How to build Robust Supply Chain : 50 Essential building blocks
A robust supply chain is essential to build a healthy business. It takes care of managing all the important supply chain aspects from strategy, planning, sourcing, logistics, people and external business partners. It is also more resilient to handle disruptions and deliver competitive advantage to come out as a winner to contribute towards the business growth
Sharing 50 essential blocks to build a robust supply chain :
#1. Supply chain Vision
Formulating supply chain vision is essential describing what supply chain intends to achieve and how it goes about achieving the same. It is a forward-looking statement outlining the future direction of supply chain function
#2. Supply chain Strategy
Strategy to be in place to set the direction of robust supply chain function in the organization It is derived from business strategy to meet organization goals
#3. Supply chain Objectives
Define supply chain objectives of safety, quality, delivery, cost and sustainability
#4. Supply chain KPIs
Quantify Objectives in terms of measures and Key Performance indicators. Examples of Supply chain KPIs are Case fill rates, Inventory, Distribution cost, Vehicle turnaround time and Quality in distribution
#5. Ensure Safety
Ensure people and equipment safety across end to end supply chain from suppliers to customers.
Create and develop safety culture of regular feedback, daily checklists for machines and equipment inspection and safety mindset of anticipating risks and eliminating them to build robust supply chain function
#6. Ensure Quality in supply chain
Ensure product quality and safety in the entire supply chain. Take the required steps to monitor product quality at each node of supply chain and store and transport goods in the right way to avoid any damages
#7. Efficient Process for robust supply chain
Define key supply chain processes- Demand to Supply Management, Customer Service Management, supplier management, Integrated business planning and new product development and launch. Understand end to end flow to build efficiencies in the supply chain process
#8. Financial Supply chain
Have full understanding of Financial impact of supply chain on business results. In depth relation of supply chain actions on profit and loss account and balance sheet items to be well understood and internalized
#9. Cost management
Costs which are managed and controlled by SCM function are covered under supply chain costs. Key supply chain costs are material cost, warehousing cost, transportation cost, inventory cost, obsolescence cost and people cost. Effective cost control and management is essential to build robust supply chain.
Plan activities in a way that right product is available in the right quantity and at right time for the customers and consumers. Also read 5 supply chain tips to deliver fresh products to consumers
#11. Product network mapping
Map and plan products to respective production units to service the demand and reduce overall cost
#12. Event Management
Plan and Deliver New product launch activities with timelines along with all cross functional stakeholders. Identify bottlenecks and resolve them to meet the targeted timelines
#13. Inventory Management :
Set inventory norms and review inventory on regular basis. Manage overall inventory targets, clear blocked stocks and report overall inventory
#14. Capacity planning
Map SKU wise demand on all the capacity resources to work out capacity utilization. Initiate require actions to resolve short term and long-term capacity constraints
#15. Demand planning
Forecast demand basis historical data and specific inputs. Align and build consensus of sales, marketing and supply chain organization on one demand plan.
#16. Supply planning
Generate supply or production plan basis demand plan, inventory norms and scheduled arrivals. Resolve supply related bottlenecks and issues along with cross functional stakeholders to build robust supply chain
#17. Dispatch Planning
Plan and execute dispatches basis the demand plan and inventory norms from factory warehouse. Ensure Finished good stock availability at distribution centres. Plan truckloads with right SKU weight and volume mix to maximize the vehicle fill rates
#18. Production planning
Plan day level production basis dispatch requirement, production capacity, labour and material availability. Identify constraints and challenges in meeting production plan as per market requirement and resolve them
#19. Material planning
Material management process includes sharing purchase order with the suppliers mentioning quantity and delivery date and ensuring material availability for production. Resolve operational and quality issues which may impact availability
#20. Integrated Business planning
Guide and own entire Integrated business planning process from portfolio review, demand review, supply review, financial review to management review. Assess the quality of all the processes and take continuous actions for improvement to build robust supply chain
Sourcing is Procurement of Raw materials and Packaging Materials which are directly used in production of Finished goods. Key activities include Market assessment, Supplier selection, Pricing negotiation, contract management and supplier management
#22. Contract management
Define contract and agreement with suppliers to define working protocols and cover risks to build robust supply chain
#23. Alternate vendor development
Develop alternate vendors to streamline supplies and reduce the total procurement cost
#24. Vendor management
Share Purchase order with suppliers and ensuring material delivery as per agreed service levels. Coordinate with plant stakeholders to ensure material availability as per production plan
Logistics is goods and material storage and movement from one location to another. Warehousing Management, Transportation Management and Customer Service are the key activities.
Customer service is evolving function in supply chain. Ensure stock availability, product freshness at optimal cost to serve. Key Activities are going to market strategy and joint business partnering with customers to improve order management process and serviceability. Customer centricity and responsiveness is essential element to build robust supply chain
Import materials from suppliers, select the mode of transportation, custom clearance and timely delivery at the factories or distribution centers
Efficient processes need to be in place for exports to build robust supply chain. Select the mode of transportation and carrier, export documentation, custom clearance and ensuring delivery at the customer end.
