The term “excellence” refers to the quality of being extremely good at something. If you scratch the surface of what it means to be “really good” at supply chain management, you will likely come across an excerpt like this: delivering the right product, in the right quantity, to the right people, at the right place and time, at the lowest possible cost. However, as you and I already know, that sentence is a lot easier said (or written) than done. And while the statement above may be accurate, supply chain excellence goes much deeper and involves several other defining characteristics.
So many factors and stakeholders weigh-in on the supply chain decision-making process, making the management of these complex networks with “excellence” a difficult task to complete. Using the term “supply chain” as an acronym, the following text provides 11 characteristics to strive for in order to move your supply chain operations from ordinary to excellent:
The term sustainable is a multifaceted word that can be applied to several aspects of supply chain operations. Most commonly, it is used to refer to a supply chain’s impact on the environment. Are companies utilizing raw materials in a sustainable manner? Can CO2 emissions be reduced through an optimized transportation strategy? Can we run our manufacturing plant on alternative energy sources? Is our packaging environmentally friendly?
Companies that can answer these questions with “yes”, or have plans in place to address these sustainability topics, are well on their way to excellence. Supply chain sustainability is an evergreen topic within the supply chain industry and companies taking a proactive approach on this matter will be able to set themselves apart from competitors.
With the word unified I am referencing the integrated approach to supply chain management. This refers to open lines of communication and the establishment of common goals across all key supply chain functions, including purchasing, manufacturing, distribution and sales. Breaking down silos within an organization and getting the right team players on the same page will help create a culture of excellence. Continuing to evaluate each function on individual metrics that do not bring the company forward as a whole will only hamper progress.
I think this point speaks for itself. If you cannot deliver what the customer needs in a timely manner, there will be a competitor out there that can. We are living in a “now-culture” which has engulfed the logistics industry, as industry giants such as Amazon promise 30-minute home deliveries. I am not saying this is something that every wholesaler must be able to do, but I do believe that in our “now culture” where impatience is a growing factor, the ability to make punctual deliveries will be a leading factor that will separate excellent supply chains from ordinary supply chains.
Effective and excellent supply chain planning has moved away from Excel spreadsheets toward ERP systems and intelligent cloud-based optimization add-ons. As mentioned in my previous featured Beet Fusion post, planning inventory and other supply chain processes in the cloud has become more of a question of “when” rather than “if”. Using operations research to create intelligent forecasts based on historical data can help companies make better decisions regarding the procurement of goods and safety stock levels. These tools can also help managers make the right decisions about where to keep their stock within their network and how to best distribute their goods to end-users. Software solutions that can help managers successfully plan their operations are out there and waiting to be implemented.
Strong leadership is central to supply chain excellence. Supply chain leaders must be able to understand and influence the “big picture” company goals and relay the importance of achieving these goals to the supply chain team. Therefore, strong communication and team building qualities must be present. These leaders must also be vocal, and if there is no chair at C-level meetings for the supply chain function, they must be willing to bring their own chair. In the end, it is the supply chain leader’s job to ensure that the supply chain function is viewed as more than just cost management, and is included in the value creation strategy development.
There are two sides to the “youthful” term here. Ensuring the recruitment and training of young supply chain talent is one aspect. An excellent supply chain operation today run by seasoned veterans may not be so excellent if proper training and coaching is not in place for the next generation of supply chain leaders.
The second aspect of the term “youthful” refers to the supply chain strategy. Are you still using those abovementioned Excel spreadsheets to plan? Have you been avoiding the digital and smart trends that are helping early adopters increase efficiency? If so, ensuring excellence in the future will become an even more difficult task.
Since there is no “T” in supply chain I had to use “clear” as a synonym for transparent. Transparency encompasses much more than the traceability of raw materials and finished goods as they make their way along the supply chain. I like to differentiate between internal and external supply chain transparency. When talking about internal transparency, I am referring to the material and information flow amongst the purchasing, manufacturing, distribution and sales functions. A major aspect of external supply chain transparency, on the other hand, is supplier visibility. Creating visibility throughout a supplier network is a complex task, but it is slowly shifting from a “nice to have” to a “must have” as government regulation (e.g. UK Modern Slavery Act) begins influencing supplier relationship strategies. A good mix of internal and external supply chain transparency will help improve supply chain performance.
Honest is an alternative way of saying ethical. As many businesses are finding out, there is a growing consumer base out there that cares about the “how” behind supply chain processes. Many firms have found themselves in the middle of child and slave labor scandals that have ended in damaged corporate images and reduced sales. Practicing ethical sourcing is one way to avoid these scandals.
One of the most honest actions I have seen within supply chain management in recent years was Nestle stepping out and admitting its involvement with a key seafood supplier in Thailand that implements slave labor. While the initial impulse from most companies would be to cower in a dark corner and avoid the spotlight, Nestle stepped out, admitted it made a mistake, and created a plan to improve working conditions across the entire Thai fishing industry. This admission and commitment to change certainly went a long way toward repairing the company’s image. Supply chain excellence therefore includes an ethical and honest operating environment.
In order for a supply chain to be excellent, it must be agile. Entire books have been written on this topic, so summarizing the importance of this attribute in a short paragraph in a blog does not do it justice. That being said, excellent supply chains are able to react to sudden changes in the operating environment. They are collaborative in nature, include a strong risk assessment program, implement intelligent decision support systems and are demand driven.
An excellent supply chain is an innovative supply chain, which means a supply chain open for change. We are being swamped with new technology at a seemingly faster rate than ever. In order to ensure excellence and remain competitive, many firms are finding ways to incorporate these new innovations into their supply chain processes. Some examples include the implementation of smart glasses in warehouses for optimized picking processes, the use of beacons on production floors to monitor manufacturing processes and the employment of geo-fencing for the optimization of time slot management for truck deliveries. These are just a few of the many examples of innovative approaches to supply chain management across various functions.
As an online marketing manager, it is my duty to include this point in the supply chain excellence conversation. Turning to social networks, blogs, podcasts and industry events as a source of information to stay on top of leading trends can serve as a strategic advantage. Furthermore, using social media to create tutorials for suppliers, or develop a supplier platform to exchange best practice initiatives can prove quite beneficial in the supplier relationship management process. In essence, taking advantage of new technologies that have enabled us to communicate with anyone in the world in the blink of an eye is a wise move in the quest for excellence.
Incorporating some or all of the 11 characteristics mentioned above will help ensure excellence in your supply chain operations. That being said, the term supply chain excellence will be defined slightly differently for just about every person reading this article. For that reason, I would be interested in hearing what characteristics you believe belong in the supply chain excellence conversation.
How do you define supply chain excellence?