies and also includes the potential costs of transportation, warehousing and other related operational costs. Keeping a healthy relationship with your suppliers allows you to effectively calculate TCO and reduce expenses where it is possible for you to do so.
Cutting Inventory Levels
A popular business saying suggests ‘there’s no such thing as too much inventory’. Well, this saying does not hold true in the efficient and optimized supply chain environment of today. Keeping additional amounts of inventory can cost your business a significant amount of money.Think of all the excess space and storage you will need to keep your additional inventory. Inventory storage costs should be minimized for better management. Then, there are additional costs such as wastages and other expired goods due to excess holding periods. Additionally, inventory can also hide problems that your suppliers and supply chain partners are guilty of committing. These problems suddenly emerge when there is an inventory shortage, and you realize just how inefficient your services are.
Planning for Demand
Having a simple idea of how the future will impact demand for your product can prove to be beneficial in the long run. Demand planning is an important part of running a business today and gives organizations an idea of the demand levels they should plan for. If you’re dealing in multiple products, you don’t want too much of an item that is unpopular. Additionally, you also don’t want to be shorthanded when more orders come for a product that is popular. Customer requests should never be rejected. A rejected customer is a possible avenue lost for your business.
Supply chain organizations can benefit from opening new doors and unearthing new opportunities for innovation and optimization. Optimization is the call of the hour today and supply chains and organizations can benefit from enhanced results.
Course Manual 2: Supply Chain Competitive Analysis and Building an Advantage
A well-designed supply chain is a powerful weapon for organizations in the corporate world today. Not only does a well managed supply chain help reduce costs and delight customers, but it also opens up new revenue options and can help entice customers with amazing offers and timely deliveries.
A competitive supply chain is the end result of continuous perfection and efforts to keep the cycle of change moving forward. However, companies do face issues in taking bold steps to not only overhaul the distribution footprint, but to also rework the critical manufacturing and supply processes. As a result of these complications, leadership teams are often forced to opt for incremental changes that might sound promising on paper but do not give the results that organizations expect out of them.
The inability to turn your supply chain into a competitive advantage is a missed opportunity, especially in an industry where competition is stiff and the market is saturated. Companies that develop a strategic approach toward plant outputs and improvements are able to improve their plant output by over 25 percent and reduce capital expenditure by 40 percent. This is done through increased speed, flexibility and efficiency within the supply chain.
Leadership teams that achieve the gains through supply chain competitive analysis have a greater understanding of the gains that can be enjoyed through supply chain optimization. Supply chain optimization, as discussed in the previous chapter, can lead businesses toward success not only on an individual level, but it can also help build a competitive analysis within the industry. Managers with an eye on building competitive advantage use a number of network tools to figure out the best supply chain practices that can help them improve services, achieve capital efficiency and build flexibility. This starts from the purchase of raw materials and ends at the delivery of finished goods to customers. This is done in order to best meet the objectives and goals of organizations.
Supply Chain Competitive Advantage Myths
Leadership teams are often limited by the myths they hold with regards to competitive advantage, which can eventually hinder their ability to turn the supply chain into a competitive weapon for the future.
Myth No 1: Network Optimization Is Only Valuable After a Supply Chain Disruption
The very first myth hosted by most supply chain managers is that network optimization can only prove to be beneficial or valuable if it is done after a major disruption in the supply chain. This assumption is false and does not assist the growth of your supply chain. While it is clearly obvious that geographic expansion and mergers create the perfect opportunity for organizations to re-evaluate their network, businesses with stable operations without the constant threat of disruption looming on their heads can also go for optimization in their networks.
The manufacturing and distribution assets of an organization play an integral role in the overall flexibility of the supply chain, and there is no bad time for organizations to rework them. In fact, it is a proven fact that supply chain optimization can help companies keep up with the pace of the time, regardless of whether they are going through a disruption or are thinking of entering new markets. It all comes down to asking the right questions and ensuring that the company is able to meet the expectations of customers, especially with regards to delivery timings.
As organizations grow, leadership teams tend to add new distribution and production capacities to the mix, without contemplating the impact this will have on the network as a whole, and how they can manage or mitigate that impact. The result is eventually incremental change, which does not give supply chains the reactive results they want.
Successful organizations always consider the supply chain a vital cog in the wheel and look at it in a futuristic perspective. As supplier, products and customer trends change, businesses need to catch up with the automation of the times to stay relevant.
Myth No. 2: Investing in Network Optimization Tools and Software Is All You Need to Do for Supply Chain Competitive Advantage
Investing in network optimization and software tools is definitely necessary and is an important part of the supply chain, but the software or tools alone do not act as the sole drivers of change in the supply chain. Why is this? Because network tools today have become extremely advanced, and allow organizations to run analyses, plan scenarios and perform sophisticated simulations. However, the tool itself would only produce results as good as the ideas that have been put into it. If the input put into the tool is not strategic, the output generated by it would hardly prove to be useful in the long run.
For instance, the use of strategic planning methods allows leadership teams to evaluate and ponder over different configuration solutions and eventually prepare their supply chains for what the future holds. However, someone should decide what to test and how to test it.
Myth No. 3: Network and Supply Chain Optimization Is Only for Saving Costs
While this myth is partially based on good reason, network and supply chain optimization tools are used to achieve a lot more than just reduced costs. Many leadership teams come under pressure to meet their financial targets and eventually look for ways to cut costs from their supply chain. These rapid changes do help get the incremental results that organizations require, but the cut costs do not increase optimization.
A top performing supply chain does a lot more than just reducing costs by also increasing revenue and improving customer experience. A good supply chain helps customers by providing deliveries ontime and also evolving with the expectations of their customers. This also better enables organizations to meet and address the needs of customers.
Myth No.4: Supply Chain Network Optimization Does Not Yield Quick Results
While supply chain network optimization and competitive advantage are about long-term improvements, they can yield quick wins by eliminating stock shortages, reducing capital expenditure, reducing extra inventory levels and costs and by reallocating production volume. All of these steps have an immediate impact and make supply chains more progressive and result oriented.
Many organizations only view their supply chain as a cost, which should at best be minimized. But successful organizations realize the importance of the network and view it as a way to develop their competitive advantage and position themselves over the other competitors in the market. A fine-tuned supply chain and logistics network can improve customer experience, increase margins and enhance the operational performance and efficiency of the firm.
Leadership teams interested in running a competitive analysis for their organization’s supply chain and in achieving a competitive advantage in the industry should start by asking themselves these questions:
• Is our network operating under stress?
• Do we know how to meet evolving customer needs and product plans by adapting our network?
• Are we achieving year-over-year efficiency gains in our network?
• Are new entrants beating us on cost or service?
• Are we taking advantage of new digital technologies, and how do they change our network needs?
Using Supply Chain Planning to Drive Competitive Advantage
Market research firm, Gartner recently mentioned as part of a study, “Supply chain planning (SCP) is the forward-looking process of coordinating assets to optimize the delivery of goods, services and information from supplier to customer, balancing supply and demand.”
Supply Chain Planning or SCP covers every stakeholder from the second or third tier suppliers to the end customers. Once the stakeholders are understood, an optimized plan is created to cohesively improve the company’s production, sales and other operations. These steps ensure efficiency and cost effectiveness in the supply chain for a lasting period.
Efficiency in supply chain planning is bound to achieve three goals, including increased sales, lower production costs and better supplier relationships. Companies like Dell and Walmart used the supply chain to good effect in the 80s to build their competitive advantage, and the same is being done by behemoths like Unilever and P&G today.
In this section we mention some ways for you to leverage supply chain planning as a tool to achieve competitive advantage in the market.
Engage in Real Time Supply Chain Planning
The current global COVID-19 pandemic has shown businesses just how the landscape surrounding them can change and shift in a very short time. How a business handles these quick shifts in the market will determine its flexibility and the longevity that it achieves in the industry.
Supply chain analytics solutions allow managers and leaders the ability to view real time data from every part of the business. From POS terminals in the supply chains and from the mines where suppliers extract raw materials, companies can gather data from all sources of their supply. Companies can use this large volume of contextual data to forecast shifts in the supply chain and determine changes in the market. These rapidly changing market demands will help organizations understand what is required of them in the moment, and how they should go about it.
A change in demand expectations should be reflected in the requirements businesses have from suppliers. A look at these different sources of data and the analytics derived from them will give organizations a chance to create changing business parameters and implement new requirements.
Develop a Collaborative Supply Chain Strategy
Most large businesses have an expansive list of vendors, distributors and suppliers. These stakeholders usually work in silos, without any form of coordination between each other. All these partners should work in a collaborative environment to maximize the value of the supply chain and minimize discrepancies in the process.
Communication is necessary for supply chains operating at a global level, where suppliers, manufacturers and customers are spread across the globe rather than being saturated and present in one area.
Additionally, developing a collaborative supply chain strategy that includes input from all stakeholders can offer good news for all stakeholders as well. The success of a company usually trickles down to all other stakeholders in the supply chain process. Suppliers get to benefit from the success of the company they’re providing goods to, as they eventually develop a positive rapport and can use the success of the company as a representationof their standards.
Building and maintaining strong relationships with suppliers is just as important as maintaining relationships with customers. Just like an organization needs to satisfy all customers, it also needs to ensure the trust and the reliability of its suppliers. As such, an effective supply chain management strategy wishing to achieve competitive advantage for the organization should prioritize stakeholder communication across the board.
Additionally, including input from the stakeholders in your supply chain can also help generate a lot of positive ideas and clear out delays in the current supply chain process. Your suppliers probably know more about the intricate details of different industries than you do. Obviously, keeping their experience in mind, it is a given fact that they will be able to guide you better in specific industry related matters than you would be able to handle yourself. Hence, the positive rapport built through stakeholder relationships here will definitely help you achieve the competitive advantage you want to achieve.
Supplier relationships and other communication between stakeholders can be improved through the use of technological advances that give organizations a chance to remain in touch with all stakeholders at a given time. The advancements in technology have meant that video conferencing and other tools can bridge the geographical gap and give organizations a chance to develop a positive relationship without any hindrances whatsoever.
Adopt Automated Solutions
Back in 2019, a report released by McKinsey international reported on the user confidence in AI adoption in the supply chain. Artificial Intelligence has opened the doors to multiple avenues and has made global supply chains more progressive than they ever were. This improvement has surely not gone unnoticed and has given organizations a chance to better their services and stand on the same pedestal as their competition.
Respondents for the survey conducted by McKinsey were asked to give answers to 33 uses of AI across different functions in the organizations, and the impact they would have on the costs and revenues of the organization as a whole. In the conclusion of the report McKinsey stated, “Aggregating across all of the use cases, 63 percent of respondents report revenue increases from AI adoption in the business units where their companies use AI, with respondents from high performers nearly three times likelier than those from other companies to report revenue gains of more than 10 percent.”
In supply chain management related questions, 14 percent of all respondents reported a cost decrease of 20 percent or more through the adoption of AI and other automated services. 16 percent of all respondents saw cost decreases between 10 and 19 percent, while over 30 percent of the firms saw a decrease of 10 percent or less. As far as revenues were considered, 13 percent of all organizations surveyed as part of the project reported that the revenue increase due to AI adoption was over 10 percent, while 22 percent saw an increase between 6 and 10 percent, and 28 percent of the organizations saw a revenue increase of 5 percent or less.
The basic results from the survey reported that over 44 percent of all respondents realized amazing cost savings in all business units where AI technology was deployed. AI implementation had reduced cost savings by over 10 percent for most firms.
“The two functions in which the largest shares of respondents report cost decreases in individual AI use cases are manufacturing and supply-chain management. In manufacturing, responses suggest some of the most significant savings come from optimizing yield, energy, and throughput,” McKinsey explains. “In supply-chain management, respondents are most likely to report savings from spend analytics and logistics-network optimization.”
A number of automation solutions are now part of the supply chain and delivery industry. Automated solutions like collaborative robots reduce errors in the manufacturing process and decrease the time it takes organizations to fulfill orders and reduce waiting times. These benefits and automated solutions allow workers inside a firm to work more efficiently and get more work done in as less time as possible.
Implement Agile Processes
Implementing disruptive and innovative technologies can prove to be a major source of progress for the supply chain. However, just as the name itself suggests, these improvements are disruptive and can prove to be a costly endeavor at times. When working with innovative solutions and disruptive management styles, it is best to implement agile process improvements because of their ability to seek and uncover incremental improvements in the process.
The full impact of implementing the agile process will not be experienced by organizations on the first day of implementation. Over the period of time, small and incremental changes and efforts work together to signal major improvements in the processes.
The benefits of the agile processes and mentalities will be felt in the form of lower costs and minimized disruptions as a result of market changes and other trends. Since employees are tasked with spearheading the process and leading the change forward, they take greater interest in the process and are more likely to accept the change brought as a result of it, rather than show resistance to it.
Consider Cost Drivers and Their Impact on Business
To obtain maximum value out of your supply chain, it is necessary for you to be aware of supply chain cost drivers and the impact they have on your business. Increasing costs in the supply chain are usually telltale signs of problematic cost drivers. Organizations looking to create a cost-effective and robust solution should address the root causes here rather than the symptoms that appear on the surface.
For instance, the labor costs in a warehouse might be drastically rising, but this might just be a symptom or a sign of another problem such as below par pick paths and picking errors in general. Replacing the current lot of employees with new unskilled labor will put you at a disadvantage without even considering treating the root cause that led to the situation. Once you understand the root cause behind the high labor rates, you can take measures to improve picking accuracy and reduce the unnecessary work involved. This will effectively address the root cause without any additional problems.
Short-term cost savings should never be attained by sacrificing on your long term growth goals. Technologies like warehouse automation and others powered by AI can help improve services and give a smart return on investments.
Supply Chain Analytics to Help Improve Competition
Most organizations today use some form of supply chain software to manage logistics and procurement in the supply chain. But when it comes to planning, many still use spreadsheets and don’t utilize analytics that can actually give them the competitive advantage they are looking for.
To give you an idea of the concept, Ventana Research recently conducted a study on supply chain planning issues. The study found that:
• 58% of organizations had difficulty managing supply chain processes
• Only 47% had accurate supply chain plans
• 53% had no ability to evaluate trade-offs
• Spreadsheets were reinforcing functional silos
• Collaboration becomes difficult due to lack of proper processes and technology
From these stats, it is evident that relying on models such as spreadsheets for planning can significantly hinder the ability of your organization to compete in the market.
There are a number of different supply chain analytics that help give you an idea of business intelligence and performance stats that can predict what the future will look like. Advanced analytics help you predict future trends with surprising accuracy. These analytics also help pit you against other competitors in the market and give you an idea of where you actually stand. In this section we explore some supply chain analytics and help you understand how to use them to evaluate competitive advantage.
Capacity Planning
Capacity planning is an analytic that allows you to match manufacturing and procurement capacity to the sales demand you have predicted for the coming seasons. The capacity planning process includes strategies such as:
• A lag strategy where you add additional capacity to the system once your current plan isn’t able to meet demand.
• A lead strategy that refers to producing goods with regards to the anticipated demand and output.
• The match strategy which involves adjusting capacity to match the demand for the product and the incremental gains achieved as a result.
Each of these strategies has its own merits, but organizations should be able to choose one based on their situation. The answer to which one is the best lies in your understanding of competitors, your market as a whole and the factors affecting demand.
Simulation and Scenario Analysis
The simulation and scenario analysis is one of the most crucial analytics when devising strategies for business scenarios. The Royal Dutch Shell company practiced simulation and scenario analysis and has since shaped their future in the right direction.
While not many companies can afford the high costs of the multidisciplinary approach that Shell follows, prescriptive analytics can give you the same results as required.
Optimization based scenario planning can be put through multiple simulations to understand the preparedness of a supply chain with regards to multiple scenarios and the kind of impact they might have.
Advanced S&OP
Advanced S&OP is a next generation sales and operation planning analytic that uses finances as well. The analytics technique looks at the financial bottom line to discuss multiple sales scenarios and look at the most profitable production output. A prescriptive analytics model is used to here to bridge the gap between sales and production departments. This form of modelling and analytics replaces the cumbersome process of manual S&OP.
Optimization
Optimization refers to the use of prescriptive methods to determine the optimal solution to different problems faced by the business. For example, it is complex for organizations to determine the perfect inventory strategy for a company involved in retailing through omni channels.
