Does Your Company Have a Supply Chain Strategy?

By Jennifer Hauge


 Supply Chain Strategy

What started out initially in the early 1980’s as in-house management of supply chains has grown into an entire services industry.  Since then, this management theory has taken on many forms, each varying between small, medium and large enterprises.
Supply chain management is more than just getting material point A to point B.  Supply chain software and service companies with e-communication abilities track the material between locations, at outside processors and to the customer.  In this case, the data is sent before the material even reaches the destination. 
Along with being able to transmit data faster, other lean technologies are used - namely forecasts and schedules.  Forecasts are used by mills and sent to the processors so inventory can be pulled and scheduled for JIT.  This eliminates lag time between orders, which are shipped out even faster.
The industry overall has changed to using service centers and VMI rather than managing material and inventories in-house.  This of course opens the door for new issues that need to be handled. So how do you handle everything?
Is There a Strategy?
At times, small to medium companies may not have a concrete strategy for handling logistics, communication channels, supply chain management and supply chain development.  Development of a strategy tends to be a reactive strategy, instead of a proactive one -- usually customer complaints or bottlenecks from suppliers. 
So whether proactive (a better approach) or reactive, strategies will vary, and may have several across the supply chain. 
Does Your Current Situation Support this Strategy?
Another factor to consider is deciding what to do with equipment, software and hardware. Is the company still running on old machines and no plan for upgrading them? It would be difficult to try and make effective changes to the supply chain and not make changes to outdated machines and other technology. It is important in this situation to be aware of the entire picture and what needs to be accomplished. Failure to do so results in poor results or execution of supply chain management applications.
Execution of both Supply Chain & Business Strategy
Consider the actual execution of the strategies.  There has to be a connection between both the business strategy and supply chain management.  Close interrogation of the implementation is important so as so catch redundancies or missed opportunities across the network of vendors,  partners and customers.
A successful plan includes having some level of ‘ownership’ of your supply chain.  This includes management of raw materials, any type of processing or finishing service, and finally customer consumption.  This way, problems are addressed quickly, material can be easily located, and questions are answered promptly.  
Ownership is managed by sharing information through demand forecasts, production schedules and improving the lead time to customers-lean or JIT inventories can do this. 
Supply Chain services are a nice tool to use for small to medium companies that are not able to obtain the resources to manage it in house.  This way, some of the duties like warehouse management, 3 PL companies for logistics management and vendor managed inventories.

 

 

 

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