What 4 Issues Are Keeping Supply Chain Leaders Up at Night?
The recent Supply Chain and Logistics (SCL) Hub in London was a welcome return to one of my personal favorite supply chain events – and good timing too! The ongoing disruptions of recent years are forcing supply chain leaders to rethink how supply chains are designed, how all the different parties communicate, and what is possible.
Supply chain conversations have shifted from the boardroom to the dining room, (where delayed shipments for birthday presents causes nail biting family anguish) as these disruptions impact our daily lives. Supply chain leaders are looking at their options, and asking what can be done differently. One thing is for sure — and more spreadsheets are definitely not the answer!
Four Recurring Themes
During my meetings and conversations throughout the day, there were 4 themes that kept recurring:
1. Supply Chain Planning
The importance of supply chain planning, and this being directly connected with the production schedule. A great plan is a great goal to aim for, but is only the start of the journey. A great plan must be executed against, and include financial metrics. You must understand the impact on business performance as changes in one area are propagated through the end to end supply chain — so the effect on procurement, manufacturing, supply chain/ distribution are clearly understood.
It might look good to be winning and taking additional business, but at what cost? It is possible some orders could be reducing margins, especially if additional overtime or premium freight is required to fulfill correctly.
2. The Connected Workforce
How do companies best engage employees and increase productivity of the front line manufacturing workers? From Food & Beverage, CPG through to industrial manufacturing, whether process, batch or assembly, in times of skilled labor shortages it is vital to maximize the use of labor (which is often one of the biggest operational expenses).
Institutional knowledge, often stored in the individual heads of employees, which can be captured and shared between different production lines, different shifts, and also between different locations. Real time performance taken from various forms of shop floor data capture (SFDC) is key to helping achieve hourly, daily, and weekly production targets. With energy prices surging and costs of raw materials rising, increasing employee and engagement represents a massive untapped opportunity
3. Digital Transformation
Digital transformation often means different things to different companies and people. What came across loud and clear from the SCL Hub was how companies were exploring the best ways to use new technology to reduce information black holes — where different information from different sources just seem to disappear. In a very simple supply chain model – the physical materials could be considered to flow from: Procurement > Manufacturing > Distribution > Consumers/ Market place, whereas the information signals flow in the reverse direction.
Digital transformation is key to maturing logistics processes, breaking down data silos between departments such as procurement, sales, finance, logistics and trade compliance. Ultimately it’s about providing the decision makers with a single version of the truth, so they can take the best course of action in real time.
4. Process and Procedural Inertia
Even though the potential benefits of new technology appear to be understood at an academic and conceptual level, one of the biggest obstacles was fully understanding the change management journey. Adding a layer of cutting edge software and technology on top of obsolete processes and poor procedures will yield few positive results.
One way to approach the issue of change from a different perspective is to consider the word ROPE.
ROPE — Return on Pain Eliminated
To understand ROPE, ask yourself this simple question: What would my business look like, if I found a way to eliminate my primary pains? What would the benefits be and what could I do differently. What new opportunities might open up?
Understanding this could provide you with insights and act as a catalyst to challenge and overcome the inertia.
As companies grow, organically or through acquisition, it’s even more important to have standard ways to capture, optimize and report supply chain information.
If you would like to have a conversation to see if these conversations lead to meaningful insights for you and your supply chain — from creating more accurate forecasts and production schedules, to reducing inventory and increasing customer service, or increasing workforce productivity, and smoothing cross border trade, or making sure your parcels arrive on time, we can help.
By Trevor Long