Mar
7
Can You Over Analyze Your Supply Chain?
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When it comes to performance management, there are definitely two answers to this question. The first is that you can (obviously) over analyze your supply chain. While the old adage of “you cant manage what you don’t measure” holds especially true for the world of material supply – all too often businesses devote far too much time to measuring the wrong thing or worse measuring the right thing and then doing nothing about it when the results obtained show underperformance against objectives.
While its vital that you do assess your supply chain (both in terms of it meeting the business need and performance) there can be a real tendancy to devote too much time in analyzing and producing report after report (which often serve little purpose) as opposed to undertaking other more value add tasks.
Understanding performance is only one aspect – we wouldn’t expect, for example for staff to simply sit carrying out assessments all day. But realistically that isn’t going to happen is it? Perhaps this may be an extreme suggestion –but in your own supply chain function – do you ensure that the parts of the supply chain you analyze contribute and add value to your business – and where the results suggest a change in strategy or deploying an improvement activity you act on it – or do you just “count numbers”.
A crude example is one of supplier performance to schedule – most (but disappointingly not all!) businesses analyze delivery schedule adherence- many choose to put together a top 10 worst performing suppliers list – but how many then go the next step and actually investigate what’s going wrong with those suppliers? Obviously most organizations will investigate underperformance but put a formal improvement programme together?
The second answer to this “can you over analyze” query is a resounding No – but lets taper that with “as long as your analyzing what’s important”. What’s your strategy/Goals (do they add real demonstrable value) and THEN comes the analysis part. How will you analyze/measure your business to assess achievement?
The supply chain is perhaps the most insecure and unstable part of any business, when things go wrong the results can be catastrophic – both in terms of cost and customer satisfaction so assessments are important. If your strategy is to simply leave the supply chain to operate and then not investigate issues, then it will not be long before it descends into chaos. The supply chain can be vulnerable in terms of commodities, the prices of items, transportation issues and so on.
It is important to know where the areas of vulnerability are and these can really only be discovered by analysis.
Only through analyzing what is happening with the supply chain reacting and developing and implementing appropriate strategies can you have any chance of ensuring that the supply chain meets your business need. Some of these issues can be global and many can be wholly unforeseen (implying a requirement for risk management and mitigation).
Simply analyzing in itself is a complete waste of time. It is the actions taken to remedy potential areas of vulnerability that will be important and will actually make a difference. And for those of you still developing ideas about what to measure and assess – spare a thought for the simple principle of QCD (Quality Cost and Delivery). Whilst it won’t cover everything QCD can get you off on the right track – implementing the foundation of a performance management system.
The increasingly complex (and global) nature of many supply chains means that analysis and performance management is here to stay. Your supply chain is precious; so everything possible needs to be done to nurture it and cherish it, if the future viability of the supply chain is to be maintained. Ignore supply chain analysis at your peril!
Mar
7
10 steps to introduce sustainability objectives into your supply chain
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Due to the development of corporate goals and increasingly complex compliancy requirements, more and more organizations are developing corporate responsibility objectives making sustainability or “green procurement” an integral strategy for modern supply chains.
But is it better to incorporate the sustainability objectives using incremental steps, rather than simply radically altering the supply chain in one go – just how should you go about it? The underlying requirement of a stable supply chain is still required no matter what the buying practices – so careful consideration of how to implement is a must.
1. Agree that sustainable objectives need to be incorporated into the supply chain. This may sound obvious, but it is critical that all stakeholders, including all senior management buy in and contribute to the objectives.
2. Once objectives have been declared at a senior level – ensure that the concept of sustainability objectives are embraced within the supply chain team. Consider your skill base and whether any changes/training are required in order to meet your goals – in particular pay close attention to commodities and how alternative products that meet requirements will be sourced.
3. Decide which objectives are achievable and in what timescales. For example if you want to ensure that you reduce the carbon footprint of the whole supply chain then this is a long term objective. If, on the other hand, you want to use more energy efficient means of transporting some items within the supply chain, then this can potentially be achieved within the short term.
4. You need to get the company to accept that the introduction of sustainable objectives will require a different culture throughout the company. There may be a change in the products you buy or the companies you use – buy in from internal stakeholders will be paramount. Sustainability is as much about change management as it is about procurement.
5. Baseline current practices and performance. In order to be able to demonstrate a change in environmental or social footprint through introducing sustainable objectives – you need to know where you are now through available and quantifiable measures and KPI’s.
6. You also need to know where your commodities/suppliers are at in terms of your aspirations are alternative products on the market? If your looking to meet compliancy requirements are your suppliers already configured to meet these needs or will work be required?
7. Plan your goals and sustainability objectives that you will be introducing. These need to be specific, they should also be measurable, attainable and of course, relevant and timely.
8. Now that the goals and objectives have been defined, construct a plan to see just what the organization needs to do to actually implement. Assign appropriate roles and responsibilities within your team and get going.
9. Once you have started to incorporate the sustainability objectives, then you need to start measuring the success of the objectives. After all, if you are including the objectives but they aren’t actually achieving anything, then you need to remove the objectives that you have included and come up with some others that will hopefully achieve their goals!
10. Now that the objectives are included and are being measured, then all that has to be done is communicating activity and successes throughout the organization, letting everyone know what the sustainability objectives are and how they are shaping the supply chain.
Obviously sustainability objectives are going to take time to settle in, but once they are in place and being measured then the transformation of the supply chain into one that is sustainable and therefore probably much less fragile, can begin! It will take time, but the effort is definitely worth it in the end!