A recent Slideshare presentation by Supply Chain Insights (SCI) on 7 Reasons You May Fail in the Race for Supply Chain 2020 had some great insights into what many organizations are doing wrong but, more importantly, cemented the need for the 3Ts, as discussed in SI’s recent post on Supply Chain 2020 – What Will It Take to Get There, if you want you Supply Chain organization to make it to 2020.
According to SCI, these are the 7 reasons your supply chain may fail:
- You treat your supply chain like a function
rather than an end-to-end process.
- You hired a boatload of consultants and spent buckets of money on “best practices”
that were actually “emerging practices”.
- Your technologies are more about you than your customers
even though customer data is more readily available.
- You are moving like a snail in a fast-paced world
when you need to be executing in real-time.
- You are simply not prepared to compete for supply chain talent
which is the missing link in the supply chain.
- Your technologies are quickly becoming legacy
while new technologies are emerging every day.
- Your supply chain is too reactive
when it needs to sense and learn.
SCI is right on the money. If your supply chain:
- lacks talent
- runs on antiquated technology
- hasn’t transitioned to new processes in decades
- only reacts to disruptions, instead of trying to predict & mitigate them
- doesn’t work with customers and never asks for their data
- doesn’t focus on solutions instead of the “hot” methodology of the day and
- doesn’t focus on strategic organizational planning because it’s spending all it’s time executing tactical processes
it’s not going to be around very long.
A supply chain needs to be:
- driven by talent
- enabled by technology
- transitioning to improved processes all the time
- focussed on risk management and mitigation
- collaborating with customers and suppliers up and down the chain
- solution-driven, not “emerging practice” focussed and
- strategic, not tactical.
And that’s just the start. For more insights into what attributes your supply chain needs to adapt in order to survive the race for Supply Chain 2020, check out SCI’s 7 Reasons You May Fail in the Race for Supply Chain 2020 before your supply chain starts stumbling too (if it hasn’t already).
Every day, SI is becoming more convinced that if you want your Supply Chain to be a success, you need to ride the rails. It used to be if you were shipping goods long-haul over land, you’d ship them by train. There was no long-haul trucking and air was just too expensive. But then the war ended, Dwight D. Eisenhower championed the National system of Interstate and Defense Highways, the Federal Aid Highway Act of 1956 came into effect, long-haul trucking became an option, buses became more popular than trains for many trips, the railroads started to struggle financially, and ground eventually overtook rail for most cargo in the US.
And today, people in North America associate trains with the Wild, Wild West despite the fact that rail is, by far, the most cost-efficient way to move cargo over ground for distances in excess of 500 miles. It’s also typically the best choice for intermodal ocean freight as the major rail networks will not only have their terminals in the ports, but SLAs (Service Level Agreements) to make sure cargo is quickly transferred from ship to rail-car. For example, agreements between the Port of Halifax and CN Rail gives you a double-stack rail-service direct link to Chicago in 71 hours, which is typically a 3-day drive when you factor in daily driver limits and border crossing.
Why is SI becoming more convinced that Rail is the Future? Three reasons:
- Fuel Efficiency
Trains can move a ton of freight nearly 450 miles on a single gallon of fuel. Find a truck that can do that!
The railroads control the rails – and can schedule them to maximize capacity and prevent traffic jams that can delay trucks for hours or more. Plus, well maintained lines and trains that keep to schedules suffer significantly less accidents than traffic on the road.
- Adoption by the East
While the young and immature west might have dumbly abandoned trains just like it abandoned trams (and replaced them with gas guzzling polluting busses), the East is investing Billions in new (high-speed) rail lines everywhere. Consider this recent article in the Economist on how its One Night to Bangkok with Laos committing to invest 6.2 Billion on a new 260-mile passenger and freight railway between Kunming and Vientiane straight through the mountainous region of Northern Laos. Think about that. The GDP of Laos is only 9.3 Billion! That’s a huge commitment for a country the size of Laos, even if the commitment connects China to Thailand and will capture a sizeable portion of the 4 Trillion worth of imports and exports that flow into and out of China. This 6.2 Billion dollar railway will require 196 km of blasting and will create 76 tunnels. To put this into perspective, combined they would form a tunnel long enough to connect Korea to Japan under the sea.
It’s time to ride those rails!
Samsung is not only none of the most successful global electronic brands, but one of the most successful brands period. (And with the surging popularity of Android, and it’s new Galaxy tablet, it’s market share is increasing rapidly in that market – one of the hardest to compete it.) On top of this, it is a supply chain leader, ranked #8 on the Gartner 2013 Supply Chain Top 25. How did they do it? A recent piece over on Supply Chain 24/7 on 7 Best Practices that Transform Samsung Electronics’ Supply Chain by SupplyChainOpz that referenced research by the Harvard Business Review, Supply Chain Management: The International Journal, and the Journal of the Operational Research Society did a great job of identifying the key decisions, and transformations, that helped propel Samsung from a much smaller player in trading, food processing, textiles, insurance, securities and retail to a world leader in electronics and digital technology.
Since they will work for any Supply Chain with a few tweaks, SI is strongly suggesting that you (re-)read SupplyChainOpz 7 Best Practices that Transform Samsung Electronics’ Supply Chain before continuing on to SI’s 7 Transformations that will transform your CPG Supply Chain.
