Improve Supply Chain Performance by pulling 10 Amazing Right Levers
Improving supply chain performance is not an option but a necessity today . Organizations have realized it fully now during Covid 19 pandemic. Supply chains have come out a major pain point for many organizations and impacted business results. Robust and resilient supply chains have been the key differentiating factor in delivering superior business and supply chain performance.
Organizations face multiple challenges in operating efficient supply chains and top among them is ensuring product availability for the consumer. Today supply chains being global and highly complex, often it takes quite a while to understand the real issue and resolve it thereby leading to loss of customer base and sales loss.
Sharing the 10 Right Levers for improved understanding of supply chain and pulling them to take the required actions in shortest possible time to improve supply chain performance.
#1. Right Strategy :
Supply Chain strategy need to be in place to deliver value to the consumer while keeping in mind the objectives of service, quality, cost and people. It defines the framework for entire supply chain function to operate while keeping in sight the organization objectives. Defining right strategy is instrumental to guide supply chain function in the right direction and allow functions to collaborate with end goal in mind.
#2. Right Customer :
Are the customers passionate for growth. Customers who do not have mindset to expand the business will always be a struggle.
Choose customers who follow win-win approach, aligned to the business principles, scalable and consider themselves an integral part of value chain and committed to improve supply chain performance. Customers with right mindset can play an instrumental role in driving business growth.
#3. Right Demand :
Right demand is the starting point to build and efficient supply chain. Capture the demand accurately and closer to the consumer. If demand variation is large, one will end up having high stock for low selling and low stock for high selling SKUs.
Right demand is an important factor in forecasting New Product volumes as forecast is not accurate and improving supply chain performance. It is better to keep initial Finished Goods inventory at optimal level and plan resources to scale up in short time basis increase in demand.
Is right inventory at the right place or absence of knowledge of scientific methods of inventory management leading to general norms.
Calculate cycle stock and safety stock basis the demand and supply variability. Have seen product availability improving by 60% with change to correct and scientific inventory norms
Key question to answer is that is inventory strategy derived by fear of product stockout or additional cost of excess inventory. Right answer to this question is to understand business strategy and basis business requirement derive the inventory strategy to improve supply chain performance
A pharmaceutical company may choose to stock high product covers as medicine stock out will risk patient lives whereas food company may go for low stock cover to deliver fresh product. Both the approaches in their own way will improve supply chain performance
Inventory can be reduced in the following ways :
a. A Class items: Sort materials in descending order by value. Pick the top 10 items and track and monitor them daily.
b. Review : Review is the key. More you review more insights one will get on how inventory is behaving. Is it more or less? Is this much really required.
c. Human Element: Providing a secure environment to planners and having a strong risk mitigation plan for stock outs will work wonders and provide courage and safety net to people to reduce inventory
d. Inventory norms: Accurate inventory norms will decide the inventory level. It is not a one-time job. So, don’t forget to review and correct them on quarterly basis to reflect current reality
e. Reduce order quantities: Take up with your suppliers to reduce Minimum Order Quantity. Lower the lot size, lower will be the inventory.
Inventory strategy is key component of Business strategy and needs to be flexible considering the business requirement and external environment. Inventory Management is one of the key component to drive overall supply chain performance and distribution performance.
Is the distribution model right to serve the customers. Are DCs at optimal locations to balance among service, cost and inventory. Are warehousing processes, systems and space robust to service customer orders on timely basis.
Is transportation reliable from supplier to factory, factory to distribution centers and DCs to customers. Transportation reliability can be impacted by vehicle detentions, no return loads and demand supply gap for specific routes.
Develop business partners who rate you highly, provide you mindshare and build reliability in supply chain. Warehouse is evolving as very important entity to deliver excellent service to its customers . Nowadays organizations are realizing that it can be also be major bottleneck to achieve customer satisfaction and looking for external experts to solve their problems.
As scale and complexity increase in product volumes, organizations face challenge in ensuring right warehouse process and stock accuracy to timely service customer orders.