Inventory optimization can save the day for organizations following an omnichannel strategy. The first step is to use the prescriptive analytics model and accurately predict the organization’s demand. Once the model is infinitely validated, the next step is to find the optimal inventory strategy and ensure that it perfectly factors in for the effects of external factors.
Demand Shaping
Demand shaping is an analytics strategy where retailers and manufacturers apply methods to change the demand for their products, rather than just meet existing demand levels. A sales promotion or marketing strategy can be used to increase demand and sales. However, companies face a problem here as they aren’t usually prepared to manufacture and procure for promotions and discounted offers, because of which they eventually encounter lost sales and suffer from stock outs.
Demand shaping allows organizations to set demand through their own understanding and also plan for the shift in demand through appropriate planning measures.
Course Manual 3: Internal Analysis to Understand Supply Chain Deficiencies
Improving or analyzing the supply chain is all about reducing process variability, improving process reliability, reducing complexity and working on a simplified supply chain model. Supply chain analysis and performance management techniques look to oversee how a particular supply chain is performing and if any steps can be taken to further improve that efficiency moving forward.
Performance management is usually defined as a measure to quantify the effectiveness and efficiency of operations in the supply chain. Most organizations tend to measure their supply chain based on measures such as innovation, learning, quality, market share, human resources and most importantly, customer satisfaction.
Supply chain analysis or performance measurement techniques serve as a quantification of how well the supply chain is currently performing and the measures that businesses can take to improve this performance over time.
The right measurement tools can help businesses:
• Check the position of the supply chain and where it currently stands and is headed to.
• Communicate the position of the supply chain to key stakeholders related to the supply chain. Communication of the supply chain is done both, internally and externally. Businesses communicate the position of the supply chain to internal stakeholders including employees to spur them forward. Internal communication is necessary to keep the team on board. Additionally, the position of the supply chain should also be communicated to external stakeholders including your suppliers, distributors and investors to give them an idea of how the supply chain is performing and the improvements that can be made over time to improve the situation. There are also certain legal requirements based on which organizations are required to discuss the status of their supply chain with external as well as internal stakeholders.
• Measuring the performance of the supply chain can help businesses identify just how far away the supply chain currently is from the objectives that are set for it. The distance of the supply chain from the ultimate objective can help managers track progress and manage the discrepancies in the best manner possible.
• Compel progress forward. The current measure of the supply chain also allows organizations to track progress and push it forward.
A supply chain performance system should have the following desirable characteristics to effectively manage and measure the success of the supply chain:
• Inclusiveness: The supply chain management system used should measure the inclusiveness of the supply chain. Through inclusiveness, the system should pertinently consider all related aspects.
• Universality: The management system in place should allow for comparison with companies in the industry to understand the strategic position of the supply chain with regards to the industry standards.
• Measurability: The data metrics used to manage the supply chain should be measurable and easily understandable for all sectors and stakeholders associated with the supply chain.
• Consistency: The performance management system used within the supply should be consistent with the goals of the organization and should also remain consistent through a specific time period to allow comparisons.
Kazemkhanlou et al provided a detailed list of characteristics that should preferably be found within a supply chain measurement system. These characteristics include:
• Be simple and easy to use
• Have a clear purpose
• Provide fast feedback
• Relate to performance improvement, not just monitoring
• Reinforce the firm’s strategy
• Relate to both, long-term and short-term objectives of the organization
• Match the firm’s organization culture
• Not be in conflict with one another
• Be integrated both, horizontally and vertically in the corporate structure
• Be consistent with the firm’s existing recognition and reward system
• Focus on what is important to customers
• Focus on what the competition is doing
• Lead to identification and elimination of waste
• Help accelerate organizational learning
• Evaluate groups not individuals for performance to schedule
• Establish specific numeric standards for most goals
• Reflect relevant non-financial information based on key success factors of each business
• Make a link to reward systems
• The financial and non-financial measures must be aligned and fit within a strategic framework
• Minimum deviations should exist between the organizational goals and measurement goals
Supply chain analysis can be performed using a number of methods and models, but the three we will discuss in this chapter include SCOR, the Balanced Scorecard Method and Benchmarking.
SCOR Framework – The Supply Chain and Operations Reference
The Supply Chain Council established SCOR or the Supply Chain Operations Reference model as the go-to approach for comparing and evaluating supply chain performances and activities.
The Supply Chain Council or SCC mentioned it to be a “unique framework that links business process, metrics, best practices and technology into a unified structure to support communication among supply chain partners and to improve the effectiveness of supply chain management and related supply chain improvement activities.”
The SCOR model comes with six primary processes for evaluation, which are known as Planning, Sourcing, Making, Returning, Enabling and Delivering.
The SCOR reference model is based on 4 major areas of evaluation or sectors.
These include:
• Performance: Standard metrics to not only describe, but also define the performance and strategic goals of the supply chain.
• Processes: Standard description of process relationships and management processes related to them.
• Practices: Management decisions and positive practices that lead to better performance from different processes in the supply chain.
• People: The skills required to perform tasks in the supply chain, and how the current crop fits into it.
Performance
The first SCOR section of performance focuses on metrics related to performance attributes. SCOR recognizes 5 major performance attributes.
These include:
Reliability
The reliability performance attribute addresses and analyzes the ability of a supply chain to consistently perform tasks in a reliable manner, just the way they’re required. Reliability focuses predominantly on the outcomes of a process and how they significantly influence the objectives of the supply chain network. Typical metrics that are used to measure and determine the reliability of a supply chain network include: the right quantity, the right quality, on time delivery. Reliability is an attribute that focuses on the customer and is known to be a key performance indicator for the supply chain.
Responsiveness
The responsiveness of a supply chain relates to the speed and pace at which tasks in the supply chain are performed and processed. Responsiveness is a measure of the speed and efficiency of the supply chain and how an organization is able to effectively run their business with an eye on the metric. The SCOR KPI or key performance indicator for responsiveness in the supply chain is the order fulfillment cycle time. Responsiveness is measured through the time it takes for an organization to fulfill orders. Comparisons with the industry competitors and benchmarks can determine if the order fulfillment rate is where it needs to be or if it’s less than what it should be.
Agility
The agility performance management attribute relates to the ability of a supply chain to respond to rapid changes in the market. The agility of a supply chain is measured through its ability to change in the face of common disruptions coming from the external world. The agility attribute also describes the ability of a supply chain to respond to external factors such as an increase or decrease in demand, natural disasters, labor issues, acts of terror, supply blockages and much more. The recent COVID-19 pandemic was an unprecedented situation and caught many organizations off guard. However, organizations with better agility were able to respond to the situation in a better manner than others. The key performance indicators or KPIs outlined for agility by SCOR include flexibility, value-at-risk and adaptability.
Cost
The cost attribute deals with the cost it takes to operate the process. Typical costs related to the process here include material, labor costs and transportation costs among many more. Supply chains aren’t just supposed to be agile and responsive, but they should be able to get the desired results at minimal costs. The ability of a supply chain to save costs can also go in its favor during times of disruption.
The KPI used by the SCOR framework to measure cost is the total cost to serve. Cost is an internal attribute focused on internal processes.
Assets
SCOR looks at the Asset Management Efficiency attribute to discuss and describe the ability of a supply chain to efficiently utilize assets. Asset management strategies followed by supply chain businesses include inventory reduction and outsource vs. insource. Metrics that are used here for asset management are capacity utilization and inventory days. Additionally, the KPIs outlined by the SCOR performance indicator include cycle time, cash-to-cash period and return on fixed assets. Asset management efficiency is an internal attribute related to profitability.
Processes
The second SCOR section of performance focuses on metrics related to process attributes. SCOR recognizes 6 major processes as part of this section.
These include:
Plan
The plan process is the first in line and describes the activities that are associated with building plans to successfully manage the supply chain. The plan process usually deals with gathering resources, requirements and other information related to the supply chain. The process also examines the supply chain capabilities and understands the gaps that currently exist in the supply chain. Once they are unearthed, corrective action can be taken by organizations to fill these gaps and build a mediation strategy.
Source
The source or sourcing process is self-explanatory and deals with the ordering and scheduling of deliveries for the supply chain. The sourcing process also deals with receipts of goods and services incurred by the business as part of the sourcing process. The sourcing process includes the issuance of POs or purchase orders and the receiving, validation and storage of goods available within the supply chain.
Make
The make process describes the activities that usually go into the manufacturing process for the conversion of raw materials into finished goods. Make includes all kinds of material conversions including maintenance, overhaul, assembly, repair, chemical processing, remanufacturing, refurbishment and all other common names of processes that convert raw materials into finished goods. As a general rule of thumb, processes coming under the process of make are recognized by the fact that one or more items go in, and one or more items come out of the process.
Deliver
The delivery process in a supply chain is directly associated with the maintenance, creation and fulfilment of all orders placed by customers. The delivery process plays an important role in the supply chain process as it embodies the validation, receipt and creation of all customer orders. The process also includes processes to schedule orders received from customers and to pick, pack and ship the contents of the order to the customer. The customer is invoiced as well during this delivery process.
Return
The return process is fairly simple and includes the activities generally associated with the reverse flow of goods in the organization. The return process usually embodies the identification of the need to reverse the goods originally sold by the company. The process also includes the scheduling of the return from the customer, the availability of receipts to process the return process and other refurbishment processes to manage the return in the best manner possible.
Enable
Processes that deal with enabling the supply chain are usually related to management and come under that scope. Managers act as enablers and enable the supply chain to operate without flaws in a comprehensive and detailed manner. Enabling processes in the supply chain include performance management reviews, the management of business rules, data management, facilities management, resource management, supply chain network management, contract management, risk management and regulatory compliance management. All of these are different facets of the management process which cannot be neglected or ignored at any cost.
Practices
The third SCOR section includes practices outlined by the SCC based on input from experts and practitioners from a number of industries. According to directions by the SCC, practices listed within the SCOR are usually for identification purposes online. The SCC believes that further research and analytics are required to understand the full impact of a practice and to implement it within a supply chain. The classification categories for supply chain practices as outlined by the SCC include:
These main categories are further complemented and strengthened with a mention of almost 200 plus practices under them.
People
The fourth and final SCOR section is based on people oversees and the standards that should be implemented to manage talent within the supply chain. The key elements in place within the people section are skills, experiences, trainings and aptitudes:
Skill
Skill is the capacity of people in a supply chain to deliver results that are pre-determined with minimal amounts of time and energy. Skills are further shaped by aptitudes, experiences, competency levels and trainings. Examples of skills required in the supply chain include: import/export regulations, master scheduling, risk mitigation and production planning.
Experience
Experience is the knowledge or ability that people acquire through actively participating or by observing the tasks being done by others. Experience is gained when people in the supply chain work in different situations that require different skills. The ability to respond to different scenarios in different ways is what makes supply chain professionals stand out. Examples of experience include cross docking, hazardous material handling and cycle counting.
Aptitude
Aptitude is an ability to perform a task at a certain level which is either natural, developed or acquired from experience. Aptitude complements experience to build the skill level of people in the supply chain. Examples of aptitude in the supply chain include accuracy in predictions, analytical brilliance, and natural leadership skills.
Training
Training is a certain behavior or skill type that is influenced through instructions and other guidance. Examples of training in the supply chain include certifications such as the SCOR-S and other training modules prepared to hone on-the-job skills of the employees working in your organization.
Perhaps the biggest benefit going in favor of the SCOR-model is that you can benchmark the results from this system with results from more than 1000 companies and industries. Since benchmarking is all about comparing and identifying areas you have faltered in, this is of great assistance to expand and improve your supply chain.
The SCOR model also helps with documenting, evaluating and analyzing your entire supply chain. This holds especially true for external analysis as it standardizes results from thousands of companies and can solve problems of both, complexity and communication.
Advantages of the SCOR Model
Certain advantages of the SCOR system include:
• Significant knowledge improvement of all employees working on a project or on a supply chain line together
• Standardized documentation of all records and metrics for measuring progress
• Benchmarking and comparing your results with those of the best companies
• Enhanced communication between stakeholders inside and outside the firm. The model also helps improve communication between members tasked with looking after supply chain processes in your workplace
• Defined measures to help build on each other
• All processes measured in the model are defined through relations
Disadvantages of the SCOR Model
Certain disadvantages of the SCOR model include:
• Not all processes are included within the model
• High abstraction rate
• Individual measures are included after the third hierarchy level
• Performance measurement is overall difficult and can be a bit complex to manage
• Businesses do not have enough flexibility to change measures when needed
• It takes significant workload and time to fully apply the model and use it in practice
• Constant actualization can often prove to be tricky
Balanced Scorecard Method
The balanced scorecard method or the BSC approach was first minted by David P Norton and Robert S. Kaplan in the year 1992. Both founders of this approach described it in the following way:
“The balanced scorecard includes financial measures that tell the results of actions already taken. And it complements the financial measures with operational measures on customer satisfaction, internal processes, and the organization’s innovation and improvement activities — operational measures that are the drivers of future financial performance.”
The BSC method suggests that organizations should develop and implement a balanced list of measures to give management the room and space to determine the current standing of the organization. The measures the management team should take into consideration should look at different perspectives related to the supply chain, including the four mentioned below:
• Financial perspective
• Internal business perspective
• The customer perspective
• Innovative and learning perspective fostered within the culture
According to research strategists, these measures are used to define the suitability of different processes within the context of the business. However, a company can definitely remove all the clutter by directly linking their supply chain practices with a performance management system. After doing so, they will be in a relatively better position to achieve the supply chain initiatives in mind. In order to ensure a competitive advantage for organizations looking to work on these lines, a ‘modified balanced scorecard’ was created by Brewer and Speh in 2000.
As illustrated in the figure above, there are four essential management areas of supply chain covered in this framework:
Supply Chain Management Goals
The true essence of supply chain management goals is that enhanced supply chain performance and waste reduction can only be achieved through higher integration and the cooperation between both, internal and external supply chain processes. These goals usually include time compression, waste reduction, unit cost reduction and flexible response.
Waste reduction is achieved by harmonizing your operations, minimizing constant duplications and enhancing the quality of the end result. Time compression is usually focused on reducing the order-to-cycle time by accomplishing production and logistics in a shorter time period to save unimaginable costs.
Customer Benefits
If the supply chain ends up achieving the goal we have mentioned previously, it will end up creating a world of ease and benefits for customers. These achievements should generally be passed on to customers, but organizations should know whether customers realize these benefits and just how that realization can be enhanced. Thus, it is equally important to understand the demands of customers along with the requirements of the supply chain to effectively churn out results.
Financial Benefits
If the supply chain management goals we started with are achieved and the benefits trickle down to the customers, financial success will be achieved in its true form. The best known financial benefits here are lower costs with higher profit margins; higher rate of returns on assets, revenue growth and enhanced cash flow results. The financial benefits you extract are highly dependent on the factors we discussed earlier.
Improved financial status is the end result that most companies look for through better supply chain management. A process that starts with limiting flaws in the SCM process can eventually end up enhancing your revenue generation and improving your profitability and liquidity.
Improvements in Supply Chain Management
This final area adds a more dynamic and necessary element to the framework. This section accounts for the fact that companies need to continuously incorporate new changes and innovations to their supply chain management process. By sharing knowledge between supply chains and by making continuous improvements in data flows, companies can keep giving consistent value to customers.
Companies should also explore new substitutes or threats to their manufacturing products. These threats need to be managed in their infancy, so that the debilitating impact they have is limited to some extent. Additionally, all latest technologies should be followed with a keen eye to ensure optimal inference and to maintain a competitive advantage. Results from SCM measures and benchmarking can best be experienced if the business is ready to incorporate and improve these steps in the long run.
Advantages of Supply Chain Balanced Scorecard
The supply chain balanced scorecard comes with a range of advantages. These include:
• A wide range of metrics available
• Amazing flexibility to adapt metrics
• Successful model for setting the basics of your benchmarking process
• Management can work on the results to strengthen the outputs
• Elongated and thorough procedure to generate metrics
Disadvantages of Supply Chain Balanced Scorecard
• Does not coordinate along the processes of the supply chain
• Interfaces aren’t optimized as a result
• Causes and effects aren’t really visible
• Lack of synchronization in results
Both these supply chain management systems offer a decent analysis of benchmarking across industries. You can compare results with those of established industries to evaluate your standing in the industry.
