How close is your supply chain to the best in class? This question is critical to more and more companies as they realize that their supply chain is critical to driving the bottom-line financial performance for their firm. To help companies answer this question and identify best practices for application in their own firms, the Department of Marketing and Logistics at the University of Tennessee began offering supply chain assessments in 2006.

Over the past 20 months, eight supply chain audits have been done, including:

• A major automotive manufacturer
• A major defense contractor
• A leading cosmetics firm
• An automotive parts manufacturer
• A pet suppliers maker
• A large tire producer
• An industrial pump supplier

The product lines manufactured by these firms run the gamut literally from lipstick to jet planes! Company size ranges from $100 million in annual sales to over $30 billion. Although the firms audited thus far are tremendously diverse, the greatest surprise of all is that they all face exactly the same supply chain problems!

What Common Supply Chain Problems Do Firms Face?
This amazing similarity of supply chain problems means that companies can learn from each other despite the industry in which they compete. Even companies as diverse as manufacturers and retailers face the same issues, creating a rich benchmarking opportunity. Companies can see best practices in a totally different industry and apply them in their own business. Some of the supply chain issues faced by firms today are noted below:

Too Much Product Complexity
All firms admit they carry too many models and further concede that they do not have a good process to eliminate underperforming products.

Too Much Slow-Moving and Obsolete Inventory
Companies struggle with stepping up to the problem of disposing of obsolete product in a timely manner. The sales function of course does not want to reduce price because they are normally measured on the margin they generate. Unfortunately, this product never gets more valuable. It sits there month after month, consuming cash and incurring inventory-holding costs until it is finally scrapped or sold at a steep discount, sometimes years afterward.

Supply Chain Considerations Not Part of the Product Design Process
When product design engineers develop a new product, they rarely consider inventory, transportation, or warehousing issues. Sometimes, small changes in a product configuration can yield big logistics savings.

No Supply Chain Strategy
It is surprising that few firms have a documented supply chain strategy. Such a strategy starts with assessing what are the needs their customers will face in the future. The process then determines the company?s future supply chain capabilities to meet its customers? needs. Eventually, specific initiatives are chartered to deliver these capabilities. Unfortunately most supply chain organizations are so consumed with the daily battles of cutting cost, managing inventory, and delivering good customer service that that they don?t plan properly for the future, sometimes with disastrous results.

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