Category Archives: Supply Chain

Supply Chain Planner — Here are Three Solutions to Nearly Every Problem

A recent piece over on Supply Chain Cowboy on “Three Silver Bullets to Solve Nearly Every Supply Chain Fire” simultaneously enthralled and shocked me because I cringe every time I hear that air freight is one of the three solutions to your current supply chain dilemma, as it is a prime indicator of a major supply chain issue — specifically, lack of planning.

But there are ways to avoid the issue. The first one is:

Supply Chain Forecasting Systems

A good, modern, supply chain forecasting system is the best way to figure out not only what you are going to need, but when you are going to need it and when you are going to have to get the orders in and production started in order to meet shipping deadlines and avoid the need for air freight.

The second way to avoid the issue is:

Supply Chain Visibility

(Near) real-time visibility into where your stuff is from your suppliers, their suppliers, and their raw-material suppliers. All delays have ripple effects, and the best way to prevent a hiccup, or disruption, that will force you to have to use air-freight is to have real-time visibility all the way through your supply chain so you can be aware of a potential issue as soon as it happens.

And the third silver bullet, I’m sad to say, is:

Standby Air Freight

Good forecasting will significantly reduce the number of emergencies and the number of times you have to ship air-freight to meet a deadline, and good supply chain visibility will reduce this number even further as you will be able to order from secondary suppliers or ship through back-up carriers when hiccups or disruptions do arise to meet the deadlines laid out in your forecasting system. That being said, no technology will completely eliminate the need. There will always be unexpected events that will cause interruptions at the last minute where the only recovery option is to air freight reserve stock. If the Super Panamax ship gets delayed a week in port because of customs issues after your cargo is loaded, there’s nothing you can do. Or if a second tier supplier gets cut off because of a civil uprising and you have to arrange for the first tier supplier to get replacement product from another second tier supplier further away, there may be no other way to get the product fast enough. That being said, the number of instances where there is no way but up should be few and far between with good supply chain planning and visibility systems.

What are the keys to a successful supply chain?

In a recent article over on Inbound Logistics on three keys to a successful supply chain trading partner network, Christopher Mazza, SVP of Business Development at IAS (International Asset Systems) claims that the three keys to a successful supply chain trading partner network are connectivity, visibility, and optimization. And those are definitely the fundamental requirements of a trading partner network.

But since a supply chain goes beyond a trading partner network, it leads one to ask what are the keys to a successful supply chain. This is a bit harder to answer in general because the depth and breadth of supply chain required is different for every vertical, and every company, and it can be argued that the most critical success factors are different across verticals and companies, but there are some common fundamentals. In this post we will attempt to identify some of them.

  • Analysis
    The first step is figuring out what is needed, when it is needed, and how much it should cost.
  • e-Document Management
    Then you need to find suppliers, send specs, get designs, get quotes, send responses, make awards, cut contracts, send orders, get invoices, process payments, etc. — all e-Documents.
  • Collaboration
    You need software that allows you to interact online with your suppliers and partner and customers virtually and in real-time. (Connectivity in this day and age is a given — but it’s not enough unless there are collaborative elements to the connectivity).
  • Optimization
    Bid analysis, awards, logistics management, inventory management, real-time order management, etc. all require optimization to keep costs down and value up.
  • Visibility
    Knowing what is, and is not, where all the way back to suppliers of critical raw materials and sub-components, is key to avoiding devastating disruptions in today’s supply chain. If a raw material doesn’t reach a component supplier on time, then the component is not going to reach the tier 1 supplier on time, and your product is not going to reach you on time.
  • Risk Monitoring
    Hand in hand with visibility is near real-time risk monitoring. This involves monitoring significant global events (so that you know an earthquake has damaged a tier 2 supplier’s plant when it happens, not 60 days later when the product doesn’t ship), monitoring supplier’s financials and/or brand (as irresponsible corporate practices such as the use of child labour could be more damaging then to your organization than if they went bankrupt), and monitoring shipments and inventory for risk of loss or theft for starters.
  • Innovation
    The supply chain needs to be progressive, constantly on the look-out for new processes and technologies that can improve it, and forward moving when opportunities arise.

Furthermore, these requirements hold true across the board. And if you have trouble remembering them, think of the fact that when you bring these needs up, you are A VOICER of truth.

Supplier Circles? That’s Just Loopy!

Don’t know how SI missed this, but apparently McKinsey has been telling everyone to abandon supply chains in favour of supply circles for almost a year now! What? While it’s true you can loop a chain to make a circle, it’s not always the case that you should. And, moreover, it’s not really a circle that you want, but a chain where information, inputs, and values flow up and down. Just like you can walk up and down stairs, you can push value up and down the chain.

