When I began my career there was no such thing as “Supply Chain Management“. Supply Chain was not a title to be found anywhere on any organization chart.
Yet all of the functions that we now associate with Supply Chain have been around for a very long time: Planning, Inventory Management, Logistics, Procurement and Purchasing, Warehousing and many more.
Take a quick look around your home or office and you’d be hard-pressed to find a product that has not seen the inside of a truck or delivered by truck drivers at some point in its existence.
In truth, many aspects of everyday life are made possible through the supply chain industry, with trucking alone responsible for 70% of America’s freight volume by weight. This is achieved through the hard work of truck drivers, the unsung heroes of the industry, who travel 430 billion miles per year hauling 10 billion tons of goods that people all need to live.
Technology and creations go hand-in-hand. The former is fundamental in building anything that can impact development, lifestyle, and economy. Take for instance, the 3D printing technology and how it rewrites the Guiness Book of World Records.
Though it was introduced three decades ago, it is recently that its impact is felt in industrial and manufacturing sectors. It has paved ways for testing and trying many things that has changed the traditional manufacturing methods.
All that invention and creativity that went into it, have enabled in developing many “worlds first.”
It’s an exciting time to be involved in the Supply Chain and for Supply Chain jobs. Across every industry, every geography and every country there are advances in Technology, the Internet of Things (IoT), Industry 4.0, Artificial Intelligence (AI), Blockchain and more.
But none of this can function without Supply Chain professionals. Your expertise and experience are the backbone of developing the strategies and action plans for making these evolutionary and revolutionary improvements .
Several years ago my Granddaughter asked me to load FarmVille 2 – Country Escape on my iPad. She was playing it and she wanted me to be able to play it together with her. I eagerly obliged!
I don’t really play any other video games but Farmville caught my attention. First and foremost was my Granddaughter’s desire to do this with me. But I also found that the ability to grow your Farm by adding capabilities and features, by controlling the way in which you buy and sell things, and managing your inventory levels of all of the materials was both fun and interesting.
And then I realized it. In playing FarmVille I was really just managing a digital Supply Chain!
Why half? For those who may find awkward the reference to “half a decade” and not the “next decade” here is why: AI is evolving at such a staggering rate that it is simply not possible to foresee the impact of Artificial Intelligence in 10 years’ time.
The theory is simple! If you can increase spend levels through centralized spend aggregation across entities then you increase your leverage in negotiations. This leverage should translate to lower costs and better terms and conditions. But there is a spend aggregation obstacle course to be overcome first.
These entities may be different departments or facilities within your own company. They may be different companies under common ownership. They may be disparate companies within an industry. Or they may be unrelated companies spanning many industries.
The benefits seem clear. So why is there so much resistance when it comes to trying to aggregate spend across these entities?
At the end of this month, the festival of Easter will begin. Aside from the religious connotations, many people automatically associate Easter with the legend of the Easter bunny delivering chocolate Easter eggs to children. I, for one, am a big chocolate lover, so I am fascinated by this amazing supply chain.
Originally, eggs were included in ancient pagan practices and these have, to some degree, been adapted to create some Christian Easter traditions with the egg symbolizing new life. Chocolate Easter eggs are more of a modern tradition and somewhat of a substitute for the former custom of decorating Easter eggs by dyeing and painting chicken eggs in bright colors using vegetable dye or charcoal.
Attacking just a single element of inventory has, in our experience and observation, proven to be an insufficient approach to making significant, sustainable changes. The entire ecosystem of processes, variables, and stakeholders requires taking a holistic approach enlisting a variety of tools and techniques (eg. lean inventory management) to drive game changing inventory performance.
Given the breadth, depth and complexity of the Inventory Turnover management ecosystem it is not surprising that there is much to be addressed in this area. We’ve captured much of this in our article Featuring our Top 10 Inventory Management articles.
In this blog article we’ve captured much of this content in a single Infographic
Indirect procurement of goods and services can be one of the largest areas of expenditure in any company. And the operational impact that the provision of Indirect goods and services can have on a company can be significant, either positively or negatively.
Yet the lack of attention and focus that Indirect Procurement is often given is inconsistent with the true importance of this area. Indirect Procurement takes a back seat to Direct Procurement unfortunately.
Many businesses begin with single-channel distribution. That sole channel could be a brick-and-mortar store or an e-commerce website. In either case, all sales flow through one outlet.
The advantage of a single-channel distribution management system is simplicity. There’s only one channel to manage, one channel to stock, and one channel to market to customers. As a business expands, however, the single-channel model can limit growth.
Everywhere you turn there is talk of a lot of very exciting technologies requiring Supply Chain investment. The Internet of Things (IoT), Augmented Reality (AR), Drones and Autonomous Vehicles, Robotics, Virtual Reality (VR), Artificial Intelligence (AI) and Intelligent Analytics are front and centre.
And all of these technologies have applicability for the Supply Chain in every business and in every industry around the world. The Digital Supply Chain vision is within our line of sight.
But most companies are still working with the same, manual, non-automated Supply Chains that they have had for at least the last decade. And they will continue to do so in the foreseeable future. They are faced with challenges which are going to impede technology investments to advance their Supply Chains going forward.
Doing business with suppliers located overseas or in another country can be an overwhelming and daunting task even for expert Sourcing professionals. But what if you considered Outsourcing Sourcing?
Recently a friend of mine asked me to have lunch with him and one of his associates. The other gentleman had invented a new product. He had a marketing plan. He knew what his cost point had to be on the product which meant that he had to have the product manufactured overseas.
But beyond that he had no idea on where to start to source his product.
For his entire career my Father worked in the field of Procurement. But the job titles that he had during his career alternatively included either the word Procurement or the word Purchasing. I seem to recall that one of his business cards included both words.
When I was young I thought I had a somewhat clearer understanding of what my Dad’s Purchasing job was. His job involved buying, negotiating, contracts, overseas travel, sourcing, suppliers, parts, services, managing, supplier qualification, product qualification, terms and conditions, quality issues and delivery problems.
But was that Procurement or was it Purchasing? Procurement sounded like a somewhat loftier and more sophisticated word than Purchasing but by the same token it also seemed like they were synonymous and interchangeable terms.
What exactly is Procurement? And what is Purchasing?
The Retail company I had just joined was undergoing a massive transformation. Fundamentally the new merchandising strategy was to curate a dramatically different set of products from that which was carried historically, but in addition to what was carried historically. What did this mean for the backroom in every store?
This meant that an enormous number of the business processes had to be transformed to support the new product set because management of the new merchandise required much different capabilities in all aspects of running a retail company. Not only did this transformation require new capabilities but it also required improvements to productivity and efficiency throughout the company. And overall this meant a need for cultural change.
I decided that I would introduce Lean process improvement techniques to this company.