#29. Global logistics
Manage global logistics from mode of transportation, carrier selection, negotiation, contract management and take regular feedback from users for building efficiencies in the procurement process
#30. Network optimization
Optimize network and route to reduce transit times, eliminate waste and reduce cost to reach
Warehouse Management include network and warehouse design, selection and management. Management includes unloading the goods from truck, ensuring proper storage in safe and hygienic work environment and loading and dispatch of goods basis customer orders.
#32. Warehouse Inbound operations
Timely unload the vehicles and receive accurately in the system.
#33. WH Stock Management
Proper upkeep of accurate stock management in the warehouse storage systems
#34. WH Outbound operations
Accurate and timely dispatch of vehicles and outbound vehicle management to reduce turnaround times.
#35. MHE operations
Material handling operations is essential part of warehouse operations. Various types of modes used are shuttles, automatic storage and retrieval systems, forklift, reach trucks and manual transfer and hand pallet trolley.
#36. Loading and unloading operations
Ensure movement of goods from warehouse to truck in accurate and efficient manner. Travel times to be optimized and accurate counting of goods to be ensured.
Transportation Management is managing movement of goods from source to destination location like suppliers to factory warehouse and factory warehouses to customers. Place vehicle requirements with transporters on slot level and coordinate with transporters for effective execution and resolve placement issues.
Effectively handling various modes of transportation during disruptions is the one of the key aspects of building robust supply chain. Fleet Management is end to end transportation management of all types of routes and vehicles
#38. Primary Transportation
Plan and execute vehicle movement from Factory warehouse to distribution centers
#39. Secondary Transportation
Plan and execute vehicle movement and goods transfer from Distribution center to Distributors or Retailers
#40. Tertiary transportation
Plan and execute vehicle and goods movement from distributors to retailers
#41. Information Management System
Implement information management systems to collect and report data and build Enterprise Resource Planning process. Reports should be in easily readable format and represented by a dashboard summary. Collaborate with external partners to implement best in class automated solutions for efficiencies in planning, procurement and logistics to build robust supply chain.
Do a thorough cost benefit analysis before implementing the solution. Warehouse Management systems and Transportation management systems are example of the key information management solutions
#42. Talent management
Managing Talent and People is essential part of supply chain function. Succession planning, job rotation and matching right people to right job and building an engaged team are the key essential for talent management. Also read Logistics Professionals: True unsung heroes of economy
Understanding of supply chain roles and career path is very important. Supply chain function has three sub categories- Sourcing, Planning and Logistics and Customer Service.
There are four levels of roles and responsibilities in these sub- categories- Senior leadership, Leadership, Middle Management and Entry level roles. Every role need to be defined by Role Name, Level, Key Responsibilities and Key skills required to accomplish the role.
To know more about careers, also read 25 Practical careers hacks on how to be effective supply chain manager.
Legal and govt compliances are to be followed without fail. All necessary licenses to be in place for warehousing and transportation. Simple documentation errors may lead to heavy penalties and transit delays for goods being carried in various modes of transportation
#45. Future Trends
Usage of artificial intelligence to gain real time insights to control end to end supply chain will be one of the key aspects to build robust supply chain.
Big Data management systems, Internet of things, blockchain and communication between devices in a dynamic manner will lead the future trends to drive improvements in end to end supply chain
Productivity improvement has been one of the key agendas for Supply chain function. There is always an opportunity to review the processes with lean mindset and eliminate waste from the value chain.
With social distancing as the new norm, supply chain productivity improvement and employee engagement are going to one of the most important metrics for organizations to drive efficiencies in future.
Read interesting article on productivity improvement at workplace
#47. Right Approach to disruptions
Supply chain need to know to navigate complexity and how to ensure business continuity in difficult and challenging situations and keep supply chains operational during business lockdown to meet the business and consumers requirement.
#48. Supply Chain partners
Supply chain of a firm cannot work in isolation. It works collaboratively with other supply chain partners to deliver the goals. Various supply chain partners are suppliers, Third party warehouse partner, labor contractor, transporter, distributor, retailer and IT solutions provider
#49. Risk Management framework
There should be structured approach to identify risks and take actions in advance to eliminate them. Approach to be defined beforehand for complex transitions. Business continuity plans to be in place for system outage and potential disruptions
#50. Sustainable supply chain
There is global focus on sustainable practices and initiatives. Optimizing fuel consumption, reducing plastic waste in value chain and using reusable materials build a sustainable and robust supply chain.
List of points shared may still not be comprehensive but covers the major important points to build a robust supply chain. Resilient and robust supply chain is the need of the hour and covering all the essential aspects will enable to build a strong and healthy supply chain.
It is essential to build a robust supply chain so that it is ever ready to overcome any disruptions and deliver business goals.
Read an interesting article on Disrupt your supply chain and feed the world