Course Manual 4: Internal Evaluation Measures
Every supply chain is unique in its own way. There are multiple factors that make supply chains different from each other and add a unique touch to them. Every supply chain should strategically be structured in a way that assists internal decisions and allows stakeholders to be on board with the decision making process. There is no best way for structuring supply chains, as the network you follow can be unlike a successful one followed by your competitor. The difference in structures is dependent on a number of factors including:
• The structure of the business in context
• The core business functions should be owned by the organization, while other business functions should be outsourced
• Horizontal integration – product variations provided to market segments and geographies
• Vertical integration – a supply chain (or part of) that has a common owner
• Virtual integration – network of companies to deliver a contract
• Conglomerate – unrelated businesses with a financially driven head office
• Type of Industry – primary, secondary or tertiary
• Type of product
• Producer
• Converter
• Fabricator
• Assembler
• Consumer durables – fast moving consumer goods (FMCG)
• ‘Use by date’ controlled – consumer packaged goods (CPG)
• Finished product sales & distribution (can include final packaging and test)
• The internal ‘owner’ of products
• Divisions, strategic business units (SBU), geographic areas, subsidiaries, product groups
• Markets served and how the enterprise views its markets
• Domestic – operates within a country
• Multi-domestic – domestic business model used for all countries
• International – countries are subsidiaries of the head office
• Global – one company image, with standard products and standard processes in all countries
• Transnational – ‘think global, act local’ – effectively use global and local sourcing, manufacturing and distribution
• Location of suppliers, manufacturing and distribution units and the length (time) of their associated links.
The structure of a supply chain is also influenced by some other factors including:
• Legal requirements related to the products and operations of a firm.
• Whether the business is publicly traded or privately owned by an entity. Typically, both these types of organizations tend to have different objectives and motives, even though the services and products they offer might be similar in nature.
Supply Chain Elements
In their own way, each organization should look to incorporate analytics based on the elements of their supply chain. There are various elements that combine to fully form the functional wheel of the supply chain. These elements are seven in total and are highlighted in the diagram below.
The core elements and their functions are directly related to a supply chain through the internal supply chain, customers and suppliers.
• Procurement
• Develop a procurement policy which is easy to implement and follow down the line.
• Source, purchase and contract rates and vendors for direct and indirect expenditures, services and capital related to the supply chain.
• Procurement analysis to determine the feasibility and benefits of the procurement strategy to the supply chain.
• Operations Planning:
• The planning process for sales and operations or S&OP planning
• Master scheduling of manufacturing to meet deadlines and plan effectively
• Planning capacity and materials to meet the requirements of the master schedule
• Inventory management policy for better management of resources
• Distribution plan for effective customer reach
• Logistics:
• Schedule the storage and movement of outbound materials going toward customers and inbound materials and supplies coming from suppliers
• Reverse logistic storage and movement preparations
• Compliance with regulations and trade agreements during the import and export of all raw materials and finished products. Government regulations should stringently be followed here for ideal results
• Settlement of both, accounts payable and accounts receivable from time to time. This should be incorporated in the materials receipts along with product delivery
• Tactical Marketing and Sales. This process is used to align the promotional marketing and sales activities of a firm with its capabilities to make and deliver goods.
• Tactical marketing and sales activities run based on the availability of products and the supply of raw materials needed to manufacture them. Retail promotions with CPG and FMCG businesses
• Order management
• Demand management process for the sales and operation processes
• Order management to set customer expectations right
Besides these core processes, there are three other elements that support the flow of the supply chain. The importance of these three support elements is usually determined by the type and size of the business in context. However, the activities exist within an organization, and their outputs are best recognized as internal parts of the supply chain. Responsibilities within these support processes include:
• Supply Network model
• Consolidate the strategy of the supply chain from individual elements and their strategies under the support and core elements. The number of individual strategies will heavily depend on the importance of each element
• Supply chain management model design
• Supply chain mapping for future success
• Supply chain analysis
• Metrics and performance analysis
• Supply chain modeling and simulation for the future
• Supply Chain IT
• Supply chain commercial software applications
• Supply Network Analysis and Planning (SNAP) applications
• Supply Chain Communications Network integration
• Investigate, design and implement viable Digital Supply Chains (DSC) solutions
• Supply Chains Finance and Legal
• Management of working capital and cash flow
• Financing arrangements for selected suppliers and approval of credit for customers
• Governance, Risk and Compliance
• Governance requirements for dealing with external parties
• Identification of all risks within the supply chains to successfully manage and mitigate them
• Compliance with all related laws in the domestic and internal market. Keep a keen eye on international and domestic laws and international trade agreements concerning supply chains (link with Logistics compliance)
The internal supply chain is based on the structure highlighted above and the analysis performed on it takes inspiration from the individual structure that it boasts. Every supply chain is different in nature, which is why the structure usually varies from supply chain to supply chain.
Steps for Completing a Supply Chain Analysis
Businesses in the contemporary world are always looking for strategies and ideas to help their businesses grow and move forward. One of the best ways to do so is by examining your processes from time to time and analyzing the strategic flaws, if any, that are found in them.
As part of these analytics, businesses should also strategize and analyze their supply chain processes and understand where it stands.
The supply chain, as we have already read earlier, is an important part of the business environment today and organizations have no option but to strengthen it for success. In order to ensure maximum productivity, profits and operational success, the workings of the supply chain must be analyzed from time to time and all rusty links should be removed.
The question remains on how to perform a supply chain analysis, which we simplify in the steps below:
Step One: Map Your Supply Chain
Mapping a supply chain is a good way to identify the weak links in your supply chain and take steps to prevent them from showing up. A supply chain map would allow the supply chain manager to identify all resources in the supply chain including the people, information, resources and all other activities involved in the supply chain.
This simple map can be designed in the form of a flowchart, which helps provide a full overview of the company’s supply chain, and shows the flow of materials and products. The communication between different links of the chain can be improved to ensure optimal understanding of objectives and to minimize the chances of failure.
Step Two: Analyze Your Market
Your supply chain isn’t the only one operating in your market or industry, which is why there are bound to be a number of other competitors and organizations you can look at or take inspiration from. By looking at the market you will be able to tell just how well your suppliers and processes are priced.
Also, you can compare the results of your SCOR and BSC processes above with those of your competitors in the market to determine how you compare to others.
Step Three: Determine Inefficiencies
The entire purpose of an analysis is to find inefficiencies in your supply chain and to cut them out. Once you have mapped your supply chain, you should take the steps required to identify inefficiencies. If you identify through benchmarking that your competitors get better rates for raw materials from local producers, then it will be beneficial for you to deal with these suppliers rather than have the goods shipped in from somewhere globally.
Can any of your products reach customers faster? Is there are a more cost-effective and frugal technique to save money on supplied raw materials? Can you lower your shipping costs? Answers to these questions will help guide you forward. Also take a stringent look at your logistics and delivery network and identify areas where you can up your game. The supply chain analysis process will identify the presence of inefficiencies in the system, what you need to do now is take the right steps forward and minimize these efficiencies.
Step 4: Adapt
As soon as you find inefficiencies and implement solutions to improvise and overcome the situation, the next best thing is to adapt. Adapt to the changes in your supply chain and ensure that you aren’t letting the complexities of change throw you off your end goal. Consumer demand trends change on a whim, and you should be ready to anticipate these changes if you want to keep making profits.
Step 5: Repeat
A supply chain analysis is not a one-time process that you manage and forget. Instead, it is a continuous process that should be managed and repeated from time to time for effective results. Global supply chains today sit right in the eye of the storm and are disrupted by all volatile geographical and political happenings.
Managers need to take charge of the analysis process and ensure that all corners are covered. An analysis can succeed if there is enough focus on future growth potential and on reducing inefficiencies that plague the organization currently.
Course Manual 5: Forming a Cross Functional Team to Analyze Supply Chain Capabilities
Cross functional teams offer an easy way out for businesses looking to analyze the capabilities of their supply chain and looking to unearth new solutions that can take their supply chain forward. Different organizations have had different experiences with cross functional teams, so your actual encounter with such teams will depend on the management style you follow and just how invested your teams are into making these plans work.
Some organizations and managers believe cross functional teams can be excellent for performance reviews and to unearth new capabilities in the supply chain. The efficacy of the teams is, however, dependent on the governance, goals set for them, the level of accountability required and the provision of suitable performance management tools. With the right provisions and the desired tools, cross functional teams can really take opportunities by the scruff of the neck and work on them for success.
Usually, cross functional teams in an organization are created to run performance analyses for the supply chain. Since the supply chain and its activities are correlated with all departments in an organization, the cross functional team can bring varying perspectives and come up with ways to accomplish what is required to not only improve performance, but ensure consistency in results.
Some managers are also of the opinion that cross functional teams aren’t worth the hassle and the results aren’t as efficient as managers and management teams expect them to be. According to a study released in the Harvard Business Review, almost 75 percent of all cross functional teams were believed to be dysfunctional. The study found that cross functional teams fail to meet three of the five basic criteria for successful team management. These criteria include meeting planned budget, following specifications, staying on schedule, aligning with the strategy of the company and meeting expectations of the customers. These factors and stats are however predominantly related to project management than they are with supply chain performance management.
The current failure rate of cross functional teams in project management doesn’t necessarily mean that such teams should be immediately rejected or not considered for supply chain performance. Cross-functional teams bring in a number of benefits, and if implemented successfully, can bring up attributes that you had previously ignored.
What Is a Cross-Functional Team?
A cross functional team is usually one which has members with different skill sets and from different departments but working toward a common objective or end result. Cross-functional teams are known to include people from different departments and areas within the organization, including employees from all levels of the hierarchy. There can also be participants from outside the company itself to lend an expert view and make the analysis even more thorough than it originally was. The primary motive bringing these teams coming together is the ability to be spot-on in their analysis and effectively review the performance of the supply chain in light of a number of metrics.
Cross functional teams in a supply chain bring varying perspectives with each member of the team chipping in about how certain decisions impact their performance and work. The supply chain is interconnected with a number of departments in the workplace. Even sales and marketing teams have to run promotions through supply chain managers because the company should be equipped to provide for the spike in demand before price promotions and discounts are launched.
Cross functional teams are mostly self-directed. They are assigned responsibilities and tasks by the upper management, but the approach they employ is one that they find befitting according to the various expertise of different team members. Each member tends to offer their own perspective to the mix, and gives a more ‘out of the box’ solution and suggestion that wouldn’t be achieved as part of a simple departmental team. This creative approach to performance management can unearth problems and solutions for them.
Cross functional teams are usually found in small businesses or startups, where owners are forced into incorporating such teams because of the limited number of employees available. Employees perform the limited number of tasks that come up.
Advantages of Cross Functional Teams
While it can be a bit daunting to build a cross functional team of employees from different departments and backgrounds, we have got some benefits of cross functional teams to motivate you. Run through these advantages and see how they can benefit you:
Gain Better Insights
Cross functional teams allow organizations to benefit from insights and feedback from all corners of the organization. This method of coordination and communication allows an opening for new perspectives and solutions. Teams can sit together and brainstorm ideas that they like to generate effective results.
The supply chain should regularly be appraised with feedback and recommendations from everyone. A cross functional team will help unearth problems and solutions that you previously didn’t expect and would open the doors to new progress in this regard.
Engaged Employees
Employee engagement levels seem to be dropping around us, a lot of which can be put on the increasing monotony in job functions. Monotony is also increased when employees are restricted to their social circles and don’t get to meet other people from different departments in the workplace and socialize with them.
Once you form cross functional teams in your organization, you can benefit from better engagement levels within employees. Employees are now more at peace with each other and discuss a variety of ideas and solutions. A strong leader can be put in charge of such cross functional teams to enhance collaboration and improve coordination. All team members from different departments will be able to hence feel comfortable in the meetings and chip in their ideas related to the discussion.
Spurring Innovation
It is popularly believed in business circles that cross functional teams are a good place to share innovative ideas and form long-term solutions. Employees can sit together and talk about ideas which are otherwise neglected. When different minds come together, they are able to generate a number of positive ideas that have a generally positive impact on the workplace and the people inside it. When a limited number of people from the same department come together to think of appraising the performance of the supply chain, they are bound to be limited in their thought process and won’t be able to take innovative decisions and expose problems.
Better Management Skills
Managers tend to develop their skills as well through cross functional teams. Individuals in cross functional teams are able to sit together and work under the guidance of the leader. The leader hence plays an even more important role, because they are now tasked with managing a diverse workforce.
Every department has their own set of norms and employees bring those norms together with them to the cross functional team. The manager is usually tasked with mixing all ideas, cultural preferences and other established norms together and creating an environment that is conducive for every worker from every department. Managers learn how to tackle diversity through these techniques and can take this into future pursuits.
Strategies to Develop Cross Functional Teams
Having looked at the benefits of cross functional teams, we now look at the strategies you should follow to develop cross functional teams of your own.
Assemble the Right Staff
While the project usually dictates staff members that you should have in your team, make sure that you have the right members. The performance management process will require people from different departments who’re in line with the company’s objectives and understand what is best required of them.
Each team member must add value to the process and should bring a separate skill set. Someone from the procurement department should be able to identify and point out discrepancies in shipping or transporting that are increasing cycle times and are limiting the efficacy of the supply chain. Organizations should also try to pick confident employees with good communication skills so that they are able to honestly study and appraise projects. Team members that require micro management and need to have their hands held for successful completion of tasks aren’t good candidates for a cross functional team.
Have a Leader
While teams can be formed without assigning the leadership role to someone, it is best for every cross functional team to have a leader figure or a liaison between departments. The leader should be able to maintain control over meetings and burden the responsibility that has been put on their shoulders.
A team leader needs to discover possible problems within the supply chain and give autonomy to members when it comes to discussing solutions. The leader shouldn’t be an excessively dominating or aggressive personality as that would kill the purpose of the meeting and would shut down opinions from different people. Without the presence of a leader, the cross functional team would be a rudderless ship left to sink.
Communication
Good communication between all team members is an absolute prerequisite for a cross functional team to succeed. This does fall down on the leader and how successful they are at breaking the ice and getting different employees to adjust with each other. Obviously, people from different departments might not know as much about each other as they know about people from their own department, hence there is bound to be some friction and difficulty in the process.
The best plan of action is to host some team building activities. Don’t just focus on the problems and analysis of your supply chain; instead, create an environment where everyone feels comfortable chipping in with ideas.
Continuous Analysis
The beauty of cross functional teams is that the problems and hurdles faced are usually felt during the first analysis. Since supply chain performance appraisal is a continuous process, the team gets to know each other and can work to analyze different factors related to the supply chain. With better synergy between all members involved in the team, the analysis will be more thorough and creative with time.
Challenges Faced by Cross Functional Teams
We do understand that cross functional teams can be highly effective at finding problems related to the supply chain and effectively solving them. However, there are certain challenges faced in forming them as well, which should be overcome for a successful appraisal.
Misaligned Priorities
Employees within cross functional teams tend to focus on things that directly impact them and evaluate these factors based on their own analysis, rather than what these factors mean for the cumulative good of the organization. Someone from the marketing team would give lower priority to the reservations of the manufacturing team related to infrequent supply schedules. However, the marketing department will be more concerned with the schedule of delivery to customers and would want no problems in that, something not related to the manufacturing side of the business.
Too Little Communication
Cross functional teams that do not communicate with each other and have too little communication are bound to suffer. Such teams are never able to break through the initial hurdle of diversity and move forward. As mentioned earlier, managers play an important role here as they influence communication between all team members and ensure that everyone is at peace.
Lack of Trust
Since all members in cross-functional teams are new to each other, there is a lack of established trust. Team members do not trust each other easily, hence they aren’t able to get the communication standard and efficiency they require. For synergy to be formed between a cross functional team, it is necessary that they trust each other and are able to rely on the outcomes presented by another member.
Technology Disconnect
There is a massive technology disconnect between members of different teams. Some teams are more prone to using technology and enjoying its benefits, while others wouldn’t be aware of such systems. Manufacturing teams are usually inept at using tech solutions for communication and project management, which is why they might not be able to effectively use them. Managers should try a hybrid solution here and accommodate the needs of every member based on their departmental backgrounds and reservations. Everyone should be allowed to voice their opinion and register their problems.
