How to Achieve Operational Excellence in Your Supply Chain

    As an executive in a leading company, you are driving higher levels of supply chain performance through the adoption of proven best practice methods and leveraging the right kind of organizational talent. As performance improvement initiatives such as Lean Six Sigma, ERP, and Operational Excellence mature past initial phases of application, you are faced with the unceasing need for even higher levels of supply chain enterprise performance.

    Having an adaptable supply chain model is increasingly vital for performance. Your organization’s supply chain is adapting indirectly in real-time, even if you’re not actively participating in the process, because some or all of your suppliers are actively pursuing adaptability which forces your supply system to evolve accordingly. Consider this passive adaptability. Your active participation in your supply chain adaptability will have the same effect on your supplier’s supply chain, as they will have to adjust their processes in response to yours. Yours will be driven primarily by (in no particular order):

    • Mergers and acquisitions
    • New partnerships
    • Laws and regulations
    • Product/service portfolios
    • Competition
    • Technology
    • New markets, and
    • Customer/client preferences.
    Here are your top considerations for maintaining an effectively evolving and adaptive supply chain:
    Map global logistics partnership connection of Container Cargo
    Embrace your knowledge, your data

    Let’s simplify the whole Big Data/Internet of Things (IoT) for a minute–put it in user-friendly reality. All those influencers above have been telling you how to improve your business, how to conform to their wishes, needs, demands, and rules for as long your business has existed. It exists now because you listened, made that your knowledge base–your big data (and theirs) available instantly via the IoT–and changed your business model to maximize opportunity there from.

    Now use what those influencers are telling you about their wishes, needs, demands, and rules involving:

    • Demand
    • Forecasting
    • Planning
    • Procurement
    • Production
    • Warehousing
    • Transportation
    • Distribution
    • Returns, and
    • Customer service.

    Make that your supply chain adaptability knowledge base. Capture it, modify it, and respond to it–your supply chain big data available instantly via the IoT.

    young business person and graphical user interface concept, smart city, internet of things
    Know and practice the 3 “A“s of supply chain management

    Armed with your big data knowledge and your IoT one-click access to it, you can systemize how you anticipate, even sense, where you need to adapt your supply chain by applying the ” three A’s of the Supply Chain: Agility, Adaptability and Alignment” (Hua Lee, Harvard Business Review 2004):

    Consider adaptability your long-term ability to effectively respond to changes in the key elements of your supply chain as listed above.

    Agility is your ability to react quickly and effectively to those changes–including rapidly addressing and correcting any wrong adaptation decisions that are made (remember that you are better off quickly reacting based on your knowledge than taking the wait-and-see approach which can snowball a small adjustment into a big problem).

    Critical to the effectiveness of every supply chain adaptation is your active, ongoing, and eager alignment with your influencers (see first list above). They are your collaborators and you are theirs–take advantage of their knowledge, supply chain optimization techniques and technologies, and share yours with them.

    Adaptability in your supply chain is a state of mind. The minds of you and your collaborators. There exists a limitless legion of technological tools available to manage your knowledge–there is something that fits every business regardless of scale or budget. There is no shortage of really talented people who can train a supply chain management team to be on top of incremental, and sometimes grand-scale adjustments based on real-time knowledge and instant access to it.

    AI (Artificial Intelligence) concept.
    Practice simplified risk mitigation/management processes

    Today’s rapidly changing circumstances and uncertainties require executives and their supply chain leadership teams to quickly respond to increased complexities and risk in the supply chain. Whether its tsunamis, global conflicts, regional economies, regulatory changes, or protection of product or intellectual property rights, supply chain leadership teams are becoming overwhelmed with all the surprises and things that don’t go as planned. Positioning you and your team to stay ahead of these events requires the implementation of simplified risk mitigation/management processes that anticipate the probable, and focus efforts on the most severe potential impacts.

    You must also expect their team to identify opportunities for performance improvement, bring those opportunities forward in a way that maintains a perspective of priority, and assure that strategic impact and manageable scope projects are defined to successfully capture that opportunity.  Executives who have viewed their roles as mostly administrative in defining metrics, setting goals, and disciplining individuals to achieve personal scorecard objectives are challenged now to be more effective in establishing perspectives, setting strategic near term priorities, and making balanced decisions for near term results in all areas of supply chain performance: reliability, responsiveness, agility, cost and asset efficiency.

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    Implement collaborative leadership of the end-to-end supply chain

    Today’s supply chains are typically global, complex and made up of hundreds, if not thousands of business entities that require alignment in priorities, business plans, and performance improvement efforts. Collaborative leadership begins with alignment of the internal senior executive team, and continues with the day-to-day supply chain core leadership team and support team.

    Establishing an end-to-end supply chain performance governance approach has become a top priority with many executives, and they are leveraging best practices in scorecards, dashboards, and performance analysis to enable these large perspective teams to know where they are and where they should be.

    Group of Business People in Meeting Photo and Illustration
    Understand the value chain, it’s essential to supply chain OpEx

    By looking across a value chain of a business system, you can take a more thoughtful view from customer output, backwards to see where the handoffs, wait states, and low value add tasks are hiding. I often find teams who are embedded into functional silos, who have limited visibility on the needs of the end user, who don’t have a clear idea of who their next customer is, i.e. what their value-added output is and who uses it. They may have never asked for feedback from the next customer, and may not feel empowered to negotiate with upstream process owners for their needs either.

    With each island of a process sub-optimally devising work-arounds and inefficient methods to make up for a lack of clear requirements or feedback, system inefficiency is often built in by accident. As long as the team members feel safe enough to uncover where the waste and errors are lurking and get credit for doing the hard work of fixing them, things can improve exponentially, not just once, but with new relationships built, continual improvement can occur quite naturally over time.

    I have often been surprised to find when I connect process owners and users who are by default interlinked and interconnected, often working in tandem for years, that they have to introduce themselves. Another danger point is to coach leadership in advance. If they realize that if they blow their stack in public when the waste and error causes and solutions are uncovered, they can rest assured that no team will ever be honest and open again in the future.

    Remember executives, you own the system, the measurements and the outcomes. If you have tolerated hidden poor performance for years, and you want to get mad at anyone, take it out on yourself. Make sure you make the environment safe for honesty and cooperation in the interest of making the customer experience better.

    symbol of capital chain

    Industry Experience

    Consumer Goods
    Financial Services
    Health care
    Information Services
    Insurance & Retirement
    Complex Manufacturing
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