Supply chain
Building a high performance supply chain
While awareness of the impact of the supply chain on business performance is increasing, many companies remain uncertain which supply chain approaches and solutions should be adopted to establish a leadership position.
The framework for building a high performance supply chain involves:
- principles that provide the foundation
- competencies that ensure an organisation is equipped to achieve and sustain the required level of performance
- levers that impact directly on supply chain operating performance.
Building a high performance supply chain: principles
- Investing in information and capacity over inventory
- Reducing internal volatility and external uncertainties, rather than just managing the consequences
- Reducing internal variety while encouraging external variety
- Deferring the point of commitment until as late as feasible
- Embracing all trading partners in managing the end-to-end supply chain
- Eliminating waste - anything that does not add value from the customers’ perspective
- Recognising that improving the performance of a component does not necessarily improve the performance of the end-to-end supply chain
- Improving the performance of the bottleneck to improve the performance of the supply chain
- Synchronising flow to increase throughput and not balancing load to optimise resources
- Not compromising on quality
- Exploiting product design as a driver of supply chain performance.
Above all, 'keep it simple, keep it visible'.
Building a high performance supply chain: competencies
- Become an adaptive organisation. Building a high performance supply chain calls for an organisation which is structured for change, unencumbered by heavy layers of bureaucracy and centralised control, and with a strong culture of communications and empowerment.
- Develop integrated planning. 'Plan, Do, Check, Act ' are the cornerstones of supply chain planning regardless of the basis for winning business. The challenge is not to eliminate planning, but to implement an integrated approach that supports the extended supply chain.
- Exploit new technology. Leading edge organisations are using technologies such as Web services, mobile and wireless computing, Web portals, integration software, business intelligence and RFID to deliver up-to-date information promptly across the whole supply chain.
- Align performance measures. Successful organisations use performance measures to highlight impending issues and provide the insight necessary to guide decisions. The emergence of new technologies based on single architecture, click-and-view technologies is starting to provide real time, end user capabilities.
- Configure to order. The design of a product impacts cost, flexibility and response time. Uniqueness drives complexity; standardisation drives efficiency. Using modular designs, which can be configured to order, allows a supply chain to operate efficiently up to the point of commitment and to be responsive from commitment to customer. That means better cost control and better service.
- Extend collaboration. Effective supply chains leverage the strengths of partners to mutual advantage. Collaboration works when companies develop strategies, processes, structures and measures that reconcile organisational conflicts and deliver real value to all parties.
Building competencies in these areas will put companies on the road to building a high performance supply chain. However, organisations also need to think about which levers can be pulled to address localised pressure points while contributing to building superior end-to-end supply chain performance.
Building a high performance supply chain: levers
A series of levers that impacts directly supply chain operating performance, focused on:
- managing spend
- managing cash
- managing time
- adding flexibility
- managing demand
- integrating planning.
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