Course Manual 6: Understanding Supply Chain Capabilities and Their Impact
Most supply chain capabilities are guided and managed by the decisions you take with regards to key supply chain drivers. Every supply chain is guided by key drivers that emphasize the efficiency and responsiveness of the business based on the changing business landscape and environment.
When managers work to improve a supply chain and unearth new capabilities, they realize that key drivers influence performance and help businesses choose between efficiency and responsiveness or better yet, get the best of both worlds.
We start this chapter on understanding supply chain capabilities by discussing the five drivers that influence demand and provide a useful framework to unearth innovative opportunities. Decisions made with regards to the operation of each driver determine the responsiveness and efficiency a supply chain can achieve through new capabilities.
The five drivers are explained in detail below:
Production
Known as a key driver within the global supply chain, production can be made more responsive by building factories that have excess capacity to meet demand spikes and use flexible techniques to develop and integrate a number of supply chain solutions. The disruptive market environment of today calls for supply chain operators to add responsiveness to their approach and create a strategy that is focused on achieving efficiency with responsiveness.
Organizations with an expansive global supply chain presence have to take quick and strategic decisions regarding the continuity of certain plants in their capacity. Supply chain managers should take these 6 factors into consideration before deciding on downsizing operations and closing a manufacturing facility. These considerations include:
• Plant Size: The size of a plant or facility should always be considered when downsizing and closing facilities. Smaller plants tend to have lower efficiency than larger plants with extended manufacturing and storage facilities. The average cost of a unit produced in a small plant is generally higher than what is produced in a larger plant. Hence, managers should look to maintain their larger plants and cut down on smaller plants if push ever comes to shove.
• Site Constraints: Plants and sites that have high size constraints should be closed before larger plants with extended space are closed. Extra space can prove to be indispensable for future expansion and even parking for the time being. Managers should decide to close plants with less space.
• Capacity: This is another factor closely linked to the size of a plant or manufacturing site. A plant producing goods at higher capacity has a lower cost per unit, which is why managers should look to continue plants with bigger capacities for obvious reasons.
• Labor Productivity: The labor productivity of all plants through units manufactured and labor employed should be computed to continue plants with higher labor productivity and shut down plants that aren’t as productive.
• Distance from Head Office: The plant’s distance from your organizational head office can also make management difficult. Hence, you should try to cut down on plants that are located at a distance from your head office. Managers should look to continue plants that are nearby. Distance from the head office can also determine transportation and fuel costs over a period of time.
• Age of Plant: Plants that have operated at full capacity for extended periods can have high costs of maintenance. Hence, managers should close down plants that are old and require extensive maintenance over others that are easier to manage.
Plant or facility management is a necessary driver for global supply chain competitive advantage. Shutting down inefficient plants based on the characteristics above can enhance manufacturing competencies and improve production processes.
Transportation
Following the manufacturing facilities, transportation is the next key driver for global supply chains. Responsiveness and new capabilities related to it in the supply chain are usually unearthed when the mode of transportation is fast and is known to be reliable and flexible, such as airplanes and road transports. Many established supply chain operators with catalogues on the internet are able to meet customer demands with high levels of responsiveness within a duration of 48 hours or less than that. UPS and FedEx are two companies that help provide responsive transportation solutions to supply chain operators. Amazon is also expanding its services to include a freight company to ship goods to customers.
Efficiency is usually achieved by shipping and transporting goods and services in larger batches than what was previously shipped. Companies looking for efficiency sacrifice on flexibility and responsiveness and go for a model that follows a set schedule. The use of models such as railroad, ships and pipelines can be highly efficient for firms in the industry, based on their business model and what seems best to them.
Transportation can also be a lot easier to implement and manage if it originates from a central distribution center rather than from separate branches and locations.
Information
The power of information as a driver grows even stronger with each passing day. With the world going through a tech revolution of its own, organizations have given value to information for how it helps collect and share data across the board. The information generated from one part of the supply chain can be handy in improving the performance of another part, which makes it even more necessary for supply chain managers and operators to invest in technology that can help in the sharing and communication of information across all stakeholders involved in the process.
High levels of responsiveness and flexibility can be achieved when organizations improvise their supply chain approach and build a data sharing and communication model that takes information from one part of the supply chain and efficiently passes it on to another in a real time basis.
The sharing of information allows organizations to become apt at their processes and share data related to customer demand, inventory levels and production. This intensive sharing and availability of information allows supply chain operators to respond to demand curves and spikes in a more responsive manner. All departments within the organization are fully oiled and the organization is motivated to move forward and achieve the desired results.
Inventory
Inventory is a key factor in the organization and determines the success of a supply chain and the management team in unearthing new capabilities. Organizations can manage perishable inventory in their supply chain through the following ways:
• Hire experienced staff members and give them the training they require to succeed in the management of perishable goods and stock. Human resource management plays a pivotal role in managing supply chains with perishable goods involved. The experience that individuals bring from their previous places of work can do wonders when it comes to managing complex supply chains, especially those with perishable goods involved.
• Work with your staff members and use their experience to define target stock levels and the order patterns you should follow. Orders from suppliers should be taken on specific dates to limit the chances of any irregularities.
• Have a solid platform in place to manage inventory levels. Inventory management personnel should look at and forecast inventory needs with the passage of time. Simple inventory management protocols and procedures should be followed to limit wastage of all kinds.
• Check the shelf life of goods and update fresh stock accordingly. Specific databases should be created to maintain a check on the shelf life and goods that are stored in your organization.
• Collaborate with other organizations and stakeholders involved in your supply chain to limit wastage. Create valuable business relationships outside your line of work to eventually head toward forward and vertical integration opportunities.
When it comes to inventory management, businesses can apply one of four approaches:
• Inventory Speculation: This basically means that businesses should hold inventory in line with the delivery of raw materials for manufacturing. This does require extensive expenditure on inventory holding costs, but businesses can benefit from just in time inventory methods.
• Inventory Postponement: This approach takes out delays in inventory procurement and takes the holding costs away from manufacturers. Manufacturers no longer have to invest in warehousing as the quick delivery of raw materials is ensured.
• Inventory Consignment: According to this strategy, the manufacturer may hold the inventory physically, but the ownership is still in the hands of the supplier. Manufacturers only pay for the part of the inventory they use and return the rest to the supplier. In this method, manufacturers can use inventory and even stock up without additional investments.
• Reverse Consignment: Reverse consignment is the complete opposite of the method we studied above. In this method, the inventory is physically held by the supplier, but the ownership is in the hands of the manufacturer. The manufacturer can periodically use the inventory as they please.
Organizations can adopt one of these four strategies to limit wastage and ensure optimal inventory management for competitive advantage.
Location
Location is the last of the 5 key drivers that we will look at in this manual. Decisions related to the location of an organization’s manufacturing plant and distribution centers can also be taken to either maximize efficiency or maximize responsiveness.
A location decision can emphasize and focus on responsiveness where a company sets up numerous locations that are close to their desired customer base. The availability of multiple manufacturing and distribution centers close to high demand sections of the population can improve responsiveness as the products are always available even on short notices. This allows organizations the ability to meet sudden demand spikes in a short period, without having to ship items through extensive road trails. Additionally, a responsive location helps improve customer satisfaction as customers are serviced in time and given the kind of services they require.
Efficiency in decisions related to the location is achieved through a centralized location away from the hubbub and costly real estate prices of the city. Efficiency might come at the cost of responsiveness, but it helps significantly improve the ability of a supply chain to lower costs and improve profits. E-commerce retailers that prefer a few central locations to serve a large geographic market are following principles of efficiency to minimize their costs and get the highest profits out of the least expenses.
Choosing Between Efficiency and Responsiveness for New Capabilities
Efficiency drove economic growth in the 20th century. The push for efficiency and cost effectiveness not only lowered the prices of products, but also meant that organizations were able to innovate and bring in new ideas to the mix without having to worry about repercussions. The prices of products from home appliances to automobiles significantly reduced and organizations were also able to innovate further and give new offerings to spoiled customers. In light of this, efficiency was the norm in the 20th century and there were many organizations that prided themselves based on their ability to lower costs and achieve efficiency in their dealings.
However, for efficiency to succeed in the modern economy, it needs two imperative factors to remain constant and ever-present. The continuous presence of these two factors is becoming much harder to ensure than it was in the previous century. The first factor that is required for efficiency to work and remain constant is predictability. For efficiency to successfully become a part of our daily lives, it is necessary that we ensure predictability. Businesses can only efficiently plan and manage all their resources if they know of the predictable and constant demand for these products. Additionally, besides the customer side of things and the demand factor, organizations also want to know about the raw materials that go into their products and how these raw materials will be provided to them. Not every organization today is satisfied with their raw materials procurement strategy and there is significant room for improvement here.
Businesses can only optimize their productions and manufacturing strategy to meet demand if they are sure of the constant delivery of goods and know that it can be trusted at all hours.
In the disruptive world environment and global structure of today, businesses aren’t able to solidify their selling strategy and effectively work on it. Demand patterns cannot be predicted and trade rifts mean that sourcing raw materials from other countries is always a tricky idea.
The recent COVID-19 pandemic and the global lockdown that was enforced as a result of it have highlighted the disruptive nature of the global market and the inability of the supply chain to match expectations and sudden demand spikes.
The demand for hand sanitizers, face masks and toilet paper was at a record high during the early onset of the COVID-19 pandemic. Such was the situation that shoppers would throng retail stores only to hoard as much of these items as they could. The sudden hoarding meant that retail stores ran out of goods to sell and there was a serious point in Australia and the United States where toilet paper ran short and manufacturers weren’t able to supply fresh batches.
Efficiency also requires one additional factor to fully succeed at helping businesses achieve their objectives – stability. The demand for goods and their prices will remain relatively stable for a number of years to come. Only when this information is guaranteed can organizations develop an efficient supply chain model without the hassles of infrequency and instability. However, since stability is not guaranteed anymore, organizations have to use other techniques and bear more costs to become more responsive. Efficiency is definitely good but that holds true only in markets that have stable demand and selling curves.
When comparing efficiency with responsiveness, we can clearly tell that responsiveness is better and more suited for the 21st Century. Responsiveness is what drives the economy forward and gives customers a chance to benefit from rapid deliveries whenever and wherever they require them.
The change in eras can also be identified through the nature and operations of the companies that stole the show light across both centuries – 20th and 21st. The big companies of the 20th Century were all efficient in their manufacturing processes and followed a model based on efficiency; the examples of GM, Ford, US Steel, Whirlpool and Kodak spring to mind here due to their ability to efficiently save costs. However, if we take a look at the big companies of today’s world or the major names in the 21st Century, most companies are known for their responsiveness and their ability to reach customers where and when they want.
Companies like Amazon, Alibaba, Apple, Google, Facebook, Tencent and Starbucks are all known for their responsive operations. While these 21st century companies do need to be efficient in their processes, they also realize that success in this rapidly changing world is better achieved through the use of responsive strategies.
The success of supply chains in the world today is hugely influenced by their ability to sense demand curves and adjust to them when they can. Low prices aren’t always the deciding factor today – as is the case with Apple. People want quality, experience and timely delivery among other factors, even if they have to pay more for the same product. Apple and Starbucks may not always have the cheapest smartphones and coffee, but they’ll be the preferred choice of masses as long as they provide quality over quantity and meet customer expectations.
Supply Chain Capabilities Businesses Should Develop
There are certain capabilities that supply chain operators in the modern economy should develop, regardless of the industry they operate in. Some of these desired capabilities include:
Capacity Planning:
Capacity Planning or CP is essential for determining the perfect utilization of resources in the supply chain and also plays a significant role in influencing decision making in the supply chain. Capacity planning is a technique in play today that measures and identifies the overall production capacity of an organization, and what can be done to improve or limit it.
Capacity Planning is utilized for more capital intense resources such as machinery, labor, plant and much more. The planning process helps organizations meet all future growth objectives and fluctuating demand standards, without sacrificing on quality. A supply chain that plans capacity succeeds in the long run and can achieve long-term goals.
Capacity planning is also used as an analytic to match manufacturing and procurement capacity to the sales demand you have predicted for the coming seasons. The capacity planning process includes strategies such as:
• A lag strategy where you add additional capacity to the system once your current plan isn’t able to meet demand.
• A lead strategy that refers to producing goods with regards to the anticipated demand and output.
• The match strategy which involves adjusting capacity to match the demand for the product and the incremental gains achieved as a result.
Inventory Management and Optimization
Inventory management and optimization, or IMO as it is known, is a top priority for investors and manufacturers today. The IMO process is driven by a set of values that are related to inventory investment and service level offerings. Inventory optimization is a process that is widely known to not only free-up some much needed working capital, but one that can also increase service levels through a cost-effective manner. The inventory optimization process can point out the stocks that are in excess quantity within the supply chain, and which part of the supply chain they exactly relate to. Businesses should look to free up storage and warehouse space to ensure that the business performs at its best at all times without the extra cost of working capital for holding inventory.
Demand Management
Demand management is a planning process that is excessively used to forecast, plan and manage the demand of the goods and services manufactured or sold by the business. The demand management process includes a defined list of processes, capabilities and behaviors for organizations that deal in all kinds of processes.
The outcomes achieved through the demand management process are a reflection of the programs and policies incorporated by the business to improve customer demand. These outcomes are also influenced by the competition available to users and the availability of products available to your own. Certain sale and marketing promotions will result in higher demand for a specific product.
Master Production Scheduling
Scheduling or master production scheduling is a supply chain process for arranging, optimizing and controlling workloads in a manufacturing or production process. Scheduling is used to allocate resources from the machine and plant, plan production processes and the purchase of materials, plan human resources and help with supply chain management in general.
The scheduling process is necessary for manufacturing and engineering, as it has a major impact here. Excellent scheduling can significantly improve the feasibility of a process and can help improve outcomes and shift them in your favor.
In the manufacturing process, the role and purpose of scheduling are to minimize production costs and time by guiding a production facility to the right schedule to make goods, to hire the right people and to use the right equipment. Production scheduling aims to reduce costs and maximize product efficiency.
Materials Replenishment Planning
While most material replenishment planning or MRP systems are based on software, it is possible by organizations to conduct the process by hand as well. Almost all supply chains today require materials to be buffered or stored properly. This implies that manufacturing and supply chain companies need effective material replenishment planning to manage stock and ensure that suppliers are managing replenishment in the best manner possible without any delays whatsoever.
This competency includes numerous steps and considers aspects related to the supplier and the product. The influence of all company’s motives and goals on the supply process is also assessed here to recognize if any backup is needed for future periods.
Most material replenishment plans use demand plans and curves to create a replenishment process that is driven by a demand-pull mechanism rather than a constant stream of goods, even when there is stock available to the firm. This prevents excess ordering when additional stock is already present within the supply chain.
Order Management
Knowledge and skills are both necessary to manage the scheduling and receipt of customer orders. An integrated order management system includes both these requirements and is usually based on these modules:
1. Product information including the description of the product, the attributes, the quantities required and the locations that will be identified for distribution
2. Inventory available to promise and the sourcing schedules to be followed
3. Customers and prospects
4. Marketing promotions and pricing
5. Vendors purchasing and receiving
6. Financial processing of payments
7. Order processing process
8. Order entry and customer service standards including the return and refund of goods
The true essence of supply chain management capabilities focuses on the fact that enhanced supply chain performance and waste reduction can only be achieved through higher integration and cooperation between both, internal and external supply chain processes. These goals usually include time compression, waste reduction, unit cost reduction and flexible response.
Waste reduction is achieved by harmonizing your operations, minimizing constant duplications and enhancing the quality of the end result. Time compression is usually focused on reducing the order-to-cycle time by accomplishing production and logistics in a shorter time period to save unimaginable costs.
True supply chain capabilities can only be unearthed by limiting costs and meeting the standards required by customers. A supply chain business looking to explore the horizons of supply chain management should begin with a thorough analysis of their current standing and an understanding of what is required to improve performance further. The steps mentioned in this article along with an understanding of the choice between efficiency and responsiveness will guide you forward.
