Here are my top 10 tips to boost your Supply Chain performance towards Best in Class.
I’ve arranged them into an acronym to help you remember them. (And check out some more resources at the bottom)
The acronym is METHODICAL.
OK, why do so many organisations struggle with the same old Supply Chain Challenges?
I’ve been working in Supply Chain for over 40 years, and consulting for the last 25, and I see many organisations still struggling with the basics. Why is that I wonder?
- Is it the focus on new technologies and automation that masks the need to still ensure the basics are right first?
- Perhaps the quality of Supply Chain training and education is not what it used to be?
- Or maybe organisations just don’t have the bandwidth in terms of people these days, to just get things done?
Honestly, I think it’s a combination of all three, and more. And whilst it’s exciting to work on the latest trends and technologies, if the Supply Chain fundamentals are not sound, it can all be for nothing.
I’ve compiled a hit list of my top 10 focus areas that will help you boost your Supply Chain performance and that of your teams. Focus on these alone and you’ll be well on your way to best in class Supply Chain performance.
I’ll also be providing some step by step guides and tools on these at our Supply Chain Performance Seminars in February and March, but more on that later.
Here we go:
1. Measuring the Right Stuff.
Far too many organisations measure too many things as well as the wrong things. Take a moment to consider the primary goals or objectives of your Supply Chain. Now think about 2 or 3 things that will directly impact you achieving those goals. Those are the things to measure! They will generally be around cost, service and productivity. If you have KPIs (Key Performance Measures) that don’t really link to your objectives, I would question why you have them.
A common challenge is running out of space and fighting rising costs. A lot of this can be fixed by simple changes to layout, flow and the equipment being used in the warehouse. Also have a look at the processes being used, as these will often be the root cause of inefficiency. More times than not, it’s possible to extend the useful life of a warehouse, this avoiding all the associated cost and upheaval.
3. Transport Service Selection.
This doesn’t need to be hard, but many organisations still get this very wrong. Look at how you are buying freight services and ask yourself two questions. 1) Am I buying the ‘right’ service? By that I mean the speed of service. Do you really need so much air freight or express freight? Then 2) Look at how you are paying for that freight. The rate ‘structure’. Are you paying full truck load (FL) rates, pallet rates, carton rates, KG rates? It is very common that the service and rate being used are not the most appropriate for your needs and hence you are over paying unnecessarily.
4. Health Checks Regularly.
Hopefully you have a regular medical health check. Just to make sure everything is working and operating within normal guidelines. Well it’s the same for your Supply Chain. You need to do regular checks such as Benchmarking to make sure that performance is in line with expectation and is also within industry norms. This will often be the first indication that cost and service improvement opportunities are there for the taking.
5. Outsourcing the Right Way.
Well over 80% of organisations outsource some part of their Supply Chain and Logistics operations. But many still get the whole process of selecting and managing their partner terribly wrong. Allow enough time and resources for the process, as it typically takes up to 4-5 months just to select the right partner. And be prepared to manage the outsourced contract effectively. Outsourcing does not mean merely handing the problem to someone else.
6. Distribution Network Aligned.
Distribution networks are rarely designed. They tend to just happen and evolve over the years. Therefore, you may experience build up in inventory levels, unbalanced inventory deployment and the consequential impacts on customer service and cost. Tell tale signs of a network problem will be increasing inventory, warehousing and transport costs, stock outs and rising customer complaints.
7. Improve Team Knowledge Continuously.
Many organisations these days just don’t have ‘spare’ resources to undertake operational reviews and implement improvements. So, it’s vital that those people you do have are well educated in how to identify Supply Chain issues and quickly come up with solutions to resolve them. Sometimes it’s hard to choose the right education and development programs for your teams, and the right combination of in-house v external. Ask around your colleagues to see where they are gaining the most value and look for programs that are very practical and case study based.
8. Customer Service Alignment.
The simple way to keep customers happy is to give them what they want isn’t it? I wish it were that simple. You need to understand what your customers value the most. If you haven’t already, survey them! Group them by their needs and then develop your customer service policy around that, and what you can reasonably afford. Take a look at your customer service offer now. I have seen just as many organisations over servicing customers as underservicing! And that’s a simple way to reduce costs.
9. Appropriate Focus.
This is a biggie! Is your Supply Chain team very clear on what your core objectives are? Do they understand the priorities and targets? In my experience almost 60% of organisations don’t have a clear Supply Chain strategy that is understood across the business. If you don’t have one, get to work. Even a one-page strategy with 3 core objectives and a couple of key enablers under each will get you started.
Plug Them! All Supply Chain ‘leaks’ cost somewhere. The trick is to find those leaks and plug them. This technique is often referred to as identifying and reducing your ‘cost to serve’. It’s a powerful and simple tool to use to start on a significant cost reduction program, and it’s so easy to do. In fact, I’ll be showing guests at our events exactly how to do it.
So, there are my top 10 Supply Chain focus areas. Take a look at these and I guarantee you’ll find opportunities to boost performance and reduce costs.
Are there more? Yes of course there are. Many systems and process related. But I picked these 10 because they are generally where organisations have serious issues and they are relatively easy to fix.
Do feel free to comment below on which you think are the most serious, or indeed add some more to the current list of 10, that you think people should focus on.
And if you want to come along to our Free Seminars in February (Melbourne and Sydney) or March (Bangkok) I’ll be going through some of these in detail and providing guests with some step by step tools and approaches to resolve these typical challenges.
Just jump on this link to reserve your seats. There are multiple locations, as well as Breakfast, Lunch and Dinner options!
Oh, and by all means share the link. But book quickly as seats are going fast and some locations are almost booked out!