7 Transformations that will Transform Your CPG Supply Chain
- Listen to the Voice of the Customer
Look at the top 10 of the Gartner Supply Chain Top 25. Apple, McDonald’s, Amazon.com, Unilever, Intel, P&G, Cisco, Coca-Cola, and Colgate-Palmolive. Every single one of these companies sells products the customer wants in every market they are in. To better understand the market, Samsung sends senior employees to MBA programs at local universities to help them understand the market and then establishes connections with appropriate leaders and partners in those markets to keep the insights coming in after the executives return to their HQ. While it’s not critical to attend a program in the target market, it is critical to be tapped in. Pay attention to market intelligence, go to trade shows and see what is attracting attention, follow the emerging trends, and consider what an average individual in your target market does in the course of a day and a week.
- Setup a Cross Functional Team Composed with the Right Talent
As a Supply Management practitioner, this is a best practice that should be well ingrained by now as you should be setting one up for every strategic sourcing project. However, there should also be a cross-functional team that guides the over-arching supply chain strategy.
- Adopt a Measurable Supply Chain Improvement Methodology
Samsung adopted Six Sigma and transitioned to DMAEV (Define, Measure, Analyze, Enable, and Verify). There’s also TPS and the Lean Methodology that fell out. The particular improvement methodology is not as critical as the commitment to implementing and executing on it day in and day out.
- Transition to Standardized Technology, Processes and Parts
Samsung standardized parts and processes and produces the majority of its components in Korea to enable them to better monitor and manage product quality. But don’t stop at parts, and production processes, move to planning and management processes and the underlying technology processes. For every function, there should be one system and one version of the truth. Each department can use its own best-of-breed systems if, and only if, there is a central data store that functions as the master data repository that each system works off of and that is always taken as the one version of the truth.
- Utilize Advanced Sourcing, CRM, and Production Systems
An Advanced Planning and Production System is a good start, but lets face it, true efficiencies materialize by getting the sourcing right. Be sure to source all strategic or high-value components using a strategic sourcing process that makes use of spend analysis and decision optimization and other advanced technologies. In addition, be sure to capture all of the sales data and user feedback that you can with good CRM systems. And be sure to make sure that you react to sales forecasts appropriately with your advanced planning and production systems.
- Implement Risk Monitoring and Measurement
The best laid plans are easily and quickly ruined by a single supply chain disruption. Implement an advanced supply chain visibility and monitoring system that monitors your suppliers and their suppliers to detect minor supply hiccups before they become major supply chain disruptions and to make sure you are aware of any significant event (such as an earthquake, border closing, civil uprising, etc.) that could affect your supply chain as soon as it happens.
- Focus on Your Talent
Samsung threw out the seniority-based performance evaluation system and implemented a performance-based system in its place that allows the best and the brightest to have their career fast-tracked. Make sure you have a system that allows talent to advance through your organization if you want to attract, and retain, the talent you need for your supply chain.
Right now, you’re probably scratching your head and saying you’re biggest secret weapon is better marketing and advertising to get more people to buy your product and keep the cash coming in. However, the real problem, especially for any company in the supply chain that is not customer facing, is the inbound cash-flow. Every month employees have to be paid, overhead costs have to be paid (or the lights go off and the doors get locked), and (starving) suppliers have to be paid. This can only happen if the company is paid, or has access to cash until it gets paid.
Inbound cash-flow is a serious problem, especially as more and more companies extend DPO terms across the board. It’s so bad in the UK that the government established the Late Payments of Commercial Debts Regulations to protect small businesses struggling with cash flow due to late payment of invoices. Cash-flow problems, and chronically late payments in particular which are topping 120 days (or more) in some verticals (especially in the UK), and not lack of customers, are now causing more bankruptcies than business failures (as there is no lack of customers). As far back as 2008, 4,000 UK businesses, which represented at least 40% of bankruptcies in 2008 in the UK, failed as a direct consequence of late payment! And that percentage is increasing.
So how is e-Invoicing going to help? One of the many advantages of proper e-Invoicing is that a buyer gets an invoice almost as soon as you submit it (as transmission over the internet typically only takes a few seconds at most) and can send a receipt thereof to your system immediately. If it’s a customer you have a contract with, then you have options. If they are cash-rich, and amicable, you can offer them early payment discounts that will save you both (if the alternative for you is borrowing at 20%). If not, and the customer has a good credit rating, you can put the invoices out for factoring on a Supply Chain Financing hub and get them factored at a much better rate than your local bank (that might struggle with a simple international wire) will give you.
Done right, as long as you are selling enough to meet your operational costs, e-Invoicing and Supply Chain Financing could save your hide when your competitor goes out of business. They truly are the best secret weapons you might have against bankruptcy (especially given that over 80% of invoices are still paper in many countries).
One of these things is not like the other
One of these things is not the same
One of these things will be straight and honest
One of these things won’t bring us shame
One of these things will stand by his actions
One of these things won’t focus on blame
One of these things will not hide his intent
One of these things won’t play a game
One of these things will appease the public
One of these things will not inflame
One of these things could make us quite happy
One of these things is not the same
P.S. This post is for Nova Scotians.