Course Manual 7: Supply Chain Tech Innovations and Their Financial Side
Global supply chain operators today are plagued with the talk of exciting technologies in the field of supply chain. Everywhere you go there is a mention of just how rapidly the supply chain industry is transforming and the potential that lies in it for companies to expand and be part of something big. From the Internet of Things to drones, autonomous vehicles, augmented reality, virtual reality, robotics, intelligent analytics and artificial intelligence, there is great scope for growth within the supply chain today.
All of these aforementioned technologies apply to the supply chain and can be used to not only enhance the efficiency of the process, but to also transform the global responsiveness. The digital supply chain is truly in play and is part of the global sphere.
Supply chain management software is an integral tool used by supply chain businesses across the globe. The software comprises of multiple software applications that help manage and simplify processes from across the supply chain, including the planning, scheduling, controlling, execution and monitoring of key tasks. Typical supply chain management software is either used on its own, or is used as part of a broader suite of applications with innumerable benefits for the global reach of a supply chain.
The functionality of a supply chain software process varies on the basis of the objectives that businesses look to achieve through it. While some organizations focus more on information sharing and business intelligence to assist decision making, others are more inclined toward the bare minimum in inventory control, logistics management and other order fulfillments. Full-suite systems come with all the capabilities required for handling all aspects of a supply chain management process.
Some of the key supply chain management processes, assisted through software operations, include:
• Planning: Planning involves the creation of strategic plans to manage resources under a business’s control efficiently. The planning process is necessary to get your product or services to customers and to monitor supply chain efficiency in a prominent manner. This includes costs and delivery of goods and services.
• Developing: During this process, you choose suppliers for the raw materials you need for a product or service. It is here that you develop your delivery, payment and pricing process and build strong relationships with all suppliers and partners.
• Making: This process is linked to the manufacturing side of things and involves packaging, testing and the production of goods. The manufacturing processes streamline the product, so that it is ready to be delivered to customers in the order size they require. Monitoring is an important part of the mix here, as it ensures optimal results without any delays.
• Delivering: Delivery or the logistics stage deals with all steps from handling customer queries to growing the transport and distribution channel. This includes the handling of receipts and orders received from customers, setting up invoicing patterns and developing a network of carriers and warehouses.
• Returning: This is usually the final stage assisted through technology and involves the return of damaged goods from customers that aren’t satisfied with the quality of the work done.
Features and Benefits of a Tech Supply Chain Solution
Multiple types of supply chain management tools exist in the market today that come with their own features and applications. The most common features performed by supply chain management software include:
• Inventory Management: Supply chain tech solutions help with inventory management, as they track and manage the availability of raw materials for manufacturing. The inventory management solutions provided here can also come in handy with barcode integration, asset management and future price forecasting.
• Order Management: Software solutions can help with automating the order processing and management process. For instance, these solutions generate and track all purchase orders, schedule supplier deliveries and set the required pricing based on product configurations.
• Logistics and Shipment Monitoring: Coordination across transportation channels is necessary for businesses today, and supply chain software solutions can help with that. The enhanced monitoring standard can boost customer satisfaction and enhance delivery performance. Warehouse management is also included here.
• Forecasting: Forecasting demand, anticipating customers and planning all production and procurement processes accordingly is the need of the hour in future-oriented supply chains today. Efficient forecasting can limit the need to store excess goods or meet indefinite downtimes due to stock-outs.
• Return Management: Return management works for the inspection and handling of faulty or damaged goods, and can come in handy while processing insurance claims and refunds.
Advantages and Benefits of Supply Chain Management Software
Global businesses that rely on technology for their supply chain operations can benefit from software systems. A good supply chain management software solution can:
• Help control and reduce the costs associated with your global supply chain
• Alleviate the risks of supply chain inefficiencies such as logistical errors and late shipments
• Improve the delivery of goods to customers, and enable better customer service standards. Customer satisfaction is eventually enhanced, and customers feel more at ease
• Help with the decision-making and forecasting of resources
Supply chain software can also help a global supply chain by:
• Automating all major processes in the business, such as invoicing, order processing and shipment tracking. Businesses are able to save a lot of time and effort as a result of this automation and can reduce administrative costs as well.
• Identifying all excesses materials or processes without any sufficient use or need for them. Once these excess processes and materials are identified, businesses are able to indulge in possible cost-saving measures and improve their warehousing and manufacturing efforts.
• Improving the process of inventory management and ensuring a more effective and flawless demand planning process.
• Improving the responsiveness of a supply chain to unforeseen events and disruptions including staff absences, machine failures, urgent customer orders, missing goods and human error among many others.
• Providing a management reporting and analysis tool at your fingertips. The information sharing achieved as a result of a software solution can bring partners in a supply chain together and can cut down on whatever silos are present inside the supply chain.
• Providing visibility across the entire network. A software solution can enhance visibility between storage, suppliers, distribution centers and production plans. Everyone has a better understanding of where the business stands and can take corrective action to remedy processes that aren’t ideal.
• Support enhanced communication and collaboration between suppliers, partners and distributors inside the supply chain.
Reasons to Use Supply Chain Software Solution
Not every business is able to get the return on investment they require from their supply chain processes to justify the investment they’ve put into it. Most businesses are either too late or too early in adopting the software automation and end up suffering as a result of it. It is always necessary for businesses to consider the intricacies of their investment, and only invest in supply chain if it feels like an interesting business avenue.
Do You Need Supply Chain Software?
When determining the need for a software solution in supply chain, businesses should always:
• Map their supply chain: Mapping their supply chain would allow businesses the ability to identify all processes inside the supply chain and what makes the chain well oiled. Usually these separate processes are merged as one, but for the sake of a software solution, you should consider them separately.
• Measure how well each of your processes perform. There are multiple processes in a global supply chain, and once you have identified them, it is time for you to measure how well they perform. Sit down with your team and generate appropriate metrics from each process. Since the processes aren’t automated, you will probably face some delay in identifying the metrics that are involved and how you can measure them.
• Once you measure the performance of your own processes, you should compare it with the best practices in the market. This benchmarking can help you compare yourself to others in the market and identify where you stand.
• Work out all costs associated with your supply chain. A total of these supply chain costs including distribution, transport, inventory costs and warehousing can help your supply chain identify information relevant to efficiency.
Supply Chain Mapping
The supply chain mapping process is the most essential during this analysis, and should be carried out with a special consideration towards these processes:
• Planning: Planning is a long term process carried out over a long period of time. The planning process helps combine demand from all customers of the product with the resources currently available and forecasted to be available in the future to ensure that there are sufficient goods and resources available for the business to fulfill all requirements that might arise in the future.
• Execution: Execution processes are actually initiated through customer demand, or through forecasts in some cases. The execution process requires scheduled manufacturing, movement and fulfillment of products, components and materials.
• Enabling: Enabling processes act as enablers that prepare and manage information used in the planning and execution processes. Enabling processes include agreeing over common terminology, unified ways of expressing quantity and size and a lot more.
Mapping your supply chain isn’t just important for assessing the current requirements of your organization, but can also come in handy for:
• Being compliant as per most state laws
• Gaining greater visibility
• Avoiding possible disruptions
• And, monitoring potential threats
With an idea of the current innovation in the supply chain we now turn towards the financial side of incorporating technology within the supply chain and what it means for organizations today.
Financing Options for Supply Chain Innovation
Organizations today basically have two types of financing options or sources of finance available to them – internal sources and external sources of finance. The choice between these sources of finance is made based on a number of factors including:
• The scale of the innovation or new capability that is to be picked up
• The requirements for organizations today
• The rate of financing
• The internal finances available to organizations
Internal Sources of Finances
Internal sources of finance usually include the following options:
• Short term working capital and
• Long term fixed capital
We discuss each of these sources in the option below:
Retained Profits
Almost all organizations, regardless of the industry that they operate in, return some of their profits on a period basis. These retain profits are usually maintained in a separate capital account, and can be used to fund new innovations within the organization or can be used during times of emergency when the business is not performing as well and is unable to record a profit. Retained profits can develop into a sizable amount with the passage of time which can come in handy for organizations looking to expand their resources and improve their business standards.
Most organizations save up their retained profits with a future objective in mind. If you have been setting aside retained profit to invest in your supply chain later, then you can do so in innovative capabilities without a second thought. However, an opportunity cost arises if you’ve been setting aside retained profit for some other cause but are now lured by the possibility of new innovations in the supply chain.
Sale of Assets
Selling assets to generate new capabilities and open new avenues is another internal source of finance that most organizations follow at the time of selling an asset. This is again a somewhat desperate measure and should be sought as a last resort than the initial response to a situation.
Your assets play a pivotal role in your operational and production processes, which is why you should realize the impact caused by their absence, before deciding to proceed with the sale. Any hasty decision taken in the heat of the moment can cost you a lot here.
Reducing Working Capital
New supply chain capabilities that increase your operational costs can be met by reducing the working capital in general and by being more frugal in your other decisions. The ability to save daily costs elsewhere will help finance new capabilities in the supply chain. While this might be sufficient for short term projects or processes, it isn’t a sustainable model to follow in the long run.
External Sources of Finance
Almost all primary sources of finance or capital for a business come through external means. The very nature of capital is defined through its acquisition from external means and modes. External sources of finance include all financing acquired from outside of the business and for which the business itself was unable to provide sufficient resources.
External sources of finance which can come in handy for incorporating innovations within the supply chain model include:
Bank Funding
Bank funding or financing is the first source of external financing seen within organizations. Bank funding includes funds and finance taken from an external financial institute, most often a bank for meeting and finding an end to cash crunches.
Bank funding is also available for long term loans that are needed to signal future growth curves and are also required to spell major innovations in the supply chain. The funding you acquire from the bank should definitely exceed the cost of the new capability you are about to incorporate in your supply chain.
Equity Shares
While small business owners might not be able to benefit from this option straightaway, equity shares are a good way to generate finance for investing in new supply chain capabilities. A share is exactly what the name suggests. It is a provision of participation in a company from external investors who benefit from dividends in return for their investment.
Ordinary Shares
Ordinary shareholders get a dividend based on the prosperity and success of the company. The dividends paid to ordinary shareholders will be generally high if the profits are higher. Similarly if the company does not make a profit during a period, the share prices will also dip and the ordinary shareholders will get no dividend from the company. Companies can get some much needed finance through this method, while selling a specific amount of shares in the open market.
Preference Shares
Preference shares are sold to investors that take little risk and require constant payments in return for the investments they make. The return should be in line with the percentage fixed with the preference shareholders at the time of selling the shares. These shares rank lower on the risk profile, hence charge less than others.
Debentures
Debentures come under long term loans or source of finance obtained by issuing a debenture. These come with a fixed rate and aren’t tied to the profit of the organization; neither does the organization have to hand over some control over to the lending party.
Debenture holders however do maintain some right over the business, as they can sell off assets if the interest payments to them aren’t made in time. This long-term line of credit can either be beneficial or messy based on the approach a business considers to adopt.
The sources of finance and your ultimate choice from them will differ based on the capability you are willing to pick up and the current situation of your supply chain. With ever increasing and the rapid pace at which it is being adapted, organizations are in a race against time to be more proficient in their dealings and add more automation to their supply chain, even if it comes at the cost of external finance.
Course Manual 8: Risks and Threats of Supply Chain Innovation
Technology today plays an integral role in the failure or success of global supply chains over the world. Computerized machines have become monumental across all facets of SCM and have replaced manual tools to make processes easier. CAD is replacing the elongated process of manual drafting, and computers and software operations are being used to manage all operational glitches.
Suppliers, businesses and other stakeholders have realized that the only way to escape the relentless pressure of price changes is through a broader implementation of technology. Information technology has become one of the many keys to success in supply chain. The internet alone is changing the way we communicate with each other, market products, create a selling strategy and generate revenue.
The addition of technology to SCM processes can help companies distinguish their presence from that of their competitors. From our reasoning in the previous chapter, we do understand that organizations employing technology are more efficient and responsive than others that don’t.
Every business, regardless of its size and structure, goes through a number of challenges when implementing technology across the board. With the changing technological sphere in the world of SCM, there is a constant pressure on organizations to keep up with a dynamic market. However, the implementation of new technology in either of the core processes does not come without its own set of challenges. While the competitive advantage of being technologically advanced does motivate businesses, there is also the challenge of implementation that you need to first surpass.
Supply chain integration can be a challenge to undertake for most manufacturers today. Knowing some of the common challenges faced by other organizations and working on the integration process can help you handle things in a smoother and more professional manner.
Some of the challenges that most businesses face during global supply chain tech integration include:
Compatibility Issues with Legacy Systems
Fewer sectors are as excited about the prospects of enterprise technology as supply chain. The industry has long been berated for its inconsistency and lack of development, and technology now offers an avenue for it to escape this criticism. Most managers end up making the dreaded mistake of replacing all systems with new ones. They then start the implementation process from there onwards. As we have mentioned earlier, the process of implementing technology in your global supply chain process is a journey rather than a destination. You can’t view it as an overnight change, since it is a gradual process of updates.
As a result of the slow and gradual nature of the process, business managers should try to boost their current systems. The digital revolution of today is all about tapping into external resources or solutions and augmenting your existing IT infrastructure with the resources and solutions you find elsewhere. This saves your internal team from a complete revamp and gives them an opportunity to focus on more strategic initiatives, while a third party can look after the challenges of migrating toward technology.
Wrong Process or Practice
Organizations need to get their homework done before they initiate the implementation process in the supply chain. Prior to the start of the implementation process, it is critical for companies to initiate and conduct research toward the right processes and methods. The new technology should be supported with the right processes.
A successful way to approach the technology revamp is to talk with other businesses that have successfully applied the technology within their supply chains. Many supply chain providers have incorporated relevant operation management systems in their organizations and will be willing to tell you all about the processes you should and shouldn’t follow.
Failure to Secure Support from Top Management
This is by far one of the most common problems faced by global supply chains today when they look to incorporate supply chain technology into their processes. Since supply chain processes have a serious impact on the objectives and finances of an organization, it is necessary for businesses to acquire sponsorship and leadership from the top management.
C-level executives from the top management can run the value-chain, sponsor projects, drive enterprise-wide accountability, achieve cross-departmental and cross-functional commitment and also allocate proper resources to insure the successful implementation of technology. One tried and trusted solution here is to create an executive steering committee than ensures the perfect allocation of resources and ensures that all obstacles in the path to proper implementation are removed.
Limited or No Cross-Functional Representation
Organizations should deploy a broad team empowered enough to make planning and implementation decisions on their own. The presence of all teams on board will ensure successful supply chain deployment and routine improvements over time. This team should comprise of the ultimate stakeholders that use the new technology and the secondary users that will benefit through the flow and information processing. It is also necessary for the implementation team to have IT representation, so that the technical aspects of system integration can be addressed. Collaboration is necessary, which is why the inbound and outbound movement of data should be guaranteed.
Inaccurate Information
Timely data and accurate information are responsible for the success of almost all supply chains. Supply chains succeed due to their ability to provide accurate information across the board for members to benefit and learn from. Many of the initial benefits that come with supply chain technology automation will be neutered through the presence of inaccurate and untimely data on your systems. Hence, before you integrate a new software process into your supply chain, you should ensure that the data related to that application is clean and structured in all possible ways.
Ensuring a Broader Scope
While long-term integration is the objective that many deployment teams have in mind, they shouldn’t look to implement and integrate everything at once. The Pareto principle for 80-20 implementation should be followed. Start by focusing on the core needs of the process and then implementing the strategy you’ve prepared.
Integrating technology in the supply chain comes with its own challenges, but with proper collaboration with all stakeholders and an accurate assessment of their needs, organizations can do what’s best for them.
Aligning Processes with Technology
Organizations need to view their digital transformation as a journey rather than a destination. Many organizations see the adoption of technology as a destination that will boost their productivity and standards without any additional effort from them. Adopting new technology is no easy feat, and you’re best served thinking of it as an arduous journey that will continue until all stakeholders and processes have been aligned together with the technology.
Adopting new technology requires a strong vision and leadership skills. Leaders should be strong willed and should set accurate goals for the rest of the organization to follow. The technology you implement in your supply chain processes would require a human touch, which is why it is necessary to hone the skills of your support staff accordingly as well.
New technologies should be incorporated to your current business processes in a manner that limits disruptions of all kinds and keeps them to a minimum. The focused implementation of technology can prove to be more effective and result oriented than just approaching the subject matter without any due background contemplation. Also remember to communicate the benefits of new technology to your team members and other stakeholders, so that they are just as excited about the prospects as you are.
