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Despite two decades of advancement in supply chain technologies, companies are struggling to gain balance at the intersection of operating margin, inventory turns and case fulfillment. My goal is to understand the impact of technologies and processes. Today, we have a number of burning platforms. It is easier said than done.
We consistently see that companies focused on functional excellence–a focus within a functional silo like manufacturing, transportation or distribution– or singular metrics– like inventory or costs– underperform against their peer groups. Many try to start with technology. Responsive. Let me give you example.
Supply chain executives must evolve from cost and service as the key objectives for optimal demand-supply balancing towards the “quadfecta” of cost, service, resiliency, and sustainability. Metrics such as lead-times, forecast accuracy, inventory levels, and service are used to measure operational risks.
It’s the key to transforming your supply chain from a source of frustration into a well-oiled, profit-generating machine. Forget static networkdesigns and gut-feel decisions. Connected technology transforms traditional supply chains into dynamic systems capable of real-time decisions and proactive problem-solving.
At each company, there is a relationship between the metrics of growth, margin, inventory, customer service, and asset strategy. For the purpose of this article, I will use Return on Invested Capital (ROIC) as the proxy metric to discuss asset utilization.) Understanding this relationship requires modeling. (A A Case Study.
For organizations layered in functional metrics and driving a cost agenda, this is a tough nut to crack. During the pandemic, companies struggled with planning systems turning off the optimizers, and using the technology as a system of record. Show the technology vendors touting digital and AI transformation the door.
Continuing Disruptions in Transportation and Sourcing Materials After the pandemic, retailers are faced with new challenges and disruptions due to global conflicts, trade restrictions, and now recessions. Here are some highlights from these trends in 2023 and implications on supply chain planning.
This document serves as a roadmap for professionals involved in supply chain networkdesign and optimization, providing valuable insights and practical guidance at every stage of the process. This initial step enables tailoring the supply chain networkdesign to meet specific needs effectively.
Each requires design and fine tuning. However, only 9% of companies actively design their supply chains. The strategy department in most shipper organizations sits in finance while the networkdesigntechnology expertise is usually a much lower level in operations. Design Your Value Chains.
For the purpose of this discussion, I define agility as the design of the supply chain to deliver the same cost, quality and customer service given a level of both market volatility and process variability. It requires design. In the supply chain, variability and volatility come from many sources. Is it S&OP?
Last week, after booking an additional $1B in unexpected supplier costs in the third quarter, the CFO led the company’s focus on restructuring to “support efficient and reliable sourcing of components and internal development of key technologies and capabilities.” What is the issue?
Year after year, well intentioned people toiled against improving metrics that reduced, not improved, the effectiveness of the supply chain. The argument that I want to make here is that the supply chain problem has changed, but we are implementing the same old technologies without stopping to realign against new goals. You got it!
While most consultants and technologists want to sell technology, and are eager to slap in a new piece of software, my caution is to slow down and better understand root issues before having a technology discussion. When a company contacts me to help them with their supply chain, the pain is usually a gap in customer service.
Much to my chagrin, when I entered into the world of supply chain, the processes of source, make and deliver were usually not designed. It was hard for me to rationalize the world of manufacturing that was deliberate and designed versus the emerging practices in supply chain. Supply chain design looks very different by company.
Source Merriam-Webster Dictionary. The article is written and the story is spun, but the solution offered is a supply-centric solution based on yesterday’s technology. The original principles of a value network that can sense, shape and translate demand with near-zero latency are being lost in the fog. The acronyms keep coming….
Over the next five weeks, seventy business/technology and consulting leaders will complete the course. Based on the work with Georgia Tech, we are getting clear on which metrics matter by industry. As companies adopt a balanced scorecard, the functional metrics shift to a focus on reliability. Analyze inventory health.
Each requires design and fine tuning. However, only 9% of companies actively design their supply chains. The strategy department in most shipper organizations sits in finance while the networkdesigntechnology expertise is usually a much lower level in operations. Design Your Value Chains.
Each requires design and fine tuning. However, only 9% of companies actively design their supply chains. The strategy department in most shipper organizations sits in finance while the networkdesigntechnology expertise is usually a much lower level in operations. Design Your Value Chains.
The most common reporting relationship in the supplier organization is to a leader of supply (focus on logistics, distribution, materials sourcing and customer service). The focus has been on sourcing and managed costs. They lack the greater understanding of planning and value networkdesign.
How can they do that in an informed way, accounting for complex cost and service trade-offs? AIMMS NetworkDesign provides functionality that helps supply chain teams model carbon emissions and other non-financial metrics like water consumption and carbon equivalents. What are the key KPIs for SC NetworkDesign? •
The number one question that I am asked today by manufacturers across all industries is “How can I improve customer service?” Nine times out of ten improving customer service requires different management of the budget cycle and a rethinking of financial planning. Background. The supply chain is a complex non-linear system.
The combination of technology along with the advancements in transportation made it possible. The winners drive improvement while posting financial results in the Supply Chain Metrics That Matter ahead of the peer group. A Supply Chain Leader will make progress on both of these key metrics with a very tight and controlled pattern.
