After a great holiday break and a fully packed schedule of social activities where we discussed the latest supply chain topics and trends, we wanted to share our list of New Year’s resolutions that every supply chain professional should have on his or her list for 2011.
- Start using financial information in your supply chain:
- Stop using Excel as a supply chain application:
- Continue developing the supply chain skills of your teams:
- Stop using a one-size-fits-all model for your supply chain:
- Shake, not break, your supplier’s hand:
- Remember that links in a chain are oval, not linear:
- Bring home baked, not store-bought, cookies to your holiday dinner:
- Understand the time and place for outsourcing:
- Use your supply chain to expand your business, not just move stuff:
Supply chain processes, specifically sales and operations planning (S&OP), are increasingly becoming powerful mechanisms to help drive financial results in organizations. We’re not talking about tracking factory overtime costs or expedited freight costs, which are certainly important to understand, but rather the complete financial performance of the business. Supply chains and S&OP processes are faced with so many tradeoff decisions, so why not start using financial information to make those decisions?
This resolution is one that’s probably been on everyone’s list for years — and one that needs very little explanation. Make this the year you get your core supply chain processes off Excel and into a proper tool. Excel absolutely has its place in the supply chain, but it can’t be the backbone of the business. Technology has come a long way over the past few years; why not use it?
We’ve found that leading supply chain organizations focus a lot of time and resources on skill development. This is not the bland and boring system training that gets squeezed in right before a go-live or the optional training class on how to use some tool. The skill development we are referring to here should be called “learning.” Some roles and positions in supply chains are certainly “administrative” in nature, but many are “thinking” roles and require business skills. Call me crazy, but if I ever require brain surgery, I’d like to know my doctor is current on the latest capabilities and industry trends, and has even brushed up on some of the fundamentals. Wouldn’t you?
We see it all the time, and it simply no longer works, so this is the year to finally fix it. Supply chain processes that treat all products, customers, channels, or geographies the same are inherently just average and sub-optimized. Supply chains must be segmented — as an example, to manage electronic parts, cables, or accessories differently than how you would for a laptop, server, or router. Unless your supply chain is incredibly flexible and responsive, a “fit for purpose” model is more appropriate — and after last month’s posting, didn’t everyone go out and contact Craig’s custom suit tailor in Singapore? Really, he does good work. (See: Finding the Right Production Shore Is Tricky.)
Many a high-tech OEM has cut its cost basis by a fairly ruthless approach to supplier selection and negotiation: “You won’t lower your prices? Fine, you’re a commodity; I’ll find it somewhere else.” Yet as original design manufacturers, contract manufacturers, third-party logistics services providers, and Tier 1 suppliers move beyond manufacturing and into design and even services, price shouldn’t be the only object of negotiations. There’s a fair amount of security in supply, quality, and even value-added capabilities out there for the taking for those willing to move beyond price and start looking for opportunities to work with a more stable and collaborative pool of suppliers across multiple aspects of the supply chain.
In other words, what goes around comes around. How I design influences how I sell, deliver, use, recover, and repair. As high-tech companies move beyond selling the laptop, or the router, or the set-top box to selling bundled solutions of hardware, software, and services, the feedback from the field into design and integration becomes even more important. As solution selling makes the servicing of some high-tech offerings analogous to complex “integration” industries like aerospace and industrial equipment, skills such as knowing the “as maintained” bill of material for a customer asset will become increasingly important.
First, because no family should have to bear the slings and arrows of store-bought cookies and second because we wanted to make sure you were still paying attention.
Outsourcing is about so much more than saving money. Outsourcing is about finding the right opportunities to obtain better supply chain capabilities. Those capabilities may not be in the areas that we usually look to outsource. You might be a terrific block-and-tackle supply chain organization but have horrid forecast accuracy, yet look to outsource logistics while retaining planning. Given the growing variety in supply chain business process outsourcing offerings in the marketplace, supply chain organizations have better information than they ever had for evaluating when outsourcing is the right (and wrong) decision.
Major high-tech companies have developed extensive supply chain networks and relationships across the globe. From sourcing, to transportation, to site construction, major high-tech firms have likely seen it and seen it done many times over. Yet at the same time, a significant amount of growth comes from new, smaller, and innovative companies. These companies have terrific products and software, but not complex supply chain organizations. This is but one opportunity for mature high-tech companies to use their supply chains as revenue centers, in this case by renting supply chain capacity and supporting capabilities to younger companies. Companies have invested significantly in their supply chains. Shouldn’t they get something back?
Happy 2011 to everyone and may it be filled with products getting to the right place at the right time (not to mention the right quantity — Steve ).
— Craig and Steve