Minimizing Security Risks
The implementation of technology brings a set of risks with itself. These risks tend to be debilitating and while we do look at them in greater detail within this course, it is pertinent to mention the challenges businesses face in minimizing them.
Regardless of whether a global supply chain decides to continue with legacy systems or incorporate a whole new set of processes and systems, it is necessary for the business to take calculated decisions and minimize security errors. For instance, a business shouldn’t hastily implement a cloud storage service to process information without thinking about critical factors such as data encryption and access control. All of these errors can prove to be criminal acts of negligence in the long run.
Cyber security should always be a priority for organizations with a global supply chain. With a footprint expanding across the globe, the last thing the firm wants is a cyber attack.
The implementation of technology in the global supply chain is no easy feat. An important tip you can follow here is to view the change as a journey rather than a destination.
Course Manual 9: Global Supply Chain Dynamics
Shrinking product life cycles, fickle consumers and continually changing product and services characteristics mean that the global supply chain market is continuously changing around us and showing no signs of stopping any time soon.
The needs and buying methods of modern consumers are changing for the better and manufacturers are struggling against time and the dynamics of the global supply chain to catch up with the trends, let alone get ahead of them. Furthermore, all signs around us suggest that the era that we are currently stuck in is that of permanent volatility and disruptions. This isn’t good for any global supply chain operator, as the supply chain requires a stable environment to operate in. Anything volatile can not only disrupt the efficiency of the supply chain but also create a number of other problems in the organization.
In fact, over 70 percent of all executives that participated in a recent survey by Accenture expressed their concern over the inability of current models to predict future trends and how the organization will perform through. Over 80 percent of all supply chain experts are worried about the overall resilience of the supply chain, and how it will change in the face of market challenges and relentless pressure.
Strengths are Now Weaknesses
Most of the supply chain strategies we follow currently were generated with the notion of stability and a general lack of volatility in the market. The supply chain processes and plans that gathered traction in the 20th century did so on the basis of their ability to plan, procure and deliver goods on a just-in-time or JIT basis. The concept of lean operations and inventory was pinned on the very notion of stability, with the perceived impression that organizations will continue with the same uninterrupted schedule without hindrances.
However, the changing global environment means that global supply chain players cannot maintain the consistency they require. Change of plans is required to not only set goals, but to also build a strategy customized to the changing dynamics of today.
The very strengths and efficiencies that supply chains developed in the previous years are now their weaknesses. Supply chains and the executives managing them hence face a unique conundrum to not only understand the global supply chain risk, but to also ensure supply chain resilience and efficiency through them; all things that we study in detail within this chapter.
Types of Supply Chain Risks:
Let us first take a look at some of the common supply chain risks:
Financial Risks
These risks are directly related to finance and can range from an unfavorable or unexpected jump or fall in exchange rates to a supplier’s bankruptcy. Some examples that can help you understand financial risks include:
• Budget overruns in the company
• Limitations in budget
• Constructive changes in the financial structure
• Additional funding to finance missed milestones
All of these risks are linked to finance and encompass a sudden cost overrun that you might otherwise have not predicted. Financial risks also require changes in the scope of work at times to successful complete activities.
Scope Risk
Scope risk, also known as scope of schedule risk, is a direct result of a poorly worded statement of work. This is a primary risk that threatens the timeline and structure of a supply chain and can also inflict major cost implications. Schedule changes come with financial repercussions as well, as businesses have to come up with a strategy to ensure that the changes required are implemented. These changes are often the result of natural disasters such as floods, fires or even hurricanes. They can also the results of noncompliance generated through a supplier’s negligence. Scope risk is basically seen when organizations have to change the initial statement of work or SOW to accommodate changes to the previous document. This happens when the previous SOW is no more workable.
Legal Risks
Legal and contractual risks are interconnected with the supply chain since disputes related to different contractual obligations are quite common. These risks arise when the terms and conditions mentioned in a specific contract aren’t met.
The use of misuse of intellectual property is also considered as a legal risk according to many theorists and can land companies in hot water. This is especially true when patent infringement is on the cards. Violations of laws and civil lawsuits can also be included within this category.
Environmental Risk
With the world turning green, organizations have to think about their corporate social responsibility and come up with a strategy that can help them evaluate risks to the environment by their contractor or supplier. These environmental risks usually include the impact on soil, water, air and other sources of nature through different forms of waste, including emissions and discharges.
Project Organization Risk
Every successful project is the culmination of the right people, machine and material. The lack of any of these three resources can put manufacturers and the entire supply chain into dispute. Project organization risks occur when the resources required for the manufacturing process haven’t been truly organized and lack direction. These risks are generally the result of not having the right equipment, the right material and the right machinery at the right place for manufacturing to continue flawlessly.
Human Behavior Risk
Human behavior risks can be the most difficult to predict, assess and manage. Sometimes, a key individual can fall sick or get injured just when you need a push in production. This risk can disrupt the entire supply chain process and have long lasting repercussions, beyond what you had initially planned.
Socio-political Risk
A global supply chain has suppliers, contractors and distributors spread all over the world. Since the sociopolitical sphere of almost every country is different than the other, there are always bound to be sociopolitical risk hindering the smooth flow of the supply chain and stopping you from sourcing products from your suppliers.
Change in governments, terror attacks, national lockdowns and instability are just some of the risks that supply chains can face here. Stability comes at a price, and if you’re dealing in low-cost countries, you will have to bear the risks that come involved here.
External and Internal Risks
Risks in the supply chain market are broken down into either internal or external risks. Internal risks are related to happenings within your own organization, whereas external risks are related to conditions outside of your organization. We look through both these risks in greater detail within this chapter.
Internal Driven Supply Chain Risks
Internal driven supply chain risks are easier to tackle and handle because of how they originate from within your premises. Internal risks come under the direct supervision of managers and require prompt action to ensure that risk mitigation is finalized in a proper manner.
Internal risks include:
• Manufacturing Risks: Manufacturing risks are caused by basic disruptions to the internal processes and operations in your organization. These risks basically include unplanned stops and disruptions in the manufacturing process. Manufacturing is a key part of every product’s supply chain, and proper supply can best be ensured through the flawless production of goods without a stop. Once manufacturing stops, the entire supply chain is bound to come to a halt as well.
• Business Risks: Business risks are risks caused due to the change in key management personnel, business processes, reporting structures and other business coordination methods. Once things are streamlined in a supply chain process, it is necessary that they continue in the given order. Every disruption or change in the order of things will be greeted with a certain amount of downtime and lack in efficiency.
• Planning and Control Risks: Planning and control risks are caused by an inadequate standard of planning and assessment inside an organization. These risks are also initiated by the change in management or key business processes. Once these key business processes are changed, the planning and control standards previously in place all go to waste. Ineffective management can lead to a drop in efficiency across the board.
• Cultural Risks: Cultural risks are a result of the culture in place within an organization. Most organizations have a toxic culture to hide and delay negative information that can impact workflow processes. Such businesses are never able to build resilience and are slow to react when they are impacted by unexpected delays and events. Cultural risks can only be averted through a shakeup of the entire management system.
• Mitigation and Contingency Risks: These risks are caused due to a lack of contingency or mitigation planning. As we have studied earlier in this chapter, businesses can achieve a competitive advantage through their resilience.
External Driven Supply Chain Risks
External risks are related to conditions outside of your organization. These risks are influenced by upstream or downstream events in the supply chain.
• Demand Risks: Demand risks are caused due to unpredictable fluctuations in end-customer demand. These can lead to unpredictability and wastages.
• Supply Risks: Supply risks are caused by undue expectations in the delivery of materials. From raw materials to parts, delays in supply can lead to delays in the entire supply chain model.
• Environmental Risks: Environmental risks come from outside the supply chain and are usually related to the social, governmental, climate and economic factors in your country. These risks also include the threat of terrorism and can negatively impact the procurement and delivery of products. These are beyond your control and cannot be managed.
• Business Risks: There are external business risks as well such as the instability at a supplier’s firm. Suppliers with an unstable business structure or unable to continue an uninterrupted flow of goods, which can often lead to irreversible problems in the supply chain. The sale and purchase of supplier companies can also negatively hinder the chain.
• Physical Plan Risks: Physical plant risks usually relate to risks at the supplier’s physical facility. Lack of regulatory compliance or lack of proper measures at their plant can lead to disruptions within your supply chain.
The understanding of internal and external risks is important for running a competitive analysis of your supply chain for better risk assessment.
Smart Strategies to Build Supply Chain Resilience
Many C-level executives today have cited risk management as one of the biggest challenges facing supply chain and procurement teams. Businesses are exposed to supply chain risks in ways more than one, and only a resilient supply chain can survive and prosper. Based on the consistent pace at which risks around us have evolved and become even more complicated, it is even more necessary for organizations to build a resistant logistics method.
Some strategies to build supply chain resistance in the world today include:
Know the Risks of Each Supplier
Every supplier brings with them a certain set of risks. These risks often deal with the geographical distance between the customer and supplier, the lack of communication or any other related cause. Knowing the presence of risk in supplier relationships, organizations should understand what risks come up with all suppliers. They should also comprehend the significance of supplier risks, and the likelihood or chances of offsetting them. When organizations and global supply chains of today understand the common risks associated with global suppliers, they can take proactive measures to not only mitigate the damage, but to also make a stitch in time and save themselves from future predicaments.
Supply chain managers should drop the ‘tick-box’ mentality and go for a progressive and mature approach towards selecting suppliers. Your supplier should be capable of managing threats and counterproductive events. They should have multiple streams or passages for getting your raw materials to you.
Talk to Suppliers
There is no way for suppliers to get a hold of your expectations without a proper communication channel. Set clear expectations from the very outset and encourage proper dialogue and communication with your suppliers. The presence of a communication channel can help build mutual confidence and trust within suppliers while minimizing the chances of any surprises.
Also, communicate your concerns to suppliers, where and when you detect a certain risk. Consult them on what can be done to improve the situation without giving the impression that you’re looking for means to bait out of the deal. Suppliers often hide certain risks in a bid to keep a contract. Give suppliers the confidence they need and work with them for the betterment of the deal.
Study the Long-Term
Supply chain planning and strategies have to be focused on the long-term. Reactive responses, inappropriate short term cash flow strategies and just-in-time procurement methods combine to form an increasingly short-sighted plan of progress. These short-term incentives do add a shiny layer of efficiency but they also open organizations up to a heightened threat of risks. You can flip this around by reviewing geo-political and global threats and also asking suppliers to deliver a transparent model. Keep reviewing possible threats in the supply chain and improve them for all parties involved.
Learn and Adapt to Evolve
Projects go wrong, technologies can backfire, disruptions can lead to downtime. But through all this, a resilient supply chain should continue to flow and evolve. Rome wasn’t built in a day and similarly your resilient supply chain will take some time to shape up. However, you can start the process towards that by implementing an attitude of learning, adapting and evolving.
Start by creating a knowledge base of best practices and benchmarks followed by others. Implement these changes across the organization and look at what can be done to drive the chances of future success.
Adopt Emerging Technologies
Organizations can also improve their supply chain resilience by adopting futuristic technologies with solutions for disruptions of the future. A remote supply chain collaboration model between all stakeholders, including customers, wasn’t implemented by many global supply chains. The implications of the COVID-19 pandemic have found all such organizations wanting and have clearly displayed the efficacy and preparedness of organizations with a remote model.
The use of tech solutions can enable businesses to survive during tough times without disrupting their business reserves. It also helps organizations become more competent in their global supply chain strategy and influence the highest standards of coordination and communication across the board. With the disruptive growth in technology and the ever changing trends around us, it only makes sense for supply chain operators to catch up and implement tech standards that not only match but exceed the standards of their competitors.
Course Manual 10: Measuring Progress in the Supply Chain
Progress management is usually defined as a measure to quantify the effectiveness and efficiency of operations in the supply chain. Most organizations tend to measure their supply chain based on measures such as innovation, learning, quality, market share, human resources and, most importantly, customer satisfaction.
Supply chain analysis or performance measurement techniques serve as a quantification of how well the supply chain is currently performing and the measures that businesses can take to improve this performance over time.
Supply Chain Analytics to Help Improve Competitive Advantage
Most organizations today use some form of supply chain software to manage logistics and procurement in the supply chain. But when it comes to planning, many still use spreadsheets and don’t utilize analytics that can actually give them the competitive advantage they are looking for.
To give you an idea of the concept, Ventana Research recently conducted a study on supply chain planning issues. The study found that:
• 58% of organizations had difficulty managing supply chain processes
• Only 47% had accurate supply chain plans
• 53% had no ability to evaluate trade-offs
• Spreadsheets were reinforcing functional silos
• Collaboration becomes difficult due to lack of proper processes and technology
From these stats, it is evident that relying on models such as spreadsheets for planning can significantly hinder the ability of your organization to compete in the market.
There are a number of different supply chain analytics that help give you an idea of business intelligence and performance stats that can predict what the future will look like. Advanced analytics help you predict future trends with surprising accuracy. These analytics also help pit you against other competitors in the market and give you an idea of where you actually stand. In this section we explore some supply chain analytics and help you understand how to use them to evaluate competitive advantage.
Capacity Planning
Capacity planning is an analytic that allows you to match manufacturing and procurement capacity to the sales demand you have predicted for the coming seasons. The capacity planning process includes strategies such as:
• A lag strategy where you add additional capacity to the system once your current plan isn’t able to meet demand.
• A lead strategy that refers to producing goods with regards to the anticipated demand and output.
• The match strategy, which involves adjusting capacity to match the demand for the product and the incremental gains achieved as a result.
Each of these strategies has its own merits, but organizations should be able to choose one based on their situation. The answer to which one is the best lies in your understanding of competitors, your market as a whole, and the factors affecting demand.
Simulation and Scenario Analysis
The simulation and scenario analysis is one of the most crucial analytics when devising strategies for business scenarios. The Royal Dutch Shell company practiced simulation and scenario analysis and has since shaped their future in the right direction.
While not many companies can afford the high costs of the multidisciplinary approach that Shell follows, prescriptive analytics can give you the same results as required.
Optimization based scenario planning can be put through multiple simulations to understand the preparedness of a supply chain with regards to multiple scenarios and the kind of impact they might have.
Advanced S&OP
Advanced S&OP is a next generation sales and operation planning analytic that uses finances as well. The analytics technique looks at the financial bottom line to discuss multiple sales scenarios and look at the most profitable production output. A prescriptive analytics model is used to here to bridge the gap between sales and production departments. This form of modeling and analytics replaces the cumbersome process of manual S&OP.
Optimization
Optimization refers to the use of prescriptive methods to determine the optimal solution to different problems faced by the business. For example, it is complex for organizations to determine the perfect inventory strategy for a company involved in retailing through omni-channels.
Inventory optimization can save the day for organizations following an omni-channel strategy. The first step is to use the prescriptive analytics model and accurately predict the organization’s demand. Once the model is infinitely validated, the next step is to find the optimal inventory strategy and ensure that it perfectly factors in for the effects of external factors.
Demand Shaping
Demand shaping is an analytics strategy where retailers and manufacturers apply methods to change the demand for their products, rather than just meet existing demand levels. A sales promotion or marketing strategy can be used to increase demand and sales. However, companies face a problem here as they aren’t usually prepared to manufacture and procure for promotions and discounted offers. As a result, they eventually encounter lost sales and suffer from stock outs.
Demand shaping allows organizations to set demand through their own understanding and also plan for the shift in demand through appropriate planning measures.
Steps for Completing a Supply Chain Analysis
Businesses in the contemporary world are always looking for strategies and ideas to help their businesses grow and move forward. One of the best ways to do so is by examining your processes from time to time and analyzing the strategic flaws, if any, that are found in them.
As part of these analytics, businesses should also strategize and analyze their supply chain processes and understand where it stands.
The supply chain, as we have already read earlier, is an important part of the business environment today and organizations have no option but to strengthen it for success. In order to ensure maximum productivity, profits and operational success, the workings of the supply chain must be analyzed from time to time and all rusty links should be removed.
The question remains on how to perform a supply chain analysis, which we simplify in the steps below:
Step One: Map Your Supply Chain
Mapping a supply chain is a good way to identify the weak links in your supply chain and take steps to prevent them from showing up. A supply chain map would allow the supply chain manager to identify all resources in the supply chain including the people, information, resources and all other activities involved in the supply chain.
