The Supply Chain Pessimist: Managing supply chain risk just ain’t that easy.
Supply Chain Management just ain’t that easy.
Supply Chains are complicated and unpredictable. They are complex networks, reliant on multiple moving parties, ridden with risk, predisposed to complications and are seldom run with absolute harmony.
The cards are stacked against you.
The guy sitting across the table has pocket aces and your all-in because you made your full house on the turn. But the river card is unpredictable, unseen. And, though there is certainly probability, and odds, that factor in to the face value of that last card, your money is already in the pot, no matter what happens.
Global supply chains are a gamble. Every product produced, every supplier selected, every cargo ship shipped, and every warehouse stocked, there is a degree of risk involved. Predicting and weighing supply chain risks is helpful, but in reality, controlling those risks is impossible; be it natural or supernatural causes.
As a supply chain professional, the best foot one can put forward for their company is to stay vigilant in the assessment and management of risk; all the while remaining understanding that failures will occur.
Supply chains fail every day: A ship spills oil in the Atlantic, thousands of vehicles are recalled because of bad air bags, or there isn’t enough telephones in supply to ease the customer demands.
The problem is supply chain failures typically affect large portions of the business value chain. Failures in the supply chain cause strain on brand and shareholder value. Because of the complexity of supply chain functionalities, there are multiple levels to the challenges included in managing supply chain risk. The first step to making life easier, is addressing the crap that can make life quite difficult.
I’ve had enough cups of coffee, so let’s give it a try:
Pre-Production
Before anything happens in supply chain production, supply chain management strategies should begin an elaborate assessment process.
This is an area where many companies fall short.
Materials and suppliers should both be assessed. Production of a quality, and sustainable grade, is entirely dependent on the first assessments and selections of suppliers and materials.
Successful supplier-buyer relationships are ones built from places of trust and transparency. Forecasting the quality and performance of a supplier is rather difficult and that’s exactly why the assessment process should be thoroughly conducted by senior level quality, category and sustainability professionals. Suppliers should be compliant with company, country and international standards (dependent on your company needs) and open to the idea of ongoing governance of their performance.
Production/Manufacturing
The individual processes of all supply chains are unique.
Some companies are manufacturers and retailers, some are buyers and suppliers, and some function only within one discipline. One thing that is congruent is the end goal: produce a product that will enhance the end customer value.
There is many challenges that go into production, but a select few probably resonate with the majority of global supply chains and supply chain professionals:
1. Pressures on cost, creating internal issues regarding quality and ethics (cips.org).
2. Dependence on multiple suppliers to work in harmony
3. Lack of supplier communication and/or compliance
4. Intellectual properties disputed
If you find these issues arising in your supply chain, it’s probably time to search for a solution. These can be detrimental challenges, for even the most competent of supply chains, to overcome.
Post-Production/Shipping and Logistics
This leg of supply chain strategy is, in theory, to get product from point a to point b as quickly as possible.
Sounds good on paper, but with the uncertainties of travel, including Mother Nature and mankind, it really just ain’t that easy.
Tracking systems have certainly eased the uncertainty of logistic mishaps, but the real challenge is the logistics itself. As stated, travel can be a real doozy. And, added to that, long lead times can kill business really quickly in the post-production stage (softwarethinktank.com).
Your product could be half way to its destination when the retailer decides the product is no longer relevant for their end customer. Guess who’s swallowing that shipping fee…
Retail
A successful supply chain looks like a smiling customer. Enhancing end customer value is the reason why so much time, money and effort is invested in the pre-production, production and post-production.
Then again, this world is far from gumdrops and rainbows.
End customers are often displeased with quality, performance, brand, sustainability and so on. These challenges must be addressed when functioning within a global supply chain. Your end customer can be your biggest asset or arch nemesis to your brand’s value.
Today’s consumer demands quality, but also transparency and traceability. Staying wary of your customer’s persona is important to combat retail challenges.
Lastly, it is very difficult to predict demand. Demand forecasting is certainly a method, which can be used to better regulate influx, or overstocking, but it is still a challenge to be taken seriously when thinking about inventory management.
Look at the Bright Side
Supply Chain Management is evolving.
Global supply chains are focusing on sustainability before profitability, technological influences on supply chain management are at an all time high, and every tidbit of it can become public information almost instantaneously.
2017 is a difficult and exciting era to be involved in SCM, and there is many exciting advancements to come in our world’s future. Technology has certainly impacted supply chains, globally, in ways never thought of just 30 years ago.
With the complexity of it all, has emerged solutions to ease supply chain pain points. Keep in mind, Supply Chain Management is a discipline of management systems that encompasses hundreds of more intricate disciplines and focuses (supplychain247.com).
From PLMs, to CRMs, to SRM, to IoT, to Shared Economy Applications, to Warehouse Management, to Inventory Management, to ERPs, to PoSs, and beyond, there is a plethora of tools and solutions to be utilized in aiding the larger ideology of managing supply chain risks.
Remember, you’re not in this alone.
Until Next Week.
This publication is brought to you by author Sam Jenks, but also on part by Kodiak Rating — A Supplier Relationship Management SaaS functioning out of Stockholm, Sweden. Kodiak Community intends to challenge traditional business practices with innovative thinking and creation.
