Supply Chain Management Disruption: To Prepare, or Not Prepare?
Harvard Business Review recently wrote about supply network mapping and the expensive, reactive and uncoordinated hoops companies are going through to secure supply.
In contrast, they pointed out that a small minority of companies had already prepared for such a disruption and, therefore, will come out ahead when this is all over:
“(These companies) have better visibility into the structure of their supply chains. Instead of scrambling at the last minute, they have a lot of information at their fingertips within minutes of a potential disruption. They know exactly which suppliers, sites, parts and products are at risk, which allows them to put themselves first in line to secure constrained inventory and capacity at alternate sites.”
Ok, so what does that mean?
How do you do that? Many of you are probably thinking, ‘little too late’. But really, it’s not. The decisions you make now will create either threats or opportunities on down the road.
It's an Everyone Problem
Understanding the ins and outs of supply chain management requires enterprise-wide coordination within S&OP processes. Procurement, Finance, Sales and Operations departments need to stop pointing fingers at each other when supply and logistics costs go through the roof.
It’s an everyone problem, and there’s an everyone solution.
Get together and talk about how a supply chain analytics solution can solve it. Analyze the cost of synchronizing (or not synchronizing) everything, from sales and operations to pricing.
- What key gaps (tools, information, people, processes, etc.) need to be fixed to protect the company from disruptive events in the future?
- What are the various cost-of-service trade-offs for your A-items?
- What new strategies, such as Price Optimization software, will help us align the goals of Procurement to the overall business objectives to free up cash?
S&OP Visibility is Key to Preparedness
Finally, there absolutely positively must be good collaboration in place. Supply chain visibility doesn’t stop at the distributor-customer relationship. Nor does it stop at the distributor-supplier relationship. It’s the whole chain reaction – (duh, that’s why it’s called supply chain!)
Therefore, a ‘whole supply chain’ planning solution needs to be in place, whether now or before the next supply chain management disruption happens. Because it will. And you damned well know it.
The best place to start is an S&OP or Integrated Business Planning solution. These solutions bring app-like simplicity to the planning process while coordinating:
- Communication between upstream supplier, your company and your customers
- Accountability and trust between functional groups
- Cost analysis for better decision making
- New sources of profitability and working capital
- Seamless cloud view into the supplier network (constraints, minimum order quantities, deal opportunities, lead times… all the things driving your bottom line)