This simple map can be designed in the form of a flowchart, which helps provide a full overview of the company’s supply chain, and shows the flow of materials and products. The communication between different links of the chain can be improved to ensure optimal understanding of objectives and to minimize the chances of failure.
Step Two: Analyze Your Market
Your supply chain isn’t the only one operating in your market or industry, which is why there are bound to be a number of other competitors and organizations you can look at or take inspiration from. By looking at the market you will be able to tell just how well your suppliers and processes are priced.
Also, you can compare the results of your SCOR and BSC processes above with those of your competitors in the market to determine how you compare to others.
Step Three: Determine Inefficiencies
The entire purpose of an analysis is to find inefficiencies in your supply chain and cut them out. Once you have mapped your supply chain, you should take the steps required to identify inefficiencies. If you identify through benchmarking that your competitors get better rates for raw materials from local producers, then it will be beneficial for you to deal with these suppliers rather than have the goods shipped in from somewhere globally.
Can any of your products reach customers faster? Is there are a more cost-effective and frugal technique to save money on supplied raw materials? Can you lower your shipping costs? Answers to these questions will help guide you forward.
Also, take a stringent look at your logistics and delivery network and identify areas where you can up your game. The supply chain analysis process will identify the presence of inefficiencies in the system. What you need to do now is take the right steps forward and minimize these efficiencies.
Step 4: Adapt
As soon as you find inefficiencies and implement solutions to improvise and overcome the situation, the next best thing is to adapt. Adapt to the changes in your supply chain and ensure that you aren’t letting the complexities of change throw you off your end goal. Consumer demand trends change on a whim, and you should be ready to anticipate these changes if you want to keep making profits.
Step 5: Repeat
A supply chain analysis is not a one-time process that you manage and forget. Instead, it is a continuous process that should be managed and repeated from time to time for effective results. Global supply chains today sit right in the eye of the storm and are disrupted by all volatile geographical and political happenings.
Managers need to take charge of the analysis process and ensure that all corners are covered. An analysis can succeed if there is enough focus on future growth potential and on reducing inefficiencies that plague the organization currently.
Supply chain progress management is a continued effort towards analyzing and improving the efficiency of the supply chain. The process involves multiple steps as outlined above and makes the chain more competitive in a global setup.
Organizations today have taken a more competitive approach towards performance management as it is believed to be the way forward in this disruptive and volatile structure of today. Regular techniques to measure progress can help determine the route to success and unearth possible strategies for the future. A supply chain that is regularly oiled and driven by processes that are taken care of regularly will evolve and perform well over time in comparison to others without any definite measures in place.
Course Manual 11: Applying the Theory of Constraints to Supply Chain
Supply chain collaboration between independent business units and firms is the way forward for most organizations today. Not only does this technique ensure better supply chain competitive advantage in the future, but it also gives organizations a chance to spruce out any errors involved in the process and come up with a proper mitigation strategy. However, a lack of awareness about the existence of constraints within the supply chain can minimize the full potential of the venture and can make it turn into a failure rather than a success.
Understanding the Theory of Constraints
According to theorist and novelist Dr. Eliyahu Goldratt, every real system or process has at least one or more constraints that stop the activity from achieving higher output levels and better performance overall.
The presence of constrains in the supply chain can limit the performance of the chain and can stop it from achieving the success that it is bound to achieve.
Typical examples included in the theory of constraints include:
• Machine capacity
• Sales saturation
• Limited demand
• Raw materials shortage
These are all problems related to the supply chain, and while Goldratt eventually proposed the theory for operations management, it holds true for the supply chain as well. In each case outlined above, the constraint in question directly limits the output of the entire process and pushes it backward. To overcome the problems faced by these constraints, Goldratt processed and recommended a Theory of Constraints, which was based on five steps:
• Identify the limiting constraint
• Exploit the constraint with existing resources
• Subordinate and align all associated activities
• Alleviate the constraint by putting in additional resources and equipment
• Repeat this same process to identify other constraints
A System-Wide Approach
One of the key principles of TOC is that the process considered the entire system, and does not look at just one process in its individuality. Looking at the entire system in detail can help identify the real constraint without delay.
Any improvement made in the system or in the supply chain process other than the constraint will waste resources and eventually make the supply chain results worse than what they are currently.
Dr. Goldratt felt so strongly about this that he is specifically quoted to have said, “Any improvements made anywhere besides the bottleneck are an illusion.” For instance, in a healthcare facility operating in the healthcare sector, the problem of reduced quality of care in the emergency department cannot be solved by adding more beds to the facility. Additionally, adding a sales executive to your company’s sales team will not solve the problem if there just aren’t enough people willing to buy the product you’re selling to them.
Identify Unique Constraints
One of the core principles highlighted within the theory of constraints is that there aren’t hundreds of constraints within one system to affect output. In fact, there are only a few constraints that affect output in systems at any given point in time. The trick to solving problems within the system or the supply chain is to identify that particular constraint and come up with a strategy to solve it. While this is apparent in a product line, it is another complex task for supply chain managers. The complexity of the identification process is why organizations today use a number of metrics to identify constraints within processes.
Organizations and managers also need to realize that upgrading or changing one aspect of the system is bound to impact the whole process. An adjustment to one aspect will impact the whole system, leading to a number of conflicts and issues.
Six Step Implementation for Theory of Constraints in the Supply Chain
There are six steps that organizations today can follow to implement the theory of constraints in their organization and to get the best results possible out of it.
Step 1
The first step in the process is to identify a goal that is both measurable and achievable. The goal you identify is typically known as throughput in operational terms. In simpler words, the goal should be measured on the basis of the amount of products manufactured, sold and delivered to your customers during a period. The goal should be a concrete objective that not only drives the profitability of the business forward, but also helps achieve the success standards required within the organization. Once the goal is set, everyone can be brought on board with it.
Step 2
The second step in the process is to identify a bottleneck in the process of the supply chain. The bottleneck is usually the guilty constraint that limits the potential of the production process and holds it backward. The constraint identified here can be internal or it can be external. Internal cases of constraints in the organization include flaws or shortcomings within the firm’s manufacturing process while external cases include the constraints put from competitors or some other market force at play.
Step 3
The third step that businesses should follow here is to exploit the bottleneck and ensure that the bottleneck is being put to use and is allowed to be profitable for the organization. If the bottleneck is a delivery method that carries two products – one which is very profitable and another less profitable product – the organization should transport more of the profitable product and focus less on the other less profitable one. The TOC comes into play here and rationalizes the entire process.
Step 4
The fourth step in the TOC implementation process is to subordinate all factors within the operation of the bottleneck identified earlier. This basically means optimizing the process of manufacturing and matching it to the pace of your constraint or bottleneck. If you have three machines within your operation facility where one cranks 20 products per hour, the second cranks 15 products per hour, and the third one cranks out only 10 per hour, then you should ideally set the pace of the other two machines at 10 products per hour as well. This will reduce the presence of excess inventory and cut down costs in the long run.
Step 5
The fifth step now, after identifying the bottleneck and subordinating it is to increase the capacity of the identified bottleneck. Carrying the example from the previous step forward, if one machine only produces 10 products per hour, you should look to increase its output rate and step up the pace. You can evaluate a number of options here and pick one that sounds the most feasible to you. Basically, you have identified your bottleneck or constraint and are now sifting through options to see which one can best solve this conundrum.
Step 6
The sixth and final step in the TOC process is to start the process all over again with the next identified bottleneck. There is always one factor within the supply chain that is limiting the potential of the entire process. Once you clear away the previous bottleneck in the process, another one is bound to pop up as the new bottleneck. Organizations looking for an efficient sustainability model should look to run the entire process time and time again to cut down these errors and entirely eliminate the bottlenecks from the supply chain.
Thinking Process for Theory of Constraints
The theory of constraints also comes with a 5-step thinking process that should be followed when identifying and approaching the bottleneck. The thought process is extremely important and is necessary for opening new doors.
Here are the five steps:
Firstly, all employees within your organization must come to an agreement on what the problem is. They must all agree over the problem at hand and reach a consensus on what they believe is the bottleneck.
Secondly, the people agree must come to a consensus on the sort of solution they feel is required. This could be something as simple as increasing the output of a machine in the production process or something that involves an investment.
The third step is to get everyone on board regarding the suitability of the solution to bring the required results. The solution should solve the bottleneck and clear the constraint.
The fourth step is to look beyond the negative ramifications of the process and see the positives it carries.
The last is to carefully study and overcome all hindrances present in this process. The implementation of the solution should be hindrance free and smooth.
Benefits of Theory of Constraints
Goldratt’s theory of constraints comes with a number of benefits for supply chains and manufacturing businesses today. The theory takes the diagnostic and analytical structure of the supply chain into consideration and lays down a step-by-step procedure that is simple for the organization to implement. The bottleneck constraints and the problems that the theory of constraint can find a solution to in the organization are just amazing.
Also, the theory of constraints allows managers within a workplace to focus on the different constraints within their processes. This is a way to not only focus attention on a single aspect of the supply chain process, but to also ensure positive results over the board. Focusing on one aspect can signal benefits across the board as the process gives a clear solution to the problem facing the supply chain.
Also, an organization that implements and adopts the theory of constraints and regularly finds out constraints will eventually be building a culture of process improvement. This process hence wards of complacency and allows the momentum to carry on without any delays. The business can eventually get better results and become more productive and profitable over time.
Course Manual 12: Unearthing New Supply Chain Capabilities
When managers work to improve a supply chain and unearth new capabilities, they realize that key drivers of the supply chain influence performance and help businesses choose between efficiency and responsiveness or, better yet, get the best of both worlds.
Once businesses and their managers understand the key drivers of change, they realize that true supply chain potential is only unearthed through an understanding between a responsive or efficient approach. Both these approaches might sound the same but are in fact different sides of a coin.
Choosing Between Efficiency and Responsiveness for New Capabilities
Efficiency drove economic growth in the 20th century. The push for efficiency and cost effectiveness not only lowered the prices of products, but also meant that organizations were able to innovate and bring in new ideas to the mix without having to worry about repercussions. The prices of products from home appliances to automobiles significantly reduced and organizations were also able to innovate further and give new offerings to spoiled customers. In light of this, efficiency was the norm in the 20th century and there were many organizations that prided themselves based on their ability to lower costs and achieve efficiency in their dealings.
However, for efficiency to succeed in the modern economy, it needs two imperative factors to remain constant and ever-present. The continuous presence of these two factors is becoming much harder to ensure than it was in the previous century.
The first factor that required for efficiency to work and remain constant is predictability. For efficiency to successfully become a part of our daily lives, it is necessary that we ensure predictability. Businesses can only efficiently plan and manage all their resources if they know of the predictable and constant demand for these products. Additionally, besides the customer side of things and the demand factor, organizations also want to know about the raw materials that go into their products and how these raw materials will be provided to them. Not every organization today is satisfied with their raw materials procurement strategy and there is significant room for improvement here.
Businesses can only optimize their productions and manufacturing strategy to meet demand if they are sure of the constant delivery of goods and know that it can be trusted at all hours.
In the disruptive world environment and global structure of today, businesses aren’t able to solidify their selling strategy and effectively work on it. Demand patterns cannot be predicted and trade rifts mean that sourcing raw materials from other countries is always a tricky idea.
The recent COVID-19 pandemic and the global lockdown have highlighted the disruptive nature of the global market and the inability of the supply chain to match expectations and sudden demand spikes.
The demand for hand sanitizers, face masks and toilet paper was at a record high during the early onset of the COVID-19 pandemic. Such was the situation that shoppers would throng retail stores only to hoard as much of these items as they could. The sudden hoarding meant that retail stores ran out of goods to sell and there was a serious point in Australia and the United States where toilet paper ran short and manufacturers weren’t able to supply fresh batches.
Efficiency also requires one additional factor to fully succeed at helping businesses achieve their objectives – stability. The demand for goods and their prices will remain relatively stable for a number of years to come. Only when this information is guaranteed can organizations develop an efficient supply chain model without the hassles of infrequency and instability. However, since stability is not guaranteed anymore, organizations have to use other techniques and bear more costs to become more responsive. Efficiency is definitely good but that holds true only in markets that have stable demand and selling curves.
When comparing efficiency with responsiveness, we can clearly tell that responsiveness is better and more suited for the 21st Century. Responsiveness is what drives the economy forward and gives customers a chance to benefit from rapid deliveries whenever and wherever they require them.
The change in eras can also be identified through the nature and operations of the companies that stole the show light across both centuries – 20th and 21st. The big companies of the 20th Century were all efficient in their manufacturing processes and followed a model based on efficiency; the examples of GM, Ford, US Steel, Whirlpool and Kodak spring to mind here due to their ability to efficiently save costs. However, if we take a look at the big companies of today’s world or the major names in the 21st Century, most companies are known for their responsiveness and their ability to reach customers where and when they want.
Companies like Amazon, Alibaba, Apple, Google, Facebook, Tencent and Starbucks are all known for their responsive operations. While these 21st century companies do need to be efficient in their processes, they also realize that success in this rapidly changing world is better achieved through the use of responsive strategies.
The success of supply chains in the world today is hugely influenced by their ability to sense demand curves and adjust to them when they can. Low prices aren’t always the deciding factor today – as is the case with Apple. People want quality, experience and timely delivery among other factors, even if they have to pay more for the same product. Apple and Starbucks may not always have the cheapest smartphones and coffees, but they’ll be the preferred choice of masses as long as they provide quality over quantity and meet customer expectations.
Supply Chain Capabilities Businesses Should Develop
There are certain capabilities that supply chain operators in the modern economy should develop, regardless of the industry they operate in. Some of these desired capabilities include:
Demand Management
Demand management is a planning process that is excessively used to forecast, plan and manage the demand of the goods and services manufactured or sold by the business. The demand management process includes a defined list of processes, capabilities and behaviors for organizations that deal in all kinds of processes.
The outcomes achieved through the demand management process are a reflection of the programs and policies incorporated by the business to improve customer demand. These outcomes are also influenced by the competition available to users and the availability of products available to your own. Certain sale and marketing promotions will result in higher demand for a specific product.
Order Management
Knowledge and skills are both necessary to manage the scheduling and receipt of customer orders. An integrated order management system includes both these requirements and is usually based on these modules:
1. Product information, including the description of the product, the attributes, the quantities required and the locations that will be identified for distribution
2. Inventory available to promise and the sourcing schedules to be followed
3. Customers and prospects
4. Marketing promotions and pricing
5. Vendors purchasing and receiving
6. Financial processing of payments
7. Order processing process
8. Order entry and customer service standards, including the return and refund of goods
The true essence of supply chain management capabilities focuses on the fact that enhanced supply chain performance and waste reduction can only be achieved through higher integration and cooperation between both internal and external supply chain processes. These goals usually include time compression, waste reduction, unit cost reduction and flexible response.
Waste reduction is achieved by harmonizing your operations, minimizing constant duplications and enhancing the quality of the end result. Time compression is usually focused on reducing the order-to-cycle time by accomplishing production and logistics in a shorter time period to save unimaginable costs.
True supply chain capabilities can only be unearthed by limiting costs and meeting the standards required by customers. A supply chain business looking to explore the horizons of supply chain management should begin with a thorough analysis of their current standing and an understanding of what is required to improve performance further. The steps mentioned in this article along with an understanding of the choice between efficiency and responsiveness will guide you forward.
Capacity Planning:
Capacity Planning or CP is essential for determining the perfect utilization of resources in the supply chain and also plays a significant role in influencing decision making in the supply chain. Capacity planning is a technique in play today that measures and identifies the overall production capacity of an organization, and what can be done to improve or limit it.
Capacity Planning is utilized for more capital intense resources such as machinery, labor, plant and much more. The planning process helps organizations meet all future growth objectives and fluctuating demand standards, without sacrificing on quality. A supply chain that plans capacity succeeds in the long run and can achieve long-term goals.
Capacity planning is also used as an analytic to match manufacturing and procurement capacity to the sales demand you have predicted for the coming seasons. The capacity planning process includes strategies such as:
• A lag strategy where you add additional capacity to the system once your current plan isn’t able to meet demand.
