SUPPLY CHAIN ASSESSMENT
A supply chain assessment is a comprehensive review process and audit of a company’s suppy chain effectiveness.
1.
Supply chain assessment report
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Supply chain maturity identification and key actionable observations
3.
Recommended IT / business roadmap (Next 2 to 5 years)
4.
Plan to yield business benefits
SUPPLY CHAIN OPTIMIZATION
Supply chain optimization techniques build quality management practices within the production process, A sharpened focus on quality will help drive efficiency while reducing waste.
Supply chain optimization uses sophisticated algorithm study and analytics to balance supply and demand in such a manner that ensures materials are procured for manufacturing and distribution to meet customer expectations at the highest cost efficiency.
INVENTORY MANAGEMENT
In supply chain management terms, inventory management refers to possessing the correct stock at the proper levels in the right place at the right time.
The ultimate objective of inventory management is to prevent stockouts, manage multiple storage locations and to ensure accurate recordkeeping.
SAFETY STOCK PLANNING
Safety stock (also known as 'buffer stock') refers to extra stock to cover demand or supply variability.
Stockouts can be caused by fluctuating customer demand, as we've seen during the pandemic.
The amount of safety stock that an organization chooses to keep on hand can dramatically affect its business. Too much safety stock can result in high holding costs of inventory. In addition, products that are stored for too long a time can spoil, expire, or become damaged. Too little safety stock can result in lost sales and higher customer turnover. Essentially, finding the right balance between too much and too little safety stock is essential.
FORECAST PROCESS IMPROVEMENTS
There are five pillars of the forecasting process:
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Problem definition
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Gathering information
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Preliminary exploratory analysis
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Choosing and fitting models
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Using and evaluating a forecasting model
Traditional demand sensing uses point of sale (POS) data from retail stores to understand the actual demand from end customers. Analysis of POS data is a very well-established method of demand sensing.
Demand sensing helps identify actual customer order trends and improve the near-term forecast. Strategic actions like demand shaping for knowingly increasing or decreasing the demand for product can be undertaken by observing demand signals. Early warnings can also be generated to identify forecasting errors and adjust the short-term forecast.
SUPPLY CHAIN MONITORING
The goal of management by exception is to ensure that supply chain operations are running smoothly and efficiently. This approach enables an organization to proactively manage its supply chain rather than reacting to problems after they occur by making data-driven decisions.
More on the
Supply Chain Assessment
Looking deeper, a supply chain assessment is a systematic process used to evaluate the performance and effectiveness of a company's supply chain operations.
1. Inventory turnover: A measure of the efficiency of inventory management, calculated as the number of times inventory is sold and replaced per given period.
2. Fill rate: The percentage of customer orders that are fulfilled without backorders. Used to measure the ability of the supply chain to meet customer demand.
3. Perfect order rate: The percentage of customer orders that are delivered complete, on-time, and in good condition. Used to measure the overall effectiveness of the supply chain.
4. Freight cost per unit: The cost of shipping and handling each unit of product. Used to measure the efficiency and cost-effectiveness of the transportation component of the supply chain.
5. Supplier performance: A measure of the performance of suppliers, including delivery time, quality, and cost. Used to identify opportunities for improvement and to manage supplier relationships.
6. Carbon footprint: A measure of the environmental impact of the supply chain, including emissions and waste. Used to assess the sustainability of the supply chain and to identify opportunities for improvement.
The Supply Chain Assessment leads to the building of a Business Case
Let’s look at the Business Case!
An organization’s investment must be measured; this is addressed by the business case.
Align Stakeholders
The success of a project and/or investment is based upon 3 pillars:
1. People
2. Process
3. Technology
An organization should be able to identify clear alignment of its vision and strategic objectives.
Measure in Business Terms
If you cannot measure, you cannot improve
An organization must establish an order of priorities within a project and construct working protocols accordingly:
1. Identify which metrics are most effective for tracking
2. Understand that different metrics and their suitability will vary by industry
3. Utilize leadership dashboards for visibility and course correction
Balance
Cost Value Risk
Organizations should consider multiple dimensions:
1. Total cost of ownership in the 3 pillars previously mentioned:
People Process Technology
2. Alignment of the project objective with the company’s vision
3. Risk scenario assessment: Investment vs. Non-investment
Projected Visibility
Return on Investment
The business case will include projected monetary gain by the end of a given project.
It will include the areas which support improved revenue growth and suggested requisite actions to achieve it.
The business case is ultimately an endeavour to deliver foresight to the client company following the execution of the supply chain assessment.
“Without change there is no innovation, creativity, or incentive for improvement. Those who initiate change will have a better opportunity to manage the change that is inevitable.”
William Pollard