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Supply Chain Management

Supply Chain Management..

More than ever before, leading companies are using the supply chain to differentiate themselves, increase sales and penetrate new markets and channels.  Competition for resources is increasing and clients are demanding more for less - so we need to think of innovative ways to introduce sustainability for our business and the industry as a whole.

So how do we define the supply chain?  We all use a number of other companies to deliver our projects.  Suppliers can be internal or external to your organisation and will be providing goods and services under a very diverse range of contracts from a roofing contractor to a delivery company.  

Managing your relationships with your suppliers is complex and difficult but will improve quality, productivity and profitability throughout the chain. To be successful you may need to develop different relationship styles for different contexts, and you will need to deploy resources to introduce and maintain systems and processes.  To be effective requires huge cultural and behavioural change and new management skills to lead the process.


 The benefits and the costs
  • Improved:
    • Profit
    • Customer Satisfaction
    • Quality Assurance
    • CSR
    • Environmental performance
    • Operational readiness
    • Business continuity
    • Time and cost certainty
  • Reduced:
    • Total Life Cost
    • Working Capital
    • Waste
    • Accidents
    • Litigation
    • Risk

"Relationship Management is about moving Supply Chain from a set of Project to Project tactical relationships to strategic long term management of our spend, relationships and performance"

10 key elements to define a world class supply chain:

1. Strategic intent

2. Supplier relationship management

3. Value chain management

4. Technology and data

5. Leadership and management

6. Professional awareness

7. Understanding the customer

8. Legislation

9. Measuring success

10. Continuous improvement


A supply chain can be considered world class when all ten elements are working efficiently together and are constantly being challenged and improved

Successful Supply Chain Leaders - what do they do best?

Leaders recognise the strategic possibilities and challenge the status quo - in the context of supply chain management they benefit from the economies of end-to-end process integration.  Leaders research and analyse the business and competitive environments and make decisions based on a firm knowledge base.  They act more quickly and decisively on the acquired information, monitor their performance more closely and improve and innovate continuously.

How do you start to lead your supply chain

Your supply chain is an untapped resource and in the true spirit of relationship management should motivate rather than force, encourage learning and be of mutual benefit to all the parties involved.  Contracts and collaboration are fundamental to realising the full potential in the supply chain and key to success.  No projects are delivered single handed, indeed most involve a multitude of players and every one of them influences your ability to deliver and perform.

For many of us it is a big step from where we are to "full-blown" collaboration.   But the goal is not complete collaboration with all parties ..... but appropriate collaboration with specific parties: 

Step1

‘Sell' the strategic opportunities internally and gain board level support - this is prerequisite to success

Step 2

Put 80% of your effort into planning and 20% into action

Step 3

Become proactive and not reactive - Plan, Do, Review

Supply Chain Strategy

Develop co-operative long-term relationships and team culture to deliver best value, demonstrated increasingly though continual improvement and, and a strong supply chain through appropriate integration and collaboration:

Supply Chain Process

Supplier/partner selection

There will be many ways a company selects its partners and some supply chain programmes place their suppliers into a tiered hierarchy depending on their strategic importance.  (See below) 

Assessing Capability

It is imperative that some kind of capability assessment process tool is used to evaluate and manage performance on a regular basis. Software has been developed to measure and benchmark.  The emphasis should be on continuous improvement, and innovative supply chain leaders claim that there are huge productivity gains to be had through supporting and training their suppliers.  A typical performance assessment model is shown below.  Regular  communication is key and meetings, conferences and incentives (awards) help to promote engagement and integration

Benefits to suppliers

Challenges

As was stated at the beginning, managing your suppliers is complex and difficult.  Getting the balance between treating suppliers fairly and meeting business needs can prove challenging, particularly when market conditions are tough and pressures for cost cutting may have repercussions on future relationships.

Supplier ‘buy in' is secured at company level and the culture is not always embraced by individuals.   In converse, staff churn may lead to varying commitments to relationships.  Over reliance on a team's flexibility or complacency of suppliers my lead to may lead to cost/cost creep and lack of ownership but the benefits far outweigh any of these considerations which can be effectively managed out.

Application of Learning Points

Page last updated 10/07/08