4 best ways to improve warehouse customer service provide a brief understanding of Warehouse processes to identify the bottlenecks and resolve them.
a. Accurate counting of Inbound goods: Cases are unloaded and moved to staging area. No of cases per pallet and Pallet numbers are counted to arrive at total stock received.
b. Goods Receipt in System: Unloading sheet and documents are checked by system operator for receiving goods in system. Stock details in the system, mentioned in documents and physically received are matched
c. Accurate Put away: Goods are moved to racks as per defined put away strategy It is ensured that stock in system is physically available in the same bin location.
d. Accurate Picking and loading to improve warehouse customer service:
Stocks are picked from designated location and moved to staging area. Stocks are counted in staging area and loaded in the truck.
These steps are the fundamentals for ensuring smooth warehouse operations and improving supply chain customer service and productivity and many organizations struggle to ensure the same as scale and complexity increases.
Distribution network plays a very important role in servicing to the customers right quantity at right time and at right cost. An efficient distribution network can reduce the cost of reach significantly and enable business to reach more consumers driving revenue and profitable growth
#6. Right Capacity:
If still short on supply then look for manufacturing output. Is capacity utilization high on machine and men. An incremental change by putting additional machine or adding a crew can significantly increase capacity.
Extra capacity provides flexibility to quickly respond to changes in demand. Use line balancing methods and reduce changeover times to improve line capacities in short term. Insufficient capacity can have big detrimental effect on supply chain performance
#7. Right Material:
If capacity is sufficient, are there enough materials to produce the product or raw material and packaging material is not available as per production plans. Set the right inventory norms for inbound materials. If material is seasonal commodity, build in advance to lower the total cost of ownership. Share long term forecast with the suppliers so that they can do capacity mapping exercise and secure materials from their suppliers to improve end to end supply chain performance.
#8. Right Supplier :
Does supplier has the capability to provide quality material and service and capacity to service the requirement.
It also includes 3rd party service providers. Share long term forecast with suppliers to secure supplies and reduce lead times. Choose the right mix of suppliers basis geographical location to avoid supply continuity issues and improve supply chain performance. have you chosen suppliers who prioritize you over other customers ?
Last but not the least is the plan to mitigate risks leading to supply chain disruptions.
There are events like GST and Eway bill implementation, international regulation, government policies, transportation and port strikes, environment and sustainability, Information systems outage and Covid-19 pandemic outbreak and business lockdown,
We have gone through a Supply Chain lockdown and local and global supply chains are severely impacted and disrupted.
Having gone through such multiple events like transportation strike, farmers strike, external agitations and recent Covid-19 lockdown, sharing the insights on surviving the supply chain lockdowns and keep supply chains operational to meet the business and consumers requirement.
a. Clear Direction: There is little scope for ambiguity as execution has to happen at a very fast pace. Everybody should know their contribution to make things happen.
b. Resolve bottleneck in Supply Chain : There will be multiple bottlenecks at the same time. Identify the bottleneck which is having the most immediate impact. Resolve it and then move to the next one.
Strong supply chain understanding is essential to identify and keep track of changing bottlenecks.
c. Create new rules : There will be situations where existing rules will not apply. Think innovative and create roundabout solutions serving the same purpose.
d. Identify Opportunity in Crisis: Everyone becomes very supportive in crisis. There is no need to explain what is being done and why is it being done. People go beyond the limits to help out each other.
e. Motivate People: One of the initial challenges is that people are apprehensive and themselves not clear what to do. There is dip in morale and attendance starts dwindling.
Leader has to demonstrate courage and act the way he expects team to respond. People safety to be given top priority and no compromise to be accepted in any case. No one is immune to these changes but proper preparation, agility and business continuity plans in place can mitigate the risks significantly.
#10. Right People :
Right people is one of the most important aspects to deliver superior supply chain performance.
Capable people with strong functional knowledge, action oriented, willing to get involved on the shop floor to know the facts, ever ready to make improvements and simplifying the supply chain deliver strong competitive advantage to build next level of supply chain and improving supply chain performance.
Building an engaged team and keeping them motivated is essential role of a supply chain leader to improve supply chain performance.
These 10 Amazing Right levers for Improving Supply Chain performance management is a wonderful start to understand the bottleneck areas and identify and take actions for improvement
Proactive and Robust supply chains will always find a way to circumvent the unique challenges and come out as a winner in improving overall supply chain performance