It pays to be proactive in making sure your supply chain is designed for success, and that means asking some key questions about it.
Responding to Any Situation
The issues surrounding these five questions revolve around culture; capability, flexibility, capacity and technology; systems and processes; repeatability and reliability; and collaboration. Let’s look at each briefly.
• When we talk about culture, we talk about whether relationships with supply chain partners—both internal and external—are adversarial or collaborative, and whether all parties are committed to quality. We also talk about whether the organization is prone to taking risks or is risk averse. A company’s culture also determines whether supply chain management is considered to be a senior-level function or simply a component of operations.
• With capability, flexibility, capacity and technology, it’s all about the ability to respond to any situation. We look at the capacity buffering or flexibility within the components of the supply chain so that if there’s a surge in demand, the supply chain can leverage its systems and technology to meet the demand. Likewise, if there’s a delay in a part’s production halfway around the world, or if there’s a supplier quality control problem, is the supply chain able to switch to a back-up or alternate supplier to maintain responsiveness and customer confidence and availability?
• Systemsand processes can make or break a supply chain. They must offer high visibility into the supply chain’s day-to-day operations to facilitate responsiveness. They should be structured so that there are minimal touches through the supply chain, and they should be constantly reviewed for improvement.
• A well-run supply chain features repeatability and reliability. You look for standardized processes to reduce errors, and repeatability to reduce cycle times and gain efficiency. The win is increased quality and reduced costs.
• Finally, supply chains are ultimately about collaboration, given that they are by definition networks of linkages and relationships. Effective supply chains aim for trust and sharing accurate and timely information, like actual demand and capacity to optimize the chain. This results in lower inventory and lower cycle times for all parties. While you can’t immediately have this relationship with a new partner, the goal should be to drive toward trust to create a more responsive supply chain and achieve greater cost reductions.
As you can see, minimizing supply chain disruptions to maintain a high level of quality control requires a best-in-class approach to addressing the complexities inherent in the system. It shouldn’t take a high-profile quality control failure for CEOs to take a fresh look at what’s happening in their own organization since a supply chain failure of any kind could devastate or destroy profitability. Start being proactive by asking the five key questions and ensuring that your supply chain organization has a culture of collaboration, responsiveness and constant improvement.
Brian Nolf is global supply chain management practice head for Wipro Consulting Services. He is based in London, UK. Gerhard Plenert has written extensively about supply chain strategy, most recently as co-author of Driving Strategy to Execution Using Lean Six Sigma(CRC Press, 2012). He is based in Sacramento, Calif.
