What is strategic supply chain management ?
Supply chain management is a broad term that encompasses many different topics and practices. These can include how products are moved from their production to retail locations, how inventory is stored, how the supply chain is organized, and more. It also involves planning for the future. There are three major areas of strategic supply chain management that all come together- The first area of strategy focuses on customer needs The second area looks at what type of company you want to be The third area addresses basic principles of supply chain management
A Strategic Differentiator- An Introduction to Strategic Supply Chain Management
The importance of strategic supply chain management?
Effective supply chain management enhances a company's financial position by producing value that is aligned with the company's business strategy. Through the distribution of products and services, Supply Chain Management plays an important role in customer satisfaction. Procurement activities, to operations and logistics departments, and across the supply chain, good supply chain management is crucial for lowering operational costs. The magnitude of profitability for major businesses is determined by how well their supply chains are managed.
Supply Chain Management also has a less well-known societal function in ensuring that the essentials that humans rely on, such as food, electricity, medicine, and modern infrastructure, are available and flowing.
How do you develop a strategic supply chain management?
Developing and implementing a Supply Chain management strategy can be difficult and time-consuming, but we've highlighted a few steps that any company can take to enhance how commodities flow in and out of their facilities.
It is difficult to manage the many processes that are required for a product to reach its destination
Zip Inventory will help you understand the different processes that are involved in creating and executing a successful supply chain management plan
A demand-driven and customer-focused Supply Chain are effective and efficient. As a result, the first step in developing an integrated supply chain strategy is to examine current and future supply chain requirements from the customer's perspective. In some situations, a business may be needed to divide its customers into segments and establish separate logistical strategies for each section. Customer requirements for delivery frequency, delivery windows, inventory levels, order fulfillment lead times, return & replacement policies, packaging requirements & transportation damage, product labeling, warehouse network changes, and special delivery services should all be addressed in the questions.
As part of an integrated supply chain strategy, a firm must consider the major supply chain trends and determine how it will address each of them.
A business must understand what the competitor is doing and likely wants to do to make the best strategic decisions about what to and what not to do.
The logistics of managing a supply chain can be complex and time-consuming
Zip Inventory provides a comprehensive overview of the strategic supply chain management process
Examining current supply chain technologies and technological developments may spark ideas on how to relate new technology capabilities to customer needs. However, do keep in mind that the creation of new supply chain capabilities should be driven by customer needs, not technology.
How well some of these technologies improve or even change a company's Supply Chain is largely determined by the company's ability to hire and retain employees who can comprehend and use them.
The lack of effective risk identification, prioritization, management, and mitigation procedure is a clear threat to an organization's supply chain and strategy. When a company intends to compete globally and/or expand its supply chain to other nations and regions, a thorough risk assessment becomes even more critical. Risk planning, however, generally goes to the bottom of the priority list when there isn't a crisis to urge action.
A supply chain strategy should, in general, include the organization's future for at least three years. That does not, however, imply that the organization will adhere to that strategy for the next three years without making any changes or adjustments. The global economy is simply too dynamic for a company to avoid making changes to accommodate significant changes in its competitive landscape.
Organization, people & indicators
The implementation of a new supply chain strategy may necessitate a change in the structure of the organization. This could include hiring more people, reducing the number of employees on a team, splitting up an existing team, or merging two teams that are currently located in different parts of the company. As a result, a review of organizational architecture is required as part of the supply chain strategy implementation process.
Business case & buy-in
Implementing a supply chain strategy is a huge cross-functional undertaking that necessitates the buy-in and support of nearly every department inside a company. A strong business case for the change is frequently insufficient to achieve buy-in, but it is a fundamental requirement.
Incorporating a company's supply chain strategy into the Sales & Operations Planning process and meetings is the best way to manage its execution. If a company does not already have a Sales & Operations Planning process in place, now is a great time to develop and implement one as part of their overall supply chain strategy.
How do you implement a strategic supply chain management?
