LTD Management
Logistics & Supply Chain Management Consulting Global Solutions That Work

TRAITS OF SUPPLY CHAIN EXCELLENCE-OR HAVING THE SUPPLY CHAIN YOU DESIGNED AND DESERVE

SCMNEWS.COM

TRAITS OF SUPPLY CHAIN EXCELLENCE-OR HAVING THE SUPPLY CHAIN YOU DESIGNED AND DESERVE

Some companies, regardless of their industry or size, do well. They are successful with low value merchandise or with fashionable merchandise or whatever product. Other firms struggle or so it seems. The difference, when you drill down, is often how well a firm executes supply chain management.

Supply chain excellence does not happen by accident. Firms with outstanding supply chains have made it a part of their strategy and operations. They know that it is good business to be a leading firm in supply chain management (SCM). These companies understand what supply chain management can do to position and to differentiate themselves in the market and against competitors. They know that it can drive sales, profits, market share and capital expenditures with inventory.

Many retailers, wholesalers and manufacturers experience wide swings during economic changes. When the economy is strong, they focus on getting sales or orders out the door. Then when the economy gets weak, they are unsure what to do.

Often in the good times, sales could have been stronger; and in bad times, they did not have to soften as much as they did. One consistency with these firms is that supply chain management (SCM) is not a dominant factor in their strategy or operations in good times or bad times.

It is easy to identify firms that do not excel at supply chain management. In good times or bad times, they cannot tell you how well their supply chain operates beyond some anecdotal stories. Supply chain management is discussed in terms of freight cost. You can see the amount of dust collected on many products in their warehouses. They struggle to tell you how often their inventory turns; and if they can. They do not have an ABC breakdown of inventory or can distinguish turns for products that are domestically purchased versus those that are sourced offshore. They have too much capital tied up inventory with low turns and, yet, have product stock outs and cannot meet all customer demand or fill timely, complete orders. Without a viable, strong supply chain, they repeat the same mistakes and yet expect different results. They have the supply chain they designed and deserve.

Firms with supply chain excellence have that capability because they recognize that SCM drives sales, profits and market share. These retailers and wholesalers do not experience as significant down swings in sales and in profits during economic changes. Supply chain excellence does not shield them from the economic realities. However they do know and use SCM to drive increased sales, profits and market share. They have the supply chain they designed and deserve.

Conversely, the best in supply chain management have consistent traits that set them apart. These include-

All this creates agility and responsiveness to better adjust to changing market conditions and, to some degree, to control those forces. All this helps the bottom line while controlling capital tied up in inventory.

Is your company among the best in supply chain management? Are you working to be among the best? If you are not, then ask why not? Increased market share, higher sales, greater profitability, compressed cycle time, improved inventory turns and reduced capital investment are good reasons to be outstanding in supply chain management.

If you want to transform from your present supply chain to develop a best-in-class program, then you must objectively assess what you are doing. Bring in outside help, if needed. Doing nothing and maintaining the status quo is a recipe for continuing problems, crises and shareholder and investor unrest.