by Greg West, Farthing West Chief Brilliance Officer
Today, most managers would agree that more than ever, the success of an organization is heavily dependent on the effectiveness of its supply chain.
Unfortunately, many supply chains have evolved. They are the result of tactical decisions to solve a short term problem here and in response to an emergency there.
While this process of evolution worked well for many year, today we are living in a world that is rapidly changing and our supply chains need to adapt. They need to be agile. They need to be planned.
Just reflect for a moment on the new and emerging technologies. Technologies that only 10 years ago would have been something out of science fiction. Driverless cars and trucks, deliveries by drones, robots replacing workers, artificial intelligent systems that can make decisions on our behalf, 3D printers, gene manipulation – the list goes on.
And on top of this we are experiencing increasingly shortening product life cycles. Our customers are increasingly demanding higher quality and more features.
With all this change, even innovative business strategies can be derailed by poor alignment with supply chain design.
To survive today, businesses need to design their supply chains to be agile, responsive and low cost. This is not a product of evolution. This is the result of planning.
Often network redesign is focused on internal factors. The need to improve service delivery and optimise working capital. While improving DIFOT (Direct In Full and On Time) and ensuring that the right inventory is at the right location is sensible, customer-centric and indeed desirable, it is no longer enough.
Networks today need to be aligned with the needs of business. The network needs to support our business goal. This is our best option for success.
We need to understand what our customers expect from us and how are we going to meet their expectations. We need to understand the current market trends, the competitive and financial pressures that we will be facing.
Understanding the gap between where we are now and where we need to be is how robust supply chains are designed.
This requires more than just determining where to locate our warehouses. Working out what to put in them. And, determining the transportation method that will deliver the appropriate level of customer service and at lowest cost.
Don’t get me wrong.
This is important.
But it is not sufficient.
When we design our new supply chains to close the gap, we need to ensure that there is internal alignment and brilliant process.
While the network redesign starts with Strategy it is ultimately about people and process.
Our network redesign needs to ensure that there are shared metrics across departments.
That the focus is on developing processes that satisfy customer needs and deliver on our business strategy.
To achieve this, our network redesign needs to focus on developing brilliant processes. Because average people deliver brilliant outcomes when the supply chain is built on brilliant processes.
And as the world changes our supply chains need to continually change.
So, are we searching for an optimised supply chain?
An optimised supply chain assumes a deterministic approach where the use of spreadsheets, regression analysis, simulation, heuristics and modelling will give us the best answer.
These are just tools.
Modern supply chains need to be aligned with strategy. They need to have agility, efficiency, responsiveness and deliver brilliant results.
To deliver brilliant results we need to adapt to change and this requires that we develop our people and help them to design brilliant processes that keep pace with change. This is the essence of world class network design.