A new research paper from the Global Supply Chain Institute at the University of Tennessee investigates the progress of companies toward achieving end-to-end supply-chain integration. Director Michael Burnette explains.
Q: What was the genesis of this research paper on best practices in end-to-end supply-chain integration?
Burnette: We interface with hundreds of companies a year, and what we found was that there are six end-to-end supply chain strategies that benchmark companies are using today. They’ve graduated from Lean, Six Sigma and TPM [Total Productive Maintenance]. One of those six is end-to-end supply chain integration.
Q: When we say end-to-end, do we really mean it?
Burnette: It’s very difficult. We interviewed 16 companies that we consider benchmark, and of those 16, there were just three or four that were truly end-to-end focused, from the tier three supplier all the way to consumption.
Q: What goes into an end-to-end supply-chain integration strategy?
Burnette: It involves a lot of work. You have to map the entire supply chain. A large global company might have 50 supply chains operating in that many categories. If you just map part of it, it doesn't work.
I'll use an example of a tier one supplier. Let's say it’s making a bottle. You have a manufacturing unit that's going to fill that bottle. You have the activity note for producing the bottle, transportation to the manufacturer, and the activity note for manufacturing. The best of the best are looking at the supply-chain map on multiple levels. If the supplier is on a throughput strategy and the manufacturer is on a responsiveness strategy, you have no integration.
At the activity level, you have materials, manufacturing, people, information and decision-making. On the materials front, if the supplier is using material specs to plus or minus one percent, and the manufacturer needs it to be plus or minus a tenth of a percent, there’s no integration. You’re going to have waste in the supply system.
When it comes to people, if you don't have adequate talk and communication, that's a problem. And the biggest form of lack of integration is in decision-making and data. Most supply-chain executives don’t make decisions based on the end-to-end supply chain. If you put a percentage of your product on hold, and only a portion of your supply chain responds, then you’re going to have waste.
Q: Once you’ve uncovered a lack of integration in a complex supply chain, what do you do to integrate it?
Burnette: You’re going to have to prioritize. Top companies have found the process of mapping the supply chain and understanding where they were integrated to be extremely information. Most of the opportunity to drive supply-chain results is in the design stage. Many of these supply chains were designed 40 or 50 years ago, when the biggest customer wasn’t Amazon.
Q: So what new strategies are needed?
Burnette: We found eight best practices. Mapping the supply chain seems relatively simple, although it takes a lot of work and leadership commitment. Number two is simplifying, streamlining, and integrating. We found one company that had 18 different material specs for glycerin. They needed two. The third best practice is talent. You have to think about how it all fits together.
Q: What role does technology play in helping to achieve integration?
Burnette: It’s a huge role. There are software programs and information systems that can help with mapping the supply chain. They can measure time and reliability — the things that drive quality and value. You also need analytics to analyze the huge amount of data that’s available.
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