Supply chain performance is always a much talked about issue. There are lots of guides available all promising various cures or remedies for any hiccups within the supply chain and whilst many of these are very good, there has also been a lot of unrealistic expectations raised with regard to how a supply chain should perform!
For a start, the supply chain will be unstable. This is a given, all supply chains, by heir very nature will be unstable, but the trick is to manage the instability and therefore reduce the risk. After all we live in an uncertain world and the supply chain will be subject to natural and man made constraints that cannot always be anticipated. So always take your bottom line as having the expectation that the supply chain will be unstable; what matters is how you manage it!
It is also realistic to expect that the supply chain will manage to meet your needs and in turn meet the needs of your customers. If a supply chain fails to perform and meet these requirements then it has indeed failed, so it should be able to fulfil these criteria.
The meeting of your needs and the needs of the customer sound very easy to quantify, but these are actually quite complex areas. For a start, the supply chain needs to be able to deliver goods or services at the right time for your particular needs. But those goods or services need to be at the right price, in addition the goods need to be of the right quality with either no or very few defective goods received. The supply chain also has to be able to offer the ’back up’ that your business needs in the form of invoices sent in a timely fashion, defective goods being received back by the supplier, administration services that are effective and good transportation links.
Living in the real world
Although in an ideal world it would be conceivable that goods would arrive on time, in the right sequence, 100% perfect etc 100% of the time, every time, this in itself is unrealistic. The supply chain, as stated earlier is subject to the vagaries of the world in which we live and there can be flooding, natural disasters and various other conditions that can adversely affect the supply chain. Hence it is important to decide what is the minimum level of service that can meet your needs, bearing in mind that perfection only exists in the abstract.
For example, to think about realistic expectations of the supply chain, it is reasonable to set a limit as to what is acceptable in terms of supplies. 100% perfection, 100% of the time may be an aspiration but back in the real world how that can be achieved is not yet known. So you need to set a service level you can live with. Some companies aim for 85% or 90% etc.
It is also important to think about the other factors that will adversely affect your business if they are not achieved, for example the timing of deliveries; too early and you have no where to store them, too late and production is halted. So it could well be that you aim to have deliveries on time for some 95% of the time, simply to accommodate the fact that transport can often be held up.
Once you have established the minimum levels of service and accepted the fact that the supply chain is, by its very nature, not stable, then you will have gone a long way to ensuring that your expectations from the supply chain and the supplier relationships within it are in fact reasonable!
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