Pull the Speed and Productivity Levers to Boost Shareholder Value

"We must do it quicker and better!" We hear this shouted a lot these days in the business world, but is it a realistic scenario?

It is realistic -- especially when it relates to how the supply chain can lead to improved operating margins. When you design business processes that are integrated, then your company naturally becomes speedier, more efficient, and holds potential for margin improvement.

I continue today with the fourth of a five-part series that looks at the supply chain mega-processes, Buy, Make, Move, Store, and Sell. (Based on a new white paper, Leveraging the Supply Chain for Increased Shareholder Value.) Here I touch on some of the key aspects of "speed and productivity" in reducing the cost of goods sold.

The Need for Speed

Increasingly, the economic focus is on "Total Delivered Cost" of goods rather than "Landed Cost." So, how do companies become quicker and smarter? Here are just a few tactics:

Supply chain benchmarking and leverage best practices
Develop strategic, tactical and operational supply chain action plans
Factor the supply chain into product development
Rationalize and strengthen supplier relationships.
Employ appropriate, current technology
Optimize distribution network(s)
Listen to the voice of the customer
Remain open to new ideas, such as designing modular and scalable operations/systems

Take the Productivity Challenge

Opportunities to improve productivity can be found throughout the supply chain, but the two most common areas are in direct labor and materials. Of course, the bread and butter of productivity is labor.

Take a good look at where your labor costs lie and compare it to productivity goals-- Is labor concentrated in the manufacturing plant? Is it in the call center, order fulfillment and/or customer service? Is it in the transportation fleet or in the distribution center?

Are you hearing more calls for "quicker and better" in your operations today? How are you meeting this challenge?

Jim
Tompkins Associates