The subject of supply-chain risk is high on the agenda of business executives today. Many companies bear scars of past disruptions, including a spate of natural disasters over the past decade. But they haven’t necessarily given the subject the full attention it deserves, especially in the age of COVID-19.
There’s an old business adage that says, “You can’t manage what you don’t measure.” Updating that aphorism for the supply chains of the 2020s, it might read, “You can’t improve what you don’t measure.”
Metrics have long been crucial to many aspects of supply chain management. But there’s reason to believe their use has become more widespread in recent years, migrating from strategy sessions at the upper echelons of large corporations to operational decision-making in supply chain organizations large and small.
As supply chain metrics evolve, they are becoming more sophisticated by recognizing the interplay among multiple metrics and using that to drive not only strategy, but day-to-day operations as well. The tradeoffs among general warehouse statistics — such as warehouse capacity usage, order-picking accuracy, and on-time delivery percentages —with labor productivity numbers are also increasingly receiving recognition.
For example, warehouse managers might want to examine how an increase in capacity usage affects the time it takes for pickers to complete orders. That’s similar to the experience many people have in their cluttered garages. The more you have crammed in there, the less likely you are to know where any given item resides. And even if you do know, the longer it will take for you to retrieve it when you need it.
“In general, once you start to get above about 80% of facility spatialization, you start to see a negative trend in labor efficiency,” explains John Reichert, senior director for SCE Solutions at Tecsys. That’s a good thing to know if you’re a warehouse manager.
Tecsys, a global provider of supply chain solutions, has noticed what it calls the democratization of supply chain metrics. That means these performance measures are increasingly being used lower down in corporate hierarchies. Managers and supervisors are interested in knowing how their facilities and teams are performing — against their own expectations, against industry benchmarks and against former versions of themselves.
Supply chain transformation involves improving an organization’s abilities to make decisions about which products to keep in stock, where to keep them, when to replenish them, how to improve
service levels for customers, how to liquidate excess stock in the most profitable way and how to quickly respond to changes in customer demand. Supply chain planning transformation can enable real-time tracking and analysis of customer and product data, decision-making based on predictive and prescriptive models, and the use of new capabilities enabled by artificial intelligence, machine learning, social media and the Internet of things. It can also automate daily operational decisions to free up talent to work on higher value activities.
Supply chain planning is complex and a transformation initiative requires getting off to a good start with the support of senior management and a business case that outlines the benefits as well as the impact to the organization. This is a multi-dimensional journey that must ask the four following questions:
What new process capabilities do you want your future supply chain planning platform to enable?
What new data sources do you plan to utilize with your future supply chain planning platform?
What new solution capabilities do you want to adopt to enable your transformed planning process?
What new people skills will be needed to analyze data, operate new processes and use new solution capabilities?
Agile, data driven, speedy and highly automated supply chain planning operations are becoming increasingly critical in today’s fast-paced, global business world. This e-book provides practical steps and a best practice roadmap to guide you on your transformative journey.
This year has served as a potent reminder that we live in a VUCA (volatile, uncertain, complex and ambiguous) world. The vulnerability of supply chains to major global events has become the subject of daily mainstream news reports. While the automotive manufacturing and after-market supply chain isn’t as high-profile as those involved in food or toilet paper, there’s no doubt the industry is under enormous pressure to respond to a rapidly evolving new normal.
Digital technology empowers the industry to effectively navigate the choppy waters of an uncertain supply-chain future, and helps businesses to continuously improve the bottom line. Read this report to find out the top five challenges that digital solutions help companies to address.