Category Archives: Supply Chain

Is It Time To Dust Off the Resume?

The annual salary surveys are reporting that salaries are rising again. In addition to Next Level Purchasing’s survey, which was discussed in yesterday afternoon’s post, we have the Logistics Management 27th Annual Salary Survey, which found that median salaries increased for the third year in a row. And even though the average increase was only 2.2%, that’s still good given the economy, and a 12.5% increase since 2007.

The article notes that a number of search firms are saying, including Kimmel & Associates, are saying that the time is right for seasoned pros looking for a new job, but is it? While I agree that your average manufacturer and retailer is as lean as they can get and that they are not going to be able to build their top lines if they don’t staff up their supply chain departments, I still don’t know if the average company is ready to hire. While it’s true that the impending crunch for seasoned supply chain and logistics talent is going to put any seasoned pro with a good education at a premium, I still don’t see a plentiful job market. But I guess it never hurts to be ready with a polished resume when it does return. Any thoughts?

Key Questions When Assessing Supplier Health

A recent article over on Industry Week that indicated that it is “time for a supplier health check” made a good point — Tier 1 suppliers may need to expand globally in the high-growth markets more quickly than they had originally anticipated, and manufacturers need to know if their Tier 1s are up to this challenge. In order to make this assessment, they have to do a detailed supplier assessment of their current Tier 1 suppliers, which should ask, at a minimum, these questions:

  • Does the supplier have access to capital to retool and meet an increase in demand?
  • Does the supplier have the talent to support a ramp up? Or did they do significant layoffs?
  • Does the supplier have the leadership to accomplish a ramp up? Or was the management team significantly reduced by layoffs or attrition?
  • Does the supplier have the right technology to support new systems and processes?
  • Does the supplier have the right financial controls in place to support a larger operation?
  • Is the organizational structure suitable to expansion?
  • Does the supplier have a viable business plan to support an expanded operation? Has it been executing against the plan?

If any of these questions yield negative answers, the supplier might need to be replaced. The alternative, if the supplier is critical, is for the organization to take an ownership position in the supplier and get it back on track. Either way, the supplier base needs to change.

The Voice of the Customer

As mentioned in yesterday’s post on What Can The Right Supply Chain Transformation Do For You, there are a number of best practices that should be followed when undertaking a supply chain transformation but by far the most important is to listen to the voice of the customer. Since the whole purpose of the supply chain is to serve the company and the whole purpose of the company is to serve the customer, the best supply chain is one that serves the needs of the customer from end to end and enables the company to excel in the products and services it provides.

Even when considering manufacturing, service, and raw material suppliers, the voice of the customer has a hand to play. The voice of the customer has a role to play at each stage of the supply chain mega process. Whether you are Planning, Buying, Making, Moving, Storing, Selling, or handling a Return — the customer’s needs must be considered. The following are just a few of the questions that can be asked at each stage:

Stage Question
Plan What needs does the customer have?
What products or services might meet these needs?
Which of these do we have the competence to offer?
Buy What materials or services do we need to offer the products or services we plan to offer?
What level of quality is the customer expecting?
How robust do the materials or services need to be?
Make What features are most important to the customer?
What level of quality is required?
What materials should be avoided because they might be hazardous?
Move How fast does the customer need the product?
How environmentally concerned is the customer?
Are there any special transportation requirements required to insure the product arrives to the customer as expected?
Store Where should we place the product to get it to the customer when they need it?
What are the storage requirements to maintain quality and integrity?
Sell What price point is the customer expecting?
Where does the customer expect to buy the product?
Return If something goes wrong, how does the customer expect to accomplish a return?
Where does the customer expect to make a return?
How efficient does the customer expect the return to be?

If you answer these questions correctly, then you just might have a customer who says:

  1. I need a solution.
  2. I know where I can get it.
  3. I buy from you.
  4. My order goes “in production”.
  5. My order is then put “in transit”.
  6. I get and use the product.
  7. I get support when I need it.

And that’s a successfully transformed supply chain.

What Can The Right Supply Chain Transformation Do For You?

There’s a two-fold reason one of the top themes for SI this year is Next Generation Sourcing and a reason SI has spent posts (upon posts) discussing CAPS Value Focussed Supply, Tompkins Associates’ Supply Chain Value Creation Framework, BravoSolution’s High Definition Sourcing, Purchasing Practice’s Innovation Framework, The MPower Group’s Next Practices, and, shortly, Greybeard Advisors’ Next Level Supply Management. Not only is your supply chain not likely to survive the prolonged global economic recession and “jobless recovery” without it, but it’s going to mean the difference between survival and smashing success.

As proof, I point you to The Lessons from Dell’s Supply Chain Transformation, a recent videocast and article over on Supply Chain Digest.

While Dell’s investor relations group edited out some of the more detailed metrics that resulted from their recent supply chain transformation, the ones that stayed were extremely compelling.

  • 300% reduction in forecast error
  • 30% freight cost reduction
  • 30% manufacturing cost reduction
  • 37% improvement in product availability
  • 33% improvement in order delivery times

That’s more-or-less a 30% improvement across the board! All you have to do is implement best practices and, most importantly, listen to the voice of the customer at each stage. (And yes, it’s often easier said than done, but those returns are worth the effort.)

What Your Supply Chain Can Learn from Starbucks

A great post over on the HBR blogs on “Why I Appreciate Starbucks” summarized some of the fundamental differences about Starbucks when compared to other multi-national corporations. These differences are part of its success story and contain best practices that can be used to improve your supply chain.

The author identifies the following fundamental differences between Starbucks and your average corporation as follows:

  • it sees itself as part of a larger community,
  • it tries to balance profit with social responsibility,
  • it creates a “third place” between home and office where people can connect comfortably,
  • it trains its employees to brew the perfect espresso in order to insure the quality of its signature product is not sacrificed,
  • it doesn’t let major disruptions delay important actions and events that need to be done,
  • it understands that employees feel far more committed to companies whose values and mission they find inspiring, and
  • it understands that customers and clients increasingly prefer to support companies whose values are consistent with their own.

These lessons can be easily translated into supply chain organization success.

  • The supply management organization must see itself as part of a larger company.
    In a successful business, all of the individual units cooperate and act as one larger business unit.
  • The supply management organization must balance cost reduction with social responsibility.
    The media and consumer backlash that can result if the organization cuts cost by buying from third world factories that employ child labor, for example, can cost way more than the amount the organization will save.
  • The supply management organization must create an atmosphere of collaboration
    and provide a comfortable meeting area where cross-functional teams can meet and work together towards success.
  • The supply management organization must train its employees to source the perfect bill of materials,
    where cost, quality, reliability, and all other important factors to the business unit that needs the product or service are appropriately balanced and the end result is overall better than what the organization would have negotiated on its own.
  • The supply management organization must be able to work through major disruptions quickly and without significant impact to overall commitments to its end customers.
    The supply management organization should regularly be gathering market intelligence and updating its contingency plans and be ready to get the job done no matter what, even if it means a lot of extra elbow grease now and then.
  • The supply management organization must hire an A-Team that believes in the mission and values of the organization.
    A team that is not committed will never achieve the level of success as a team that is.
  • The supply management organization must put the needs of the organizational units they serve between their own.
    The needs of the many outweigh the needs of the few, or the one.

Follow this advice and your supply management organization is on its way to becoming world class.