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| Supply chain integration |
Supply chain integration if often something that keeps on
getting put off. Just having a supply
chain in place often becomes its own worst enemy, because its presence, with
the benefits it provides, is often seen as being good enough. But the truth of the matter always is that full supply chain integration can
provide so many more benefits. It’s all about prioritizing it.
Demonstrate how full supply chain
integration drives other corporate initiatives
Full supply chain integration might be on
the mind of the purchasing people, but to those in other departments, with
other priorities, it often gets put on the backburner. One way of bringing it
to the fore, is by indicating the advantages to other departments, and the
business as a whole, that can be gained by aligning supply chain integration so that it drives other corporate initiatives.
Managing the corporate margin
According
to the National
Centre for the Middle Market
achieving margin is at the forefront of the thinking of many “middle market”
businesses.
It's easily
understandable, given how the world economy has been struggling in recent
years. Keeping a watchful eye on costs in relation to revenue and profit is the
only thing that has allowed many businesses to weather the storm. Middle market
companies are often put under pressure by their larger competitors who have
deeper pockets and who can therefore more readily afford overcoming certain
cost issues. Improvements in the supply chain are therefore one of the best
tools to approach, in order to make the savings needed. Economies can be sought
from various areas within the supply chain such as:
·
Automating the ordering and receiving
processes.Communications between buyers and suppliers can take up an inordinate amount of
time, and contribute to delays. Time is money, and anything that can lessen the
amount of time taken creates time for looking at other areas within the supply
chain that could lead to further economies.
·
Introducing smart labeling can significantly reduce the amount
of time in terms of handling the receipt and internal movement of products. It
can also lessen the number of errors that take place. Wasted time processing
urgent rush orders necessitated by mistakes made with stock inventory can be
easily avoided.
·
Enforcing delivery dates is important. It not only helps to ensure that
you don’t run out of stock of certain items, but on-time delivery helps your
cash flow to run to schedule too.
Deliveries that arrive too early not only potentially damage cash-flow,
but they can also cause problems from a storage space point of view. Similarly,
delinquent deliveries can have knock-on effects whereby they can create
production stoppages. In addition they can also affect any distribution plans
that may already be in place.
Installing
the above mentioned measures helps in reducing operating costs and contributes
to relieving pressure on margins. It’s also precisely the sort of thing that
will promote full supply chain integration. Everyone’s a winner!
Mitigating corporate risk
Supply chain risk management is an important mobilization force
when it comes to facilitating full
supply chain integration. Once
again, we turn to the National Centre for Middle Management to look at
statistics that tell us that every 4 or 5 years, 75% of the number of companies
that face crisis will either close or suffer adverse long-term damage. 43% of
these companies will never fully recover, and only 29% will be in business two
years down the line.
It means
that the smarter so-called "middle market" companies are now ensuring
that risk mitigation is one of their top priorities. They ensure it is incorporated
into their supply chain methodology so it is an inbuilt component of full supply chain integration.
Supply chain
risk management also takes into consideration things like global unrest and/or
natural disasters, which, if not taken into consideration and mitigated, can
cause significant disruption. The steps to consider in any risk mitigation
program include:
·
Nurturing
a multi-tiered supply system
·
Taking
risk assessment into account as part of the vendor selection process
·
Carefully
monitoring multi tier supply chain function
·
Keeping
careful crack of products in transit
Adopting
this sort of visibility also helps to provide insights into the effects of
disruptions. This can help to drive decisions such as knowing when to purchase
supplies stocks; when to put alternative policies in place; and went to sit
back and relax. This sort of supply chain integration significantly improves an organization’s
strategic thinking.
Facilitating expansion
One of the
top challenges facing companies is the growth of revenue. It's something that
affects the supply chain too. Expanded volumes of purchasing may need to be
managed, new sources may need to be drafted in, and new clients might need to
be introduced to the end of the supply chain. Something called “automated
supply chain collaboration” can help to facilitate this, through:
·
Clear
sight across the inbound and outbound supply chain
·
The
integration of data across both internal and external partner networks
·
Facilitating
partner collaboration through improved data access, the express updating and
execution of transactions, and communicating and sharing updates and
information on transactions with partners throughout the supply chain.
This sort of
automation enables scalability, thereby helping to underpin growth initiatives.
It's another great selling point for the complete supply chain integration process.
Buying into sustainability
Many organizations
today recognize that sustainability is not just advantageous to a company's reputation;
it is also a way of saving money and bringing about economies of scale, as
referenced in a recent GE Capital report entitled “Sustainability
in the Mid Market”.
Owners and
managers of supply chains have it within their power to encourage partners
within those supply chains to "work green" and in doing so, minimizing
their carbon footprints. The "old chestnut" of the paperless office
that was talked about so enthusiastically with introduction of PCs into the
business world, is a reasonably soft target, especially with the emphasis on
computing in the cloud today. The introduction of an automated supply
collaboration solution can help any organization to substantially cut down on
the amount of paper they use.
The backbone of your business
Although
many companies don't realise this at first, as much as the 45% to 65% of a
business’s working capital can be tied up in their global supply chain. It
literally is the backbone of many organizations, and it is therefore essential
that full supply chain integration is achieved across all areas.
Getting
everybody on board by incorporating these strategies is fundamental in terms of
working up enthusiasm for full and complete supply chain integration across the
board.
Can you think of any other areas
where total supply chain integration benefits business?
