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.

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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

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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 rol