Tuesday, February 25, 2014
Five Major Issues: Facing Supply Chain Executives
Executing supply chain excellence strategies can make favorable contributions to return on assets, margin, improved customer service and competitive advantage while generating more reliable metrics by which to measure success and foresee trouble spots. Executives should be aware of the top challenges they will face as they make changes to their supply chain operations.
Continued complexity being added to supply chain operations. As more technologies, processes and “red tape” continue to be layered onto their operations, companies increase their costs of doing business and create confusion about what must be done to realize the corporate objectives and vision. Companies must be vigilant about finding and stamping out unnecessary complexity wherever it exists—for instance, identifying ways business or operating units can share common processes and technology platforms.
Overlooking the continued growth of e-commerce as a channel in the industrial sector. As sited by The Chief Supply Chain Officer Report in 2013, more than half (55 per cent) said the demands of e-commerce and mobile-enabled consumers are increasing the number of stock keeping units they have to support. Almost 55 per cent reported they are building new distribution centres, and 48 per cent are building direct-to-customer fulfillment capabilities. However, to avoid being the next Borders, small and midsize industrial manufacturers and distributors must take ecommerce seriously. That means building multi-channel fulfillment networks that can simultaneously process orders from multiple ordering channels and fulfill them from the source that provides the highest level of customer satisfaction and the lowest fulfillment cost.
Inattention to potential risks. An inability to define potential risks and develop mitigation strategies for those risks that have a high probability of taking place could jeopardize business continuity and profitability. With the globalization of manufacturing operations, having a global procurement network that can support and react to your supply chain needs is important. One of the very trends that has increased supply chain risk – globalization – also provides opportunities to manage that risk.
Safety and quality products. The pressure on manufacturers to produce high-quality products that are safe is an increasing challenge. The number of product recall cases is growing each day. It can damage a company’s reputation and is expensive to its bottom line. Following the horse meat scandal, safety and quality incidents are at the top of the risk index, with 37 per cent reporting that they are “very concerned” about this for 2013-14 and 35 per cent are “concerned”.
Unrealistic assumptions that supply chain management technologies will fix everything. Access to the latest technology in various fields by having the right experts has proven to be a great support in new product development. However, for technology to work most effectively, a company must have an explicitly stated and shared corporate vision and mission—not just among external customers and service providers, but also internal constituents involved in the supply chain, including warehousing, transportation, and sales.
In addition to the challenges discussed above, in 21th century supply chain management, an executive might also need to facilitate career progression, developing new production skills and demonstrating a return on investment is a further issue; continue to reduce costs while improving customer service and supporting expansion in new markets and product lines. The bottom line is that while the executives have to deal with all these challenges, they should not ignore that it might also be possible for them to search some new opportunities at the same time, such as they might be able to use global souring to minimize risks and try to control supply chain disruption.
Here is a short video about a supply chain academy. Speakers focused on supply chain agility and the key importance of resource management, how to develop a strategic supply strategy to achieve sustainability of supply and the challenges of social and environmental compliance with the need to have a keen relevance in a volatile global commercial market place.