Businesses can manage their moving components more effectively and efficiently with the proper solutions. They break down silos and provide teams with real-time access to critical information, enabling improved collaboration and more informed decision-making.
Here are some steps you should take to improve the implementation of a strategic supply chain management plan-
Know what you need
It's crucial to figure out what your company needs in the short and long term before investing in new software. Conducting an audit of existing systems and procedures, gathering information from employees and stakeholders, and, of course, having a clear vision for the future of your company and Supply Chain are all examples of this.
There are many goods on the market, but you must choose the best one for your company. While one solution may be appropriate for one firm, it may be too complex, basic, or customised for another.
Make a shortlist of the goods you think are the finest, and schedule meetings with representatives from your top choices to learn more about what they have to offer. Check out online reviews and ask your industry contacts for their opinions and recommendations.
Make a realistic plan
As implementing a new system is a major job, it's critical to sketch out a strategy and define what success means for your company before getting started. Include goals, deadlines, major activities, and timetables, as well as a map of key players and their involvement in the process.
Include success metrics like as demand forecasting accuracy, revenue growth, and customer experience.
Keep your timetables and budget as realistic as possible - things often take considerably longer and cost much more than anticipated, so run a comprehensive pricing and timings exercise to assist you predict the most likely case.
Map the risks and considerations
Collaborate with key stakeholders to create a comprehensive list of concerns that are likely to arise. This can include staff resistance to change software, incompatibility with existing systems owned by you or your partners, or the possibility of supply chain disruptions as you transition.
After you've identified the risks, describe the possible repercussions and what you can do to mitigate them. It's a vital exercise in being prepared, but it'll also be useful in easing stakeholders' fears and demonstrating that potential dangers are being addressed.
This is true at every level of the process, even before you've decided on a new system. Get senior management on board as early as possible to ensure their support for the transition, as well as essential personnel who will be most affected by the new system.
Consider creating a business case to accomplish this. Gather proof that the current system is no longer fit for purpose, both in terms of the company's financial line and the capacity of employees to accomplish their tasks well and with reasonable ease. Then show how a new system would address these problems.
Train your staff
The best technology in the world can fail if employees don't know how to use it properly, so include a thorough, continuing training program as early as feasible in the process. To assist with this, appoint some internal software champions the more super-users there are, the more access staff will have to help and guidance.
Many software companies create their training videos and courses as well. Before you make a final decision, see what training resources your preferred vendors provide.
Test early and often
Any new system will have bumps in the road, so test it before it goes live and continue to test it during the implementation period. Ensure that important personnel are involved in the process, and establish a channel of communication for employees to communicate any concerns they may encounter.
Check in with them on a regular basis as well speak with personnel one-on-one and/or provide a platform for people to share how things are doing. This is a crucial means for users to resolve minor issues among themselves, as well as to determine which are more serious or require escalated action.
Monitor your system's progress
The job isn't done after the rollout is completed. It's critical to keep an eye on how the system is doing, what influence it's having on your supply chain, and how front-line employees are responding.
Establish a monitoring strategy and maintain lines of communication open for input from employees and outside partners. You can't solve what you don't know, and issues that go untreated for too long can turn into major concerns. Monitoring will allow you to catch problems early and offer the new system the best chance of succeeding.
Strategic supply chain management as a strategic differentiator
For the past two decades, supply networks have been built to be low-cost and efficient. Businesses, like electricity and water, have come to take them for granted over time. You made a significant initial investment, paid a low operating cost, and expected supply chains to run smoothly in the background. However, supply chains are now taking centre stage.
Companies' reactions to the present supply chain crisis usually fall into one of three categories. First, look at the most important portions for production and redesign them to eliminate the requirement for difficult-to-find materials and components. Second, regionalizing supply chains to limit exposure to transportation delays and bottlenecks. Third, raising inventories as a buffer against supply delays by modifying buffer-stock strategy.
