One of the presentations at last week’s Supply Chain Directions Summit, sponsored by eyefortransport, was Greg Aimi’s presentation on Is the World “Flat” or Not?. In this talk, which I’ll also cover in later posts, Greg presented AMR’s top 10 Supply Chain Issues. These were:
- Customer preferences / product option explosion
- New product introduction speed and lifecycle end decisions
- Reducing forecast issues / better demand visibility
- Right-sizing network inventory levels
- Creation and coordination of a multi-tiered flexible supply network
- Obtaining the right landed costs for sourced products
- Controlling complex global logistics
- Minimize expediting need
- Lowering operational costs and improving profit
- Managing outsourced relationships for flexibility and profit
Customer preferences / product option explosion
These days, SKU’s are proliferating like wildfires through gasoline soaked dry deadwood on a zero humidity day. What can you do? I’d start by adopting a Product LifeCycle Management (PLM) solution.
New product introduction speed and lifecycle end decisions
Not only are SKU’s proliferating out of control, but product lifecycles are getting shorter and shorter. Not only do you need a good PLM to manage the cycle, but you need a good methodology to make sure you are designing the right products with the right technology. I’d recommend starting with TRIZ-based Innovation on Demand .
Reducing forecast issues / better demand visibility
This is where collaboration takes center-stage. The entire organization needs to be working off of one number, that is collectively agreed upon based upon demand data coming down the chain and manufacturing capability data moving up the chain.
Right-sizing network inventory levels
Once you have good demand visibility, this is where inventory management systems and transportation network optimization come into play. See my 4th post on CombineNet for some insights on how to accomplish the latter.
Create and coordinate a multi-tiered flexible supply network
This is where supply chain visibility comes into play. Make sure you are using multiple tier 1 suppliers and that each tier 1 supplier uses distinct tier 2 suppliers and so on. This helps to mitigate risk in case a supplier goes out of business, a lane goes down, or a disruptive force affects your supply chain.
Obtaining the right landed costs for sourced products
These days, everyone is focusing on low cost country sourcing with its promises of cheap labour and cheap manufacturing. However, these countries typically have poor infrastructures, little or no IP protection, and higher crime rates. Furthermore, they are usually located far away from you and with rising fuel costs, transportation costs can dwarf your manufacturing and labor costs to the point where your perceived outsourcing savings evaporate, especially when you add import and export tariffs and duties.
Controlling complex global logistics
How do you get your order from a factory deep in mainland India or China to your distribution centers deep in the American heartland – in thirty days or less – guaranteed – every time – affordably?
Minimize expediting need
This involves getting a good handle on your demand and your global logistics. Expediting adds multiples to your logistics costs, eating away both your savings and your profit!
Lowering operational costs and improving profit
To be truly effective, procurement best practices need to be applied across the board, not just to your direct goods, indirect goods, and services procurement. Your best practices need to be applied to internal operations, sales, and marketing. See my posts on Magic and Logic for some insight onto how good procurement best practices are often universally applicable across the organization.
Managing outsourced relationships for flexibility and profit
In today’s ultra competitive marketplace, success often depends on doing what you do best and outsourcing the rest. However, outsourcing only adds value if the proper relationship is formed, managed, and used to improve your business. This is a topic I tackled briefly in my procurement outsourcing series (I, II, and III) over on ESF and a topic I’ll take up again in future posts.
In response to these top 10 issues, Greg Aimi presented seven best practices to tackle them. Check back tomorrow to find out what AMRs recommendations are.
Note that eyefortransport‘s sister organization, eyeforprocurement has a number of upcoming events next year custom designed for today’s procurement professionals, including the Supplier Management Forum next April in Miami. Registrations received before year’s end save $400 off of the regular registration rate and those who quote “sourcing innovation” in the discount code field save an additional $100.