Home' MHD Supply Chain Solutions : MHD Mar-Apl 2017 Contents different paths of products through your supply
network and see how many times each product
is ‘touched’. Less ‘touching’ encourages greater
efficiency and higher performance. In parallel,
the following areas are also good starting points
for reviewing current performance.
1. Customer service (expectation, offer and
2. Channels to market.
3. Product physical flow.
4. Asset utilisation.
7. Forecasting, inventory accuracy and ‘sell-
8. Complexity (of processes).
9. Trade-offs (cost vs. speed vs. risk).
10.Communication and systems.
11.Reporting and key performance indicators
Profitability can be better understood and
evaluated through a cost-to-serve analysis.
This shows the real cost of serving different
customers and may hold a few surprises. It is
not uncommon to discover that only a small
percentage of supply relationships are in fact
profitable, and that many others, hidden in the
mass of overall profitability, are making losses
that could be avoided.
Aligning the supply chain
with enterprise objectives
The next step is to map what your supply
chain does onto what your business needs.
Your enterprise could be targeting growth in
market share, taking a low-cost leader position,
or competing through outstanding service, to
mention just a few possibilities. Your supply
chain must support your business strategy,
however you have defined it.
This allows you to develop ‘strategic
imperatives’ for your supply chain. These are
the handful of crucial things the supply chain
needs to deliver to support overall business
objectives. If you have not yet involved other
directors or functional heads, other than your
supply chain director, this is a good moment
to do so. Joint input and discussion will help
articulate the supply chain deliverables in
a way that is clear and meaningful across
your enterprise. For example, if you supply
healthcare products, your supply chain
deliverables might be ‘service assurance, strict
compliance, complete product range’. Or if
your business is in heavy industrial machine
parts, your supply chain deliverables might be
‘high material availability, lowest HSE impact,
minimum total cost to the customer’, and so on.
With continuing input from all major
stakeholders, the supply chain strategy can
then be drafted to enable the deliverables to
be supplied. The result of these review and
alignment steps is a supply chain strategy that:
1. Supports business strategy.
2. It is focused on the required results.
3. It is understood and supported by major
4. Can be tracked and adjusted.
2. Convergence on supply
With your supply chain imperative and strategy
in place, all the participants and contributors
to the supply chain must now move towards
the same objectives, notably those of keeping
customers satisfied and making a profit for the
business. Whichever way you split tasks and
responsibilities with your supply chain director,
important tactics for convergence will include:
• Communicating. Convergence can only
happen if people know and understand what
is to be achieved. Good communication is
essential, putting across the clarity of your
business and supply chain strategies to all
those concerned. Internal communication is
the first challenge to be met, before turning
your attention to external supplier and
• Managing change. Polish up your change
management skills as well. If your business
never had a formal supply chain strategy
before (remember that 61% figure above!),
you will need to show the expected benefit
and set clear, achievable targets and
accountabilities. Tell your people how
important this is to you and the enterprise.
Contribute regularly, actively and visibly to
remind them of that importance. Use KPI
to track progress and head off problems.
Also, ensure that change management and
problem-solving training is given where it is
needed. Sometimes, the competences of
current staff and systems may not allow you
to execute fully on your strategy. If in doubt,
start with the basic steps for your strategy in
its simplest version, and build from there.
• Seizing opportunities. Supply chain
performance and business common sense
go well together. In other words, as a CEO,
you don’t have to be a supply chain expert
to spot gaps or opportunities to succeed in
supply chain objectives and business goals.
Quick wins that are good for the business or
a shortlist of the top items to be fixed can
“Each of these 3 Cs must be linked with the goals
of customer satisfaction and overall profitability that
apply to most supply chains, as well as to objectives
specific to your market or sector.”
MHD SUPPLY CHAIN SOLUTIONS — MARCH / APRIL 2017
SUPPLY CHAIN 39
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