According to industry experts, resolving supply chain disruptions will take time- for semiconductors, the industry should see some benefits from recent investments in new capacity by the middle of 2022, but increased supply will be limited, and supply shortages will most likely last until 2023 even if no additional shocks occur. And, just as the issues have been building for years, the transformation of supply chains will take a few years to complete, and it will be significant.
It's no longer just a matter of finding a quick fix for today's supply shortages- businesses have grasped the crucial relevance of supply chain architecture, and they've been compelled to examine their supply chain structure in detail, weighing the costs and benefits of various adjustments. With a greater awareness of the risks, the crisis offers a chance to adjust supply chain design for the long term, improving both efficiency and flexibility.
While each company can now try to turn its supply chain strategy into a competitive advantage, the challenge is exacerbated by the lack of coordination and information sharing among enterprises.
Benefits of strategic supply chain management
Every aspect of the supply chain must be closely monitored and assessed regularly to maintain productivity and optimal performance. This has the power to make or break a business. And executives in supply chain management must ensure that these activities run smoothly so that organizations can focus on providing high-quality services.
Some of the most significant advantages of supply chain management are as follows-
1. Support your business goals
Knowing what your vendors and distributors will need to help you achieve your business goals is crucial.
List how your items get from the original supplier to your organization as the first step in any supply chain strategy. Map out each of these sources and how they arrive at your organization if you obtain raw ingredients to build a finished product. It's important to remember that parts and supplies can originate from a variety of vendors or distributors.
Making strategic trade-offs between the company's cost and the degree of service provided to customers can be part of developing an effective supply chain strategy.
2. To understand the historical data
To know where a firm should go to fulfill its commercial objectives, it must first comprehend where it has been.
To begin, figure out how much product or raw material your company received from each supplier last year and how much it cost. Determine how dependable they were in terms of the price they promised and the time they delivered. Determine what the differences were and what caused them.
It's useful to examine how each vendor performed on an annual basis to determine their future value in your supply chain strategy.
3. To know where your inventory is
Every company has to know where their finished inventory or raw materials are in the supply chain to meet consumer demand at a sustainable profit.
Businesses may now see exactly where all of their merchandise is from their warehouse to retail shelves thanks to cloud-based technologies. This end-to-end visibility is a requirement for any successful supply chain strategy. Point-of-sale, warehousing, and inventory management systems are among the systems that businesses can employ.
The greatest systems, are those that can connect with vendors in real-time to determine where finished goods or raw materials are located.
4. To adapt to changing demand of the customer
Markets change rapidly. Companies must be able to detect changes in prices, delivery, and client demand quickly in order to earn a profit.
Companies used to wait for end-of-month inventory and production reports before making changes to their strategy. Growing firms with a supply chain strategy may now make dynamic modifications based on daily data from their cloud-based systems.
5. To adapt to changes in internal product design
Rapid innovation is essential for expanding firms, but it doesn't happen by itself. For a corporation to be profitable, products must be produced at the proper cost and pace, and the actual expenses of delivering a product must be precisely recognized for financial planning.
Decisions taken early in the product development process can have a big impact on its success. Designs can be optimized for "manufacturability" and long-term supply levels with the correct supply chain strategy. Knowing the agreed delivery rate and the price at which raw materials may be sold to a firm for a proposed product, for example, will affect the company's motivation to develop and stock it if they know they can profit in the long run.
Choose Zip Inventory to ensure smooth transmission of supply chain
Zip Inventory is one of the most effective automation programs available, and it will assist you in achieving your aim. Here are some key features of Zip Inventory-
- It can establish variable count frequencies
- View the total amount of menu items that have been sold
- Corrects errors before they become an issue
- Identifies ways to reduce waste
- Keeps your team informed about new recipes
- Allows you to look at inventories anytime
The lack of time, resources, and knowledge can often lead to a lack of effectiveness in the supply chain management plan
Zip Inventory provides an understanding of the processes required to manage a product from start to finish