Let’s start with what supply chain is NOT. And this might surprise you.
Supply chain is not purchasing, not demand planning, not supply planning, not logistics and not cost reductions.
The simplest way to explain a supply chain is this: how stuff gets from there to here.
Your business’s supply chain is like its circulatory system. Supply chain is the management of all facets of the business from all suppliers to the customer.
Supply chain is a centre led approach for collaboration and partnership.
But the supply chain of any extended enterprise has become an increasingly complex ecosystem of people, processes, and technologies.
It’s important to get back to basics and see not only what supply chain management really is but find out the five best ways to optimise it.
1) Assess the Maturity of your Supply Chain
How robust and mature is your supply chain? Or another way to put this is how resilient is it? To assess your supply chain’s maturity, you need to examine your processes and find out how many are manual and how many are automated.
How integrated are your systems? Ask yourself if your supply chain is reactive – which is at the bottom of the maturity rating – or is it dynamic? Being dynamic represents a much more mature supply chain.
Another good way of assessing your supply chain’s maturity is to ask yourself if cost is the primary discussion point. Moving forward with your supply chain’s maturity means your discussion point needs to start changing to the cost of ownership and looking at value as a primary mechanism.
2) Optimise Your Supply Chain
Once you have assessed your supply chain, it’s time to understand how to optimise it.
And it’s important to understand the complex nature of the extended supply chain. You need to segment the extended supply chain not on cost/spend but instead focus on relationship.
Supply chain has been transformed in recent years. It was once exclusively comprised of internal systems. But now most supply chains have greatly expanded due to the proliferation computer networks and internet tools and technologies over the past 10 years.
These innovations have opened the door for true collaboration between partners, distributors and suppliers that now extends well beyond the four physical and virtual walls of any business.
An optimised supply chain needs to stay lean, manage costs and perhaps most critically, respond instantaneously to even minor fluctuations in demand.
3) Relationships are Based on Partnerships
Not all relationships are created equally! And it’s very important to remember that when it comes to supply chain. The eternal dilemma is how to find the balance.
Many manufacturers have been forced to evolve or perish when it comes to optimising processes or navigating the new tools and best practices for supply chain management.
It’s vital that you eliminate nonvalue adding suppliers. Ask yourself do you have a performance partner or a preferred supplier? How competitive are they?
Ultimately all suppliers and partnerships need to align to your business strategy.
Quite often there is a challenge or a tradeoff that affects increasingly complex, competitive and transparent supply chains.
Always remember – during the execution of your supply chain, look very carefully and maintain your relationships and investments in your critical resources – infrastructure, assets and technology.
4) Maintain your Relationships
You want to become a destination of choice. You want to be a business that customers queue up to partner with and you want suppliers to clamour to become partners.
So how do you achieve and maintain this? It’s vital that you choose suppliers that align with your values. A lot of companies are so driven by cost, they never take the time to ensure they have shared values.
Paying promptly is hugely important. It’s the foundation stone of building trust. And no relationship can survive unless there is trust on both sides.
Remember, all relationships are a two-way street, so you need to understand your suppliers’ needs and be a great customer.
5) Create the Culture of Continually Improving.
What is your journey to always getting better? This is the most important supply chain question that you should never stop asking.
You’ve done the huge groundwork in supply chain maturity assessment, researching and finding the relationships and partnerships that support growth and maintaining those relationships.
Now ask yourself how a supplier feels and thinks about you? What do they take home? How do they speak about you to other people? Would they refer you to colleagues? And how can you improve this?
Communication will support every single one of these five ways of optimising supply chain management. Strong and regular communication is essential.
Keep your partners regularly informed and up to date on your strategy and your plans. This will allow them to immediately see where they fit in and how they can help. But it will also mean they’re planning and benefitting from your plans. This is what true partnership is all about.
