Supply Chain Strategy Assessment
Supply Chain Strategy Assessment

Supply Chain Strategy Assessment

 The Supply Chain and logistics industry in Australia has experienced considerable change over the last few decades. As each decade has seen the evolution of integrated distribution centres, new supply chain technologies linking vendors with customers and the use of advanced algorithms for predictive analysis, organisations have had to alter their supply chain strategy and supply chain management approach.

While some organisations still operate under a traditional supply chain model, leading supply chain organisations have recognised the need to move quickly to refine their supply chain model in pursuit of the new paradigm. These are the factors that need to be supported in new supply chain strategy:
 
  • The role of mobile devices and their impact on manufacturing and distribution facilities.
  • The rise of Ecommerce creating Omni-Channel distribution centres to support the demands of the customer.
  • The internet of things and how it controls delivery modes with realtime track and trace capability for the customer.
  • Supply chain analytics, the role and use of data, sharing and collaboration, to drive predictive modelling analysis to execution

The customer has become an educated shopper using tools at their disposal to generate compressed order cycles on most supply chain organisations. The traditional supply chain model which operated on despatching to a destination when the container was full are out dated and never focused on customer service levels. Their aim was cost minimisation at the expense of customer service. Tomorrow's supply chain success stories will achieve more balance with the aid of supply chain optimisation and an agile supply chain model. Anything less will result in extinction.

Does your Supply Chain Strategy have these symptoms?

  • Customer service levels are constantly below 70% and we are unable to improve.
  • New products releases to market have not achieved forecast expectations.
  • Inventory mix issues contribute to too much or not enough inventory
  • Significant Supply chain costs has not yielded efficiency improvements.
  • Our investment into supply chain technology has not delivered productivity gains.
  • Supply chain footprint has too many warehouse facilities that are cost prohibutive.
 

The right Supply Chain Strategy achieves success

Effective supply chain management requires a responsive framework consisting of Strategic, Tactical and Operational components within supply chain model. Progressive organisations understand that the right supply chain strategy will achieve success by aligning this framework with business strategy. Continuous improvement initiatives to enhance supply chain performance must be a cultural strength and owned by the entire organisation, promoting success and achievements.

Product portfolio

A new acquisition by the business has broadened its product portfolio to provide products into a mass market channel. As the existing premium range portfolio is servicing a separate distribution channel, the supply chain model will need to change and broaden its coverage to support regional locations with a higher cost to serve. What is the depth and scale of the product range? How many SKU's are active and how many are due for transition or disposal? What is the current margin on these products? What marketing programs are in play and is there an on boarding program for key customers or distributors?

Supply management

The additional product range will need to be sourced from a new supplier base. Existing supply contracts will need to be reviewed to understand commercial implications, inventory commitments within the current supply chain and the indent cost based on a range of incoterms. Increasing the supplier base may impact on resource levels, does the existing team migrate or is there a transition period to full ownership and control centrally? The physical location and capacity of vendors will require review and may present centralisation options to standard distribution supply points. Your supply strategy will need to be refined to incorporate these challenges.

Supply chain footprint

Our existing supply chain footprint consists of a 3PL that is based in Sydney and services all existing premium accounts as a direct to distribution centre model. Existing deliveries follow a direct to store model, which is managed by the clients 3PL. The addition of the new range will require a direct to store model to be supported from a multi warehouse environment based in each capital city. Is this the most efficient model to support? Are there opportunities to consolidate storage and delivery points to minimise the supply chain foot print without impacting on service? Can our existing 3PL support a hybrid supply chain model? Is the new supply chain footprint infrastructure leased, owned or outsourced?

Physical Distribution

The existing transport cost structure to support the direct to DC supply chain model is operated as a cost centre, the new direct to store model is operated as a profit centre. Additional management and coordination for line haul transportation may be required prior and post vendor consolidation. Local couriers will be an additional service to support the direct to store model. The management and coordination of the inbound logistics component i.e. freight forwarding, customs clearance and transportation will certainly require a review to identify consolidation opportunities, service contract changes or closer vendor management during a transition cycle.

Supply chain technology

The existing ERP system supports financials and inventory at an aggregate balance sheet level. The warehouse management system, which is operated by the 3PL, is integrated to the ERP by way of file interfaces that capture order management and inventory balancing. The additional business has a number of smaller scale systems that have full ERP capability, but lack real time updated information. Can these systems be integrated or migrated? How will financials be consolidated to provide a regional profit and loss statement and balance sheet? What support agreements exist and how can support me centralised, outsourced or managed internally? How is customer service to be managed?

Developing the right supply chain strategy requires a responsive framework that can support strategic, tactical and functional changes in an organisations supply chain model. The challenge for organisations remains, as evident from the above functional areas, selecting the right model is critical. Which supply chain strategies align with your corporate strategy?

"EFFICIENT supply chain model";"SPEED TO MARKET supply chain model";"CONTINUOUS FLOW supply chain model"; "AGILE supply chain model" or "FLEXIBLE supply chain model"

 

Corporate strategy: "Developing the right supply chain strategy"

Supply Chain Strategy Health Check

Our supply chain strategy health check is a structured approach to evaluating your end to end supply chain strategy, its strengths, weaknesses, opportunities and threats. Our model provides a balanced qualitative and quantitative approach where we spend time with business leaders to understand your current situation, your business planning methodology and then undertake data mine supply chain metrics to establish a fact based outcome. This information is then used as the basis for selecting the right supply chain strategy for your organisation.

Our Approach

  1. Spend time with your business leaders and topic experts who contributed to the formulation and delivery of existing strategic and business plans.
  2. Review all of these existing plans, along with other pertinent information, to establish a strong awareness of the methodology used and your current state position. 
  3. Understand current state methodology, strategic plans and business plans.
  4. Determine the core drivers for success for your supply chain strategy.
  5. Review all assumptions that underpin your supply chain strategy.
  6. The extent of market intelligence within your supply chain strategy. 
  7. Understand the scale of the existing supply chain footprint. 
  8. Review of supply chain service metrics and their level of achievement.

Planned Outcomes

  1. To formulate a road map to fully align corporate strategy and supply chain strategy, incorporating a level of agility to support changing conditions.
  2. Depending upon the scale of the organisation, a road map may incorporate a range of components to support the new supply chain strategy:
    1. Changing the supply chain footprint through divestment, acquisition or movement to an outsourced 3PL solution.
    2. Create or modify your inventory policy to support changes to the supply chain footprint
    3. Modify inventory flow to support a centralised, decentralised or hybrid solution through vendor consolidation
    4. Supply chain technology enhancements to support information management and integration within you business.
Our supply chain strategy assessment is an essential health check and is used as a baseline to identify or validate the level of alignment between your business strategy and your supply chain strategy.
 
Popular articles on Supply Chain Strategy