There are many ‘management gurus’ out there who will all insist that they are complete experts when it comes to the supply chain and if you buy their service/if you buy their book then you will be empowered with better decision-making abilities. In reality, however, there is little requirement for magic. Decision making is primarily about utilizing information and there is much that you can do to improve your decision making through appropriate use of Tools /data, performance management, requirements definition and process.

Tools/Data

At its heart decision-making relies on data and if its one thing that Supply Chains are great at its in generating data. In most organizations the sheer volume of data that can be (note we did not say should be) analyzed is now immense. Most organizations will utilize an IT system of some regard. Each transaction that is created within that system will generate data. In order to facilitate better decision making its imperative that this data is utilized appropriately. While most corporate data is not without some issues (data integrity anyone?) utilizing appropriate tools (from Excel to dedicated software) data can be extracted and used to generate management reports.

Performance Management

Once you have the data the next step is three fold

1/ Understand what measures will add value and support decision making
2/ Utilize exception management
3/ Plan, do, check act

Given as we’ve stated the volume of data in most organizations (from number of suppliers to transaction levels) it would impossible to focus on everything. What’s important is to focus on the right thing. What matters to your business (from QCD style metrics to longer term forecasting) understand what can impact your business then ascertain how you will generate information on it.

As we’ve stated the sheer volume of data in most supply chains makes it impossible to analyze everything – what becomes important is monitoring what matters. For example if you looking make deicisons about your suppliers and your monitoring delivery performance – your focus should be on those suppliers that are failing to deliver on time and who contribute significantly to the overall performance.

Once you have understood what needs to be done utilize the Plan, Do Check, Act technique
• Plan your activity
• Do your activity,
• Check the performance
• Act accordingly.

Requirements definition

One of the most overlooked cornerstones of the supply chain is requirements definition – fail to clearly articulate what is needed from the supply chain and you’ll be pleasantly unsurprised in what you get back! Supply chain configuration requires adequate understanding of requirements full stop. You make decisions based on what you thing the business needs – the clearer that is the better decisions you’ll make.

Process

Finally, process has a key part to play in successful decision-making. Incorporating information from your activities can help underpin choices that your business makes. For example lots can also be learnt from examining past decision-making and its impact. Whilst it sounds clichéd, learning from past mistakes or things that have been beneficial in the past can be a key success factor for your business. There can be great mileage in examining past decisions and ascertain which have been successful and why using this method you can incorporate tried and trusted techniques into your processes.

Thus there are some fundamental approaches that can be utilized to ensure that better decisions are taken in the supply chain as a whole. It does require a leap of faith at times, especially with regard to flexibility, but that leap of faith can certainly ensure that only good decisions are made all the time and every time!

Comments

One Response to “How can you make better decisions in your supply chain?”

  1. SANJAY MAHESHWARI on January 18th, 2015 10:29 am

    How I can effectively reduce my inventory for MRO items with the help of better decision in supply chain