To cope with global changes and to maintain if not improve their competitive position, organizations need to redefine their supply chain strategy, review their inventory deployment and implement collaborations based on order visibility and traceability.
In addition, the challenges in supply chains imply a review of transportation modes, partners and technological solutions to ensure the security of supplies. Therefore, you must question your approach and develop a supply chain master plan to support your vision and your ambitions while having an environmental responsibility.
Supply chain management is the process of managing the flow of goods and services to end users from suppliers in the form of raw materials to finished products. All the activities in the chain are linked together by information technologies.
A supply chain activity measurement project consists of comparing the practices observed during an audit with the industry's best practices. The result of this comparison is the identification of areas for improvement and the implementation of a series of key performance indicators to measure the company's progress, performance and to guide the company towards industry best practices.
In order to define the priorities for coming years, Supply Chain executives need to have a clear understanding of the challenge they are facing and develop a Supply Chain Master Plan based on current performances and future vision. It allows them to identify the main projects to leverage priorities, efforts, investment needs and deadlines.
A well-defined Supply Chain Strategy will guide teams towards achieving their goals. In a world where creating a competent team is a challenge, this plan allows structuring the supply chain design approach and motivate the best resources.
Inventory strategy review is about finding the right balance between the availability of goods to meet demand and minimize the costs of holding inventory while gaining in business profitability. Typically, you can identify reductions up to 10% of the value of inventory when doing this type of project.
- For the development of an inventory strategy, one will want to calculate the required stock based on the supply chain strategic objectives, the demand for each item and the storage costs.
Some specific aspects can be taken into account in inventory strategies, such as:
-The identification of the level of traceability required (lot management, expiration date management, FIFO VS LIFO)
- The stock split according to a risk based analysis
It's important to ensure the follow-up and the implementation of inventory strategies like:
- Cycle counts will verify that the physical inventory matches the inventory level in the system
- Stock rotation calculations ensures that the stock level does not pile-up
Sales and Operations Planning (S&OP) is a business process in which leaders come together to ensure that all business functions are aligned to balance supply and demand, increase visibility and maximize profitability.
Key steps in implementing this critical process include:
- Establishing an S&OP structure and governance, by identifying the person responsible and the time required by team members;
- Establishing the frequency of S&OP meetings (monthly at a minimum), the structure of the meetings, and the tracking indicators;
- Defining the inputs to the S&OP meetings and holding the pre-S&OP meetings (sales plan and production plan);
- Holding the meetings and following the 5 steps presented in the best practices for the S&OP process;
- Maintaining and improving the S&OP.
Implementing this key process is one of the first steps if a company wants to increase its service level and reduce inventory costs and obtain stakeholder satisfaction.
Procurement has long been considered a support function for logistics and on a larger scale for the enterprise. However, following major crisis events in recent years (pandemic, component availability, etc.), companies have become aware of the value of procurement and its necessity in a global, regional and even local supply chain. A diagnosis and optimization of the current procurement process consists of
- Mapping the current procurement processes
- Identifying structural problems
- Identifying anomalies in the flows of goods and information
- Reviewing purchasing practices
- Reviewing demand forecast methods and tools used
- Propose new practices & methods
- Communication skill
- Achievement of business goal
There are two approaches to supply chain, the product approach and the supplier approach.
The supplier approach consists of developing the relationship with suppliers (1st, 2nd and 3rd tier) in order to create value that will be characterized by: better lead times, discounts, a privileged business relationship, sharing of best practices, priority access to services, optimized information sharing to reduce and mitigate bullwhip effect, etc.)
To achieve this privileged relationship with your suppliers, you need to follow these 7 steps
1- Supplier portfolio Analysis
2- Key supplier Identification
3- Contact and develop the relationship
4 - Set up a feedback mechanism and feed the relationship
5- Potential strategic suppliers Identification
6- Implementation of a preferred supplier program
7- Review and evaluation of current supplier portfolio using an ABC analysis
A Make or Buy analysis involves answering the question, "Should I produce or outsource? What is the financial implication?"
To answer this question, several aspects need to be studied:
- The financial aspects: comparing the manufacturing cost with the purchase price from a supplier. It is important to consider all costs:
- Material cost
- Cost of labor
- Cost of specific equipment for the manufacture of the product
- Cost of the surface used in the building
- Cost of support activities (R&D team, quality team, supply team...)
- The Strategic aspect: Is this a direction I want to take with my company? Do I want to develop this skill?
A powerful tool is the supplier scorecard that allows you to evaluate the quality, cost, delivery and responsiveness of your suppliers. This provides increased visibility on the performance of your suppliers.
A network analysis will allow us to put all the variables into a simulation and give you an idea of the ideal location for your next DC based on your growth.
The tool we use is a supplier evaluation card that allows you to measure the quality, cost, delivery and responsiveness of your suppliers. Thanks to this tool, we obtain an increased visibility on the performance of our suppliers.
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