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DIVYA BHARTI ....created by me............
Supply Chain Asia
July/August 2009
infrastructure update
14
supply chain – strateGy
Post-recessionsupply chains –
opportunity and challengefor design makeover
Tom Craig
, president o LTD Management,says on the path out o recession, companieswould do well to start taking the business osupply chain management seriously
S
upply chain management is a complexresponsibility. There are supply chainswithin supply chains. Supply chains arenot linear rom one customer to one supplier. They involve multiple customers and multiplesuppliers each o whom has a supply chain. This complexity is compounded by thepresence o three dierent supply chains —product, inormation and nancial.Despite the scope and complexity,supply chain management is oten not a vitalpart or many companies. It is viewed more interms o costs, such as reight. Supply chainexecutives are not presidents o retailers,wholesalers or manuacturers. Supplychain departments are oten positionedsomewhere lower down in an organisation. The impact to companies o theirtreatment o supply chain managementhas handicapped their eectiveness andresulted in:1) Wasted capital and resources2) Increased costs to perorm activities andtransactions3) Lost customer sales and poor customerservice4) Sacriced competitive advantageSupply chain management’s biggest challengeand obstacle is internal and begins with thecompany o which it is a part. The reasons orthe situation are numerous and include:
Companies are dominated by a ocuson traditional corporate unctions —manuacturing, accounting/nancial andsales
Supply chain management is not viewedas a core competency. It is viewed as acost centre
Organisations are built rom the insideout. Despite the attention to customers,companies are not designed romcustomers and markets back into therm so as to best serve them. Firms arenot truly customer-centric
Supply chain management is a horizontalprocess that runs across the organisationand outside the organisation to includesuppliers, logistics service providers,and customers. Companies, though,are vertical. Processes, products andinormation do not low smoothlyacross the vertical barriers created byorganisation silos.
Accounting has its roots inmanuacturing when companies were
July/August 2009
Supply Chain Asia
infrastructure update
15
supply chain – strateGy
sales, are not reported on any nancialstatement.
Companies recognise global complexityo their business but do not include itsimpact on overall perormance and donot include supply chain managementin their strategy.
Channels o distribution are dominatedby large corporations. Each large rmhas dierent requirements becauseo each one’s internal supply chainrestrictions. The dierence in size andthe dierences among irms inhibitreal collaboration and the ability tostreamline and improve supply chainmanagement. Instead, accommodatingto each customer’s demands is howsupply chain management is perormed. The rms do not ask the large customerswhy they do what they do; nor are theyproactive to initiate and collaboratewith other approaches that could helpcustomers. Instead, company practicesare orce-itted to accommodate thevarious customer specications.
Company metrics are not cross-company.Instead they are more unctional to selectareas and are tangential to supply chainmanagement.
Supply chain management evolved rombeing trac to distribution to logistics tosupply chain management. Companiesailed to recognise the evolution and themeaning o this change. The above is why much o a rm’s supplychain management is cobbled togetherand contributes to company diculties inaddition to those caused by the severity o the economy.As a result, programmes, such as lean donot properly address international supplychains and sourcing, and long lead-timesand waste created with inventory and time.Lean, instead, is essentially used or thedomestic side o the company. It is not totallyappreciated that oshore procurement andits cycle times can create signicant issuesor orecasting accuracy, and or good salesand operations planning.Oten, one supply chain approach isused or all products, markets and customerswithout segmentation or dierentiation orrisk, complexity, velocity, time and servicerequirements beyond those demandedby each customer, revenue, and proitcontribution. Warehouse networks are notregularly analysed as to costs, service andlow, even though customers, products,suppliers and business demands change. The locations have been static while businesshas been dynamic as to customer andsupplier locations, products and order anddelivery requirements. This conundrum applies to companiesregardless o size, regardless o industryand regardless o what country in whichthe businesses are located. It is especiallydicult or small-medium rms. These rmsight a competitive battle against largecompanies who have leverage and resourceadvantages. Less-than-needed supply chainmanagement only compounds the problemsor these small-medium companies.Companies are in a survival mode tryingto deal with and get through the globaleconomic crisis and the credit collapse.As rms work through the diculties, willchange come or those companies thathave not properly perormed supply chainmanagement? There will be change becausemany irms will not make it through the
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Organisations arenot going to evolve intohorizontal entities withhorizontal processes. Theywill remain vertical withthe obvious implicationso authority. Accountingstandards are rules thatwill not be updated quicklyto reect the realities oglobal business. Whilethere may not be changesto these, companiesneed to recognise thelimitations they impose onsupply chain managementperormance.
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vertically integrated and labour costswere large and when variable costs-and ixed costs-control dominatedattention. Nowadays, with supplierslocated around the country and aroundthe world, outsourcing, product liemanagement and cycle times areimportant. Accounting does notadequately address supply chainmanagement. Freight and warehousecosts are reported monthly on the protand loss statements. Inventory is viewedas an asset and is reported annually onthe balance sheet. This is what is reportedto shareholders and stakeholders.Customer service, including lost salesand lost opportunities with discount
transport insurance plus
innovation
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| Upload Date: | 11/08/2009 |
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