Cost cutting is the key objective of many supply chain organizations. This is no surprise, as it remains one of the fundamental requests made by companies supported by supply chain functions. This was also the mandate I got in 2005 when I enter an organization as head of supply chain management. The organization was consisting of seven different distributions companies that cover whole of Norway with newspaper distributions. The mandate was to consolidate the seven companies into one company, with a common ERP, CRM system etc.
To derive improvements to working capital, propagate innovation and lower operating costs one shall use Lean management and Business Process Optimizing.
Challenges facing supply chain professionals
Supply chain professionals are faced with the main task of reducing costs. This issue is compounded by the fact that they must also tackle the classical business challenges:
- Continuous service and financial pressures
- Cost volatility
- Increasingly complex operating environments
- Capacity volatility
The responsibility to orchestrate new modes of operation while keeping best-in-class performance also lies with the supply chain professional. To succeed, the right people with the right level of skills and the right talent are needed, which in many cases represents the subsequent challenge.
Is there a way that Supply chain management, SCM leaders can resolve these challenges, continue to shave costs from the supply chain year after year, while contributing to more strategic goals? Goals such as growing the business, new product innovation and enhanced profitability, conducted in tandem with continuing to cut the costs of their own organization. The answer is no. Supply chain organizations can continue to deliver working capital improvement, bring innovation to the company, while decreasing operating costs by exploring new methods, such as Business Process Optimizing.
My experience on how to build a sustainable competitiveness over time, is best done through Lean management and Business Process Optimizing. My experience is within major change process within supply chain management.
Through the work of business process optimizing one need to standardize and automating hundreds of SCM business processes including new product development, prototyping, product manufacturing, quality assurance, packaging, raw materials, warehousing and shipping and custom quotes. By implementing business optimization, The National Schoolfruit (Bama), Orkla Media Distributions, Taxus Norway, Lindorff, Sønnico etc have eliminated supply chain process inefficiencies, and realized rapid, measurable benefits that extend across departments in their entire organization. Some of these benefits include:
- Reduce turn-around time for build-to-order processes
- Produce more accurate quotes
- Accelerate continuous process improvement initiatives such as Lean Management
The most important measures of SCM successfulness are the final level of service, customer satisfaction and supply chain performance and competitiveness.
Improving customer service and responsiveness, particularly related to exception processing, while reducing costs is one of the biggest supply chain challenges that organizations will face in the coming year. Companies need to get a handle on business processes and data within their supply chains. This undertaking can be overwhelming. Companies need real-time visibility so they can adapt their processes to changing economic and commercial environments, ensuring they have the right information at their fingertips to make informed decisions. It is also critical that solutions intended to enhance the supply chain integrate with existing IT systems and applications, so they improve overall business performance instead of hinder it.
To improve business performance and efficiency, companies need to enhance key processes, such as order to-cash and procure-to-pay, by leveraging their investment in IT applications with fully integrated solutions. Solutions that create information silos only complicate these processes. Flexible solutions can be tailored to handle the unique aspects of each business, optimize process flows, enhance supplier and customer relationships, and deliver a competitive advantage. Implementing a flexible business performance improvement solution can help in several ways. For instance, you gain transparent visibility into processes and the ability to quickly resolve exceptions. Simplified business partner communications like flexible receipt and payment options, dynamic discounting, vendor portals, discrepancy management, and having the right information when and where it is needed can satisfy the above challenges. Additionally, the ability to manage the data generated from supply chain activities for operational and business analytics helps ensure security and minimizes storage and administration costs.