But we’re getting ahead here. Stepping back, the article from last spring on “Manufacturing Resource Productivity” stated that manufacturers can generate new value, minimize costs, and increase operational stability by focusing on four broad areas: production, product design, value recovery, and supply-circle management. All true, but none of it requires you to manage a supply circle, or even treat the supply network as a circle.

Digging in, we find the article is building on an inforgraphic released at the same time that takes us “from supply chains to supply circles” and explains how companies can respond [to pressures on profit as a result of higher variable costs] by improving resource productivity. Furthermore, it goes on to say that leaders in the field are exploring circular operating models where value is created by looping products, components, and materials into the value chain after they fulfill their utility over the life of a product.

Essentially, the article is saying that you should recycle, refurbish, reuse, and repair — the reduce, reuse, recycle that environmentalists have been preaching for years. The only difference is that they are preaching that this thinking should pervade the supply chain and influence new business models that improve recovery, create new sources of supply, optimize production, and increase revenues and products. Isn’t this just the Design for Recycle that SI and other thought leaders have been preaching for over 6 years?!? (SI’s post is back in 2007!) It is! The only difference is that they are confusing you by saying that you have to circle your supply chain to make it work.

Sorry, bub, but this ain’t the case. As long as you build a recovery mechanism that is usable, and attractive, it doesn’t matter if you have a chain, a loop, a circle, or a figure 8. It’s not the physical design of the chain, but the capability. Maybe the consumers return unwanted / end-of-life products to a recovery centre that breaks your product down into component parts, and returns the working ones to your primary manufacturer and sends the broken ones to a base metals extractor that, in turn, sends the extracted metals to the component manufacturers that feed the primary manufacturer and the waste that it can’t process to a waste processor for further recovery efforts. And maybe the consumers return the produts to the retailer that sends them to you and you repair, or send them to a raw material extractor, as needed. The supply network might end up being circular, might loop back in to the manufacturer, or the return (and recovery) paths might be the exact inverse of the supply paths. The design doesn’t matter — it’s the capability to insure raw material supply and keep variable (and unpredictable) costs down that matters!

Getting a Grip on Multi-Tier Supply Chain Risk – A Resilinc Commentary


Today’s commentary guest post is from Jon Bovit, Chief Marketing Officer of Resilinc, a provider of supply chain resiliency solutions for industries including high-tech, medical devices, and automotive manufacturers. SI recently covered Resilinc in detail in Do You Know What’s At Risk? Resilinc Does! and Will Resilinc Resonate with Your Supply Chain.

Today’s supply chains are complex, global, and highly dependent on
sub-tier suppliers. Long term sustained success of companies is hugely dependent on the resiliency of their suppliers. Despite this, most supply chain leaders are unable to readily access critical supplier information necessary in order to manage business effectively. Supply chain leaders need a solution that maps the global supply chain across multiple tiers, identifies critical supply chain dependencies, exposes critical vulnerabilities and single points of failure, manages risk mitigation across the organization, and optimizes resiliency practices throughout the organization.

Despite popular opinion to the contrary, the harsh reality is that measuring supply chain risk at the supplier, or even the location, level is inadequate for today’s global and complex supply chains. In order to properly managing supply chain risk, a company must start by mapping its global supply chain down to the individual products, parts, sites, and revenue across each of the multiple tiers. Once the multi-tier supply chain is mapped down to the product and part level, with the proper methodology, the company can calculate risk scores based on (multiple measures of) financial risk, location (economic and geopolitical) risk, and recovery risk (recovery time and BCP). By evaluating supply chain elements based on inherent financial, location and recovery risks (which align well with the risks identified in the recent World Economic Forum Global Risks report), supply chain practitioners can choose the most effective mitigation
strategies.

As an example, by utilizing the above methodology, the Resilinc platform is able to quickly identify high risk, high revenue, single sourced parts for a high-revenue producing business unit. The high risk may come from long recovery times from a specific supplier manufacturing site in Malaysia or Japan. The customer can then come up with specific risk mitigations strategies for those specific high risk, high revenue single sourced parts before a disruption occurs, which could save the company millions in losses and unmeasurable damage to its brand. If risk was measured at the supplier level, these details would have been missed completely.

Customers should not only focus on assessing and mapping risks based on their supplier global footprint and site locations, but also should capture sub-contractor and sub-tier supplier dependencies, site activities, part origin, alternate sites, recovery times, emergency
contacts, and business continuity planning (BCP) information. By focusing on identifying critical vulnerabilities and the highest risk exposures using quantitative scores and impact analysis at the product, part, and site level, leaders can direct limited budget and resources into the right areas for optimal protection against future supply chain disruptions.

Thanks, Jon!