• A lead strategy that refers to producing goods with regards to the anticipated demand and output.
• The match strategy, which involves adjusting capacity to match the demand for the product and the incremental gains achieved as a result.
Inventory Management and Optimization
Inventory management and optimization, or IMO, is a top priority for investors and manufacturers today. The IMO process is driven by a set of values that are related to inventory investment and service level offerings. Inventory optimization is a process that is widely known to not only free-up some much needed working capital, but one that can also increase service levels through a cost-effective manner.
The inventory optimization process can point out the stocks that are in excess quantity within the supply chain, and which part of the supply chain they exactly relate to. Businesses should look to free up storage and warehouse space to ensure that the business performs at its best at all times without the extra cost of working capital for holding inventory.
Master Production Scheduling
Scheduling or master production scheduling is a supply chain process for arranging, optimizing and controlling workloads in a manufacturing or production process. Scheduling is used to allocate resources from the machine and plant, plan production processes and the purchase of materials, plan human resources and help with supply chain management in general.
The scheduling process is necessary for manufacturing and engineering, as it has a major impact here. Excellent scheduling can significantly improve the feasibility of a process and can help improve outcomes and shift them in your favor.
In the manufacturing process, the role and purpose of scheduling are to minimize production costs and time by guiding a production facility to the right schedule to make goods, t hire the right people and use the right equipment. Production scheduling aims to reduce costs and maximize product efficiency.
Materials Replenishment Planning
While most material replenishment planning or MRP systems are based on software, it is possible by organizations to conduct the process by hand as well. Almost all supply chains today require materials to be buffered or stored properly. This implies that manufacturing and supply chain companies need effective material replenishment planning to manage stock and ensure that suppliers are managing replenishment in the best manner possible without any delays whatsoever.
This competency includes numerous steps and considers aspects related to the supplier and the product. The influence of all the company’s motives and goals on the supply process is also assessed here to recognize if any backup is needed for future periods.
Most material replenishment plans use demand plans and curves to create a replenishment process that is driven by a demand-pull mechanism rather than a constant stream of goods, even when there is stock available to the firm. This prevents excess ordering when additional stock is already present within the supply chain.
With these new capabilities and advancing structures, all supply chains today can cement their position at a global scale. The global supply chain market might be disruptive and volatile, but there is good payback for new capabilities and supply chains that are able to unearth and implement them.
Workshop Exercises
New Capabilities Exercises
01. The Need for Supply Chain Innovation and Optimization: Explain in your own words how this process will directly impact upon your department?
02. Supply Chain Competitive Analysis: Explain in your own words how this process will directly impact upon your department?
03. Internal Analysis to Understand Supply Chain Deficiencies: Explain in your own words how this process will directly impact upon your department?
04. Internal Evaluation Measures: Explain in your own words how this process will directly impact upon your department?
05. Forming a Cross Functional Team to Analyze Supply Chain Capabilities: Explain in your own words how this process will directly impact upon your department?
06. Understanding Supply Chain Capabilities and Their Impact: Explain in your own words how this process will directly impact upon your department?
07. The Financial Side of Innovation in Supply Chain: Explain in your own words how this process will directly impact upon your department?
08. Global Supply Chain Dynamics: Explain in your own words how this process will directly impact upon your department?
09. Risks and Threats of Supply Chain Innovation: Explain in your own words how this process will directly impact upon your department?
10. Applying the Theory of Constraints to Supply Chain: Explain in your own words how this process will directly impact upon your department?
11. Measuring Progress in Supply Chain: Explain in your own words how this process will directly impact upon your department?
12. Unearthing New Supply Chain Capabilities: Explain in your own words how this process will directly impact upon your department?
SWOT & MOST Analysis Exercises
01. Undertake a detailed SWOT Analysis in order to identify your department’s internal strengths and weaknesses and external opportunities and threats in relation to each of the 12 New Capabilities processes featured above. Undertake this task together with your department’s stakeholders in order to encourage collaborative evaluation.
02. Develop a detailed MOST Analysis in order to establish your department’s: Mission; Objectives; Strategies and Tasks in relation to New Capabilities. Undertake this task together with all of your department’s stakeholders in order to encourage collaborative evaluation.
Project Studies
Project Study (Part 1) – Customer Service
The Head of this Department is to provide a detailed report relating to the Global Supply Chain Development process that has been implemented within their department, together with all key stakeholders, as a result of conducting this workshop, incorporating process: planning; development; implementation; management; and review. Your process should feature the following 12 parts:
01. The Need for Supply Chain Innovation and Optimization
02. Supply Chain Competitive Analysis
03. Internal Analysis to Understand Supply Chain Deficiencies
04. Internal Evaluation Measures
05. Forming a Cross Functional Team to Analyze Supply Chain Capabilities
06. Understanding Supply Chain Capabilities and Their Impact
07. The Financial Side of Innovation in Supply Chain
08. Global Supply Chain Dynamics
09. Risks and Threats of Supply Chain Innovation
10. Applying the Theory of Constraints to Supply Chain
11. Measuring Progress in Supply Chain
12. Unearthing New Supply Chain Capabilities
Please include the results of the initial evaluation and assessment.
Project Study (Part 2) – E-Business
The Head of this Department is to provide a detailed report relating to the Global Supply Chain Development process that has been implemented within their department, together with all key stakeholders, as a result of conducting this workshop, incorporating process: planning; development; implementation; management; and review. Your process should feature the following 12 parts:
01. The Need for Supply Chain Innovation and Optimization
02. Supply Chain Competitive Analysis
03. Internal Analysis to Understand Supply Chain Deficiencies
04. Internal Evaluation Measures
05. Forming a Cross Functional Team to Analyze Supply Chain Capabilities
06. Understanding Supply Chain Capabilities and Their Impact
07. The Financial Side of Innovation in Supply Chain
08. Global Supply Chain Dynamics
09. Risks and Threats of Supply Chain Innovation
10. Applying the Theory of Constraints to Supply Chain
11. Measuring Progress in Supply Chain
12. Unearthing New Supply Chain Capabilities
Please include the results of the initial evaluation and assessment.
Project Study (Part 3) – Finance
The Head of this Department is to provide a detailed report relating to the Global Supply Chain Development process that has been implemented within their department, together with all key stakeholders, as a result of conducting this workshop, incorporating process: planning; development; implementation; management; and review. Your process should feature the following 12 parts:
01. The Need for Supply Chain Innovation and Optimization
02. Supply Chain Competitive Analysis
03. Internal Analysis to Understand Supply Chain Deficiencies
04. Internal Evaluation Measures
05. Forming a Cross Functional Team to Analyze Supply Chain Capabilities
06. Understanding Supply Chain Capabilities and Their Impact
07. The Financial Side of Innovation in Supply Chain
08. Global Supply Chain Dynamics
09. Risks and Threats of Supply Chain Innovation
10. Applying the Theory of Constraints to Supply Chain
11. Measuring Progress in Supply Chain
12. Unearthing New Supply Chain Capabilities
Please include the results of the initial evaluation and assessment.
Project Study (Part 4) – Globalization
The Head of this Department is to provide a detailed report relating to the Global Supply Chain Development process that has been implemented within their department, together with all key stakeholders, as a result of conducting this workshop, incorporating process: planning; development; implementation; management; and review. Your process should feature the following 12 parts:
01. The Need for Supply Chain Innovation and Optimization
02. Supply Chain Competitive Analysis
03. Internal Analysis to Understand Supply Chain Deficiencies
04. Internal Evaluation Measures
05. Forming a Cross Functional Team to Analyze Supply Chain Capabilities
06. Understanding Supply Chain Capabilities and Their Impact
07. The Financial Side of Innovation in Supply Chain
08. Global Supply Chain Dynamics
09. Risks and Threats of Supply Chain Innovation
10. Applying the Theory of Constraints to Supply Chain
11. Measuring Progress in Supply Chain
12. Unearthing New Supply Chain Capabilities
Please include the results of the initial evaluation and assessment.
Project Study (Part 5) – Human Resources
The Head of this Department is to provide a detailed report relating to the Global Supply Chain Development process that has been implemented within their department, together with all key stakeholders, as a result of conducting this workshop, incorporating process: planning; development; implementation; management; and review. Your process should feature the following 12 parts:
01. The Need for Supply Chain Innovation and Optimization
02. Supply Chain Competitive Analysis
03. Internal Analysis to Understand Supply Chain Deficiencies
04. Internal Evaluation Measures
05. Forming a Cross Functional Team to Analyze Supply Chain Capabilities
06. Understanding Supply Chain Capabilities and Their Impact
07. The Financial Side of Innovation in Supply Chain
08. Global Supply Chain Dynamics
09. Risks and Threats of Supply Chain Innovation
10. Applying the Theory of Constraints to Supply Chain
11. Measuring Progress in Supply Chain
12. Unearthing New Supply Chain Capabilities
Please include the results of the initial evaluation and assessment.
Project Study (Part 6) – Information Technology
The Head of this Department is to provide a detailed report relating to the Global Supply Chain Development process that has been implemented within their department, together with all key stakeholders, as a result of conducting this workshop, incorporating process: planning; development; implementation; management; and review. Your process should feature the following 12 parts:
01. The Need for Supply Chain Innovation and Optimization
02. Supply Chain Competitive Analysis
03. Internal Analysis to Understand Supply Chain Deficiencies
04. Internal Evaluation Measures
05. Forming a Cross Functional Team to Analyze Supply Chain Capabilities
06. Understanding Supply Chain Capabilities and Their Impact
07. The Financial Side of Innovation in Supply Chain
08. Global Supply Chain Dynamics
09. Risks and Threats of Supply Chain Innovation
10. Applying the Theory of Constraints to Supply Chain
11. Measuring Progress in Supply Chain
12. Unearthing New Supply Chain Capabilities
Please include the results of the initial evaluation and assessment.
Project Study (Part 7) – Legal
The Head of this Department is to provide a detailed report relating to the Global Supply Chain Development process that has been implemented within their department, together with all key stakeholders, as a result of conducting this workshop, incorporating process: planning; development; implementation; management; and review. Your process should feature the following 12 parts:
01. The Need for Supply Chain Innovation and Optimization
02. Supply Chain Competitive Analysis
03. Internal Analysis to Understand Supply Chain Deficiencies
04. Internal Evaluation Measures
05. Forming a Cross Functional Team to Analyze Supply Chain Capabilities
06. Understanding Supply Chain Capabilities and Their Impact
07. The Financial Side of Innovation in Supply Chain
08. Global Supply Chain Dynamics
09. Risks and Threats of Supply Chain Innovation
10. Applying the Theory of Constraints to Supply Chain
11. Measuring Progress in Supply Chain
12. Unearthing New Supply Chain Capabilities
Please include the results of the initial evaluation and assessment.
Project Study (Part 8) – Management
The Head of this Department is to provide a detailed report relating to the Global Supply Chain Development process that has been implemented within their department, together with all key stakeholders, as a result of conducting this workshop, incorporating process: planning; development; implementation; management; and review. Your process should feature the following 12 parts:
01. The Need for Supply Chain Innovation and Optimization
02. Supply Chain Competitive Analysis
03. Internal Analysis to Understand Supply Chain Deficiencies
04. Internal Evaluation Measures
05. Forming a Cross Functional Team to Analyze Supply Chain Capabilities
06. Understanding Supply Chain Capabilities and Their Impact
07. The Financial Side of Innovation in Supply Chain
08. Global Supply Chain Dynamics
09. Risks and Threats of Supply Chain Innovation
10. Applying the Theory of Constraints to Supply Chain
11. Measuring Progress in Supply Chain
12. Unearthing New Supply Chain Capabilities
Please include the results of the initial evaluation and assessment.
Project Study (Part 9) – Marketing
The Head of this Department is to provide a detailed report relating to the Global Supply Chain Development process that has been implemented within their department, together with all key stakeholders, as a result of conducting this workshop, incorporating process: planning; development; implementation; management; and review. Your process should feature the following 12 parts:
01. The Need for Supply Chain Innovation and Optimization
02. Supply Chain Competitive Analysis
03. Internal Analysis to Understand Supply Chain Deficiencies
04. Internal Evaluation Measures
05. Forming a Cross Functional Team to Analyze Supply Chain Capabilities
06. Understanding Supply Chain Capabilities and Their Impact
07. The Financial Side of Innovation in Supply Chain
08. Global Supply Chain Dynamics
09. Risks and Threats of Supply Chain Innovation
10. Applying the Theory of Constraints to Supply Chain
11. Measuring Progress in Supply Chain
12. Unearthing New Supply Chain Capabilities
Please include the results of the initial evaluation and assessment.
Project Study (Part 10) – Production
The Head of this Department is to provide a detailed report relating to the Global Supply Chain Development process that has been implemented within their department, together with all key stakeholders, as a result of conducting this workshop, incorporating process: planning; development; implementation; management; and review. Your process should feature the following 12 parts:
01. The Need for Supply Chain Innovation and Optimization
02. Supply Chain Competitive Analysis
03. Internal Analysis to Understand Supply Chain Deficiencies
04. Internal Evaluation Measures
05. Forming a Cross Functional Team to Analyze Supply Chain Capabilities
06. Understanding Supply Chain Capabilities and Their Impact
07. The Financial Side of Innovation in Supply Chain
08. Global Supply Chain Dynamics
09. Risks and Threats of Supply Chain Innovation
10. Applying the Theory of Constraints to Supply Chain
11. Measuring Progress in Supply Chain
12. Unearthing New Supply Chain Capabilities
Please include the results of the initial evaluation and assessment.
Project Study (Part 11) – Logistics
The Head of this Department is to provide a detailed report relating to the Global Supply Chain Development process that has been implemented within their department, together with all key stakeholders, as a result of conducting this workshop, incorporating process: planning; development; implementation; management; and review. Your process should feature the following 12 parts:
01. The Need for Supply Chain Innovation and Optimization
02. Supply Chain Competitive Analysis
03. Internal Analysis to Understand Supply Chain Deficiencies
04. Internal Evaluation Measures
05. Forming a Cross Functional Team to Analyze Supply Chain Capabilities
06. Understanding Supply Chain Capabilities and Their Impact
07. The Financial Side of Innovation in Supply Chain
08. Global Supply Chain Dynamics
09. Risks and Threats of Supply Chain Innovation
10. Applying the Theory of Constraints to Supply Chain
11. Measuring Progress in Supply Chain
12. Unearthing New Supply Chain Capabilities
Please include the results of the initial evaluation and assessment.
Project Study (Part 12) – Education
The Head of this Department is to provide a detailed report relating to the Global Supply Chain Development process that has been implemented within their department, together with all key stakeholders, as a result of conducting this workshop, incorporating process: planning; development; implementation; management; and review. Your process should feature the following 12 parts:
01. The Need for Supply Chain Innovation and Optimization
02. Supply Chain Competitive Analysis
03. Internal Analysis to Understand Supply Chain Deficiencies
04. Internal Evaluation Measures
05. Forming a Cross Functional Team to Analyze Supply Chain Capabilities
06. Understanding Supply Chain Capabilities and Their Impact
07. The Financial Side of Innovation in Supply Chain
08. Global Supply Chain Dynamics
09. Risks and Threats of Supply Chain Innovation
10. Applying the Theory of Constraints to Supply Chain
11. Measuring Progress in Supply Chain
12. Unearthing New Supply Chain Capabilities
Please include the results of the initial evaluation and assessment.
Program Benefits
Management
- Performance Improvement
- Productivity Improvement
- Stakeholder Management
- Globalization Process
- Decentralized Approach
- International Engagement
- Strategic Alliances
- International Distribution
- Lean Management
- Project Management
Production
- Process Improvement
- Improved Options
- Logistics Management
- Procurement Excellence
- Supply-Chain Globalization
- Outsourcing Optimization
- Insourcing Optimization
- Lean Process
- Productivity Improvement
- Distribution Enhancement
Globalization
- Business Partnering
- Global Process
- Mergers Acquisitions
- Cost Reduction
- Product Improvement
- Quality Management
- Process Decentralization
- Supply-Chain Globalization
- Return On Investment
- Competitive Improvement
Client Telephone Conference (CTC)
If you have any questions or if you would like to arrange a Client Telephone Conference (CTC) to discuss this particular Unique Consulting Service Proposition (UCSP) in more detail, please CLICK HERE.