Slowly, as shown in the image of the consumer value network, supply chain leaders expand the scope of their supply chain operations from the customer’s customer to the supplier’s supplier with a clear view on the customer. The metrics reward functional thinking. NetworkDesign Maturity Model.
Financial reengineering focuses on the optimization of short-term results that are usually based on a functional analysis of source, make, or deliver. Few consultants understand the interrelationships between source, make and deliver. Snow fell last night as I worked on my last Supply Chain Metrics That Matter report.
However, this mature team found the technology insufficient. They gave lip service to the need for IT standardization, but ran their process on a custom built model that enabled reverse bill of material, and profitability analysis. Orchestration enables companies to effectively manage trade-offs between source, make, deliver and sell.)
294 manufacturing facilities produced more than 90 million metric tons of food and beverage in 2021. PepsiCo products then reach shelves through its operating subsidiaries and a complex network of fleet operations. Technology is used to help in this endeavor. PepsiCo has farmers they directly source from.
You can use modeling technology to accurately identify and quantify potential supply chain risks and their corresponding costs, and develop mitigation strategies through scenario optimization and advanced analytics to build resiliency into your operations. Understanding the Resiliency of Your Network.
Manage Make, Source, and Deliver Together. Change internal metrics to a balanced scorecard and force the functions to work better together. The design, and redesign, of supply chains needs to be continuous based on market data. Invest in networkdesigntechnologies. What to do? Focus Outside-In. What to do?
In our research for the book Supply Chain Metrics That Matter , we find that this is the case for 90% of companies. Instead, invest in a networkdesign group to understand your potential. Ask the team to use supply chain networkdesign models to determine what is possible in the supply chain. You are not alone.
Manage Make, Source, and Deliver Together. Change internal metrics to a balanced scorecard and force the functions to work better together. The design, and redesign, of supply chains needs to be continuous based on market data. Invest in networkdesigntechnologies. What to do? Focus Outside-In. What to do?
The rising complexity of items sold decreases the organization’s ability to forecast, and the longer lead times across multiple tiers of sourcing and supply, increases the bullwhip impact (distortion of the demand signal across multiple tiers of the value network). Technology has not caught up. This increases risk.
The advent of transportation management systems (TMS) in the 1990s introduced near-infinite metrics and data points into the supply chain yet brought with it more questions than answers: How do we centralize the data? Most systems are flexible enough to merge data from external sources into the algorithm architecture.
” At the other end of the continuum is the argument that “ Forecast error is the most important metric to improve.” I worked for a software company for almost a decade and implemented demand management solutions in the 1990s for multiple companies. The capabilities of these technologies are not equal.)
No other service, trade or profession has been stretched to its limits the way healthcare systems have been. The healthcare industry has changed considerably since the onset of the pandemic, and there’s been a renewed focus on healthcare services to cut costs from the bloated healthcare system.
How should the Global Procurement Councils (GPC) in multinational companies position themselves in the global operations network? Instead, it should be an information exchange virtual platform. Here I want to share eight key procurement challenges that we and consultants are facing in today’s global sourcing world.
End-to-end supply, transformation and distribution of goods has extended into a global, networked operation for many companies. At the same time, business system technology has evolved to help manage the multiplication of relationships and touch points.
Here, Gai emphasizes the critical need to find the right services partner to supplement your internal team — accelerating and maximizing the results of all your supply chain improvement initiatives. For example, the team needs to include technical specialists who can make the best hardware and software choices. And the list goes on.
The report examines the trends impacting how shippers and logistics service providers manage freight transportation processes and the technologies used in support of these processes. 2) Focus on improving understanding of the key milestones in your transportation network and boost visibility efforts specific to those milestones.
In most ‘benchmarking activities’, self-reported data is the most common source. However, for elements like forecast error, customer service and slow-moving inventory self-reported data is not sufficient. Debra built the Gartner Hierarchy of supply chain metrics. Self-reporting of data does not meet this standard.
Teams must fully understand the concept and goals, and be equipped with the tools to enact change. NetworkDesign Today’s supply chain networks optimize for linear material flows. Networkdesign needs to evolve to handle distribution and collection, allowing product recovery to eliminate waste and reuse products.
The definition: an adaptive network focused on a well-defined value-based outcomes. The network senses, translates, and orchestrates market changes (buy- and sell-side markets) bidirectionally with near real-time data to align sell, deliver, make and sourcing organizations outside-in. Buffer Design.
Source: Machine Learning – A Giant Leap for Supply Chain Forecasting, Material Handling and Logistics Conference (PDF, 28 pp., Reducing freight costs, improving supplier delivery performance, and minimizing supplier risk are three of the many benefits machine learning is providing in collaborative supply chain networks.
On Monday, I would speak in Orlando Florida at the Terra Technology event; and on Wednesday, present the keynote at the Logistic Summit & Expo in Mexico City. Brain storm the impact of the collaborative economy, eCommerce, and shared service models. As you think about the products/services sold embrace new business models.
They are saying “we need to down the analytics platform, and define the roles and responsibilities of that area.”. It is viewed as “putting the platform out there and making it easy for people to create their own analytics.”. Don’t just limit yourself to one or two data sources, but drive creating thinking.
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