The Supply Chain

Every company has a supply chain and each industry runs it differently. Even companies in the same industry will have a different process.

In this section we review different parts of the supply chain. Scroll down to the bottom and you'll see them all proudly displayed.

Does your company manufacture gum? Then the purchase of sugar, corn syrup, gum base and grape flavor may be the start of your supply chain. From there you have production, purchasing the right wrapping paper, managing inventory and shipping to customers.

Optimizing the supply chain is a mix of managing costs, processes, deliveries, people and business relationships. Most companies develop their supply chain process through their own experience. “We’ve been shipping meat to Minneapolis with our own trucks for the past 35 years. And we never had a problem.”

That could be the case. But has anyone examined the routes to see if there was a better way? What are the transportation costs? What is the cost of garaging the trucks and performing maintenance? Could outsourcing provide a cost benefit? Are other food companies delivering to the same area? Maybe the route can be shared?

Plan: The high-level strategic view of sourcing, making, selling and delivering your product. Your goal is to minimize costs, maximize efficiency and deliver quality to the customer.

Source: Purchasing the materials and services that put your product into motion. By putting together a range of metrics, managers have a guide they can adhere to. Vendor pricing can be compared to other vendors or indudtry metrics.

Make: Welcome to the kitchen. The manufacturing component is the most metric intensive. We have testing, packing, quality control and production. Whatever it takes to get the product right.

Deliver: Also known as logistics. Transportation costs are rising. How can we manage shipping effectively? Large amounts of goods are being moved from ship to shore, truck to truck, or truck to plane. What technology can we use to track goods?

Returns : What is the process when goods are returned and how do we support that customer. Maybe it was the wrong quantity, wrong size or maybe a defect. The customer’s experience with your service department is extremely important. They were a customer once, and you want them to be a customer again.

Partnering. Not an easy thing to do. But if it can be done, there is talk of achieving nirvana. That wonderful place where suppliers and customers treat each other as partners and share information.

Some larger companies such as Wal-Mart have partner relationships with their suppliers. Not only is information shared, but so are cost savings.

Cost Savings : Imagine a company that is unloading delicate glass tubes into its warehouse. These glass tubes are packed in a plastic casing. What if, instead of throwing these plastic casings into the garbage, they were dropped into a bin. Then this bin was shipped back to the glass tubing company to be used again.

What would the incentive be aside from saving the environment? The tubing company could pass the savings onto its customer. What a great idea. The tubing company not only saved on packaging costs, but they are able to offer their customer a further cost reduction by sharing the savings. That’s a nice competitive advantage.

Share Information : Would a customer share information about inventory levels with their supplier? Unfortunately, many relationships can become adversarial. If I’m paying you money, you’re not my partner. But if the customer shared this information, the supplier might be able to know just when to ship goods.

Partnering requires a change in the way you treat a vendor or customer. It’s a change in culture at its most basic. It goes without saying; it’s easier to be a good partner if everyone is acting like one too.

The financial industry exhibits partnering. For example, investment banks will trade financial products with other banks that require payments every three to six months. These payments are based on who lost and who gained according to a benchmark.

Each bank has entrusted each other with their banking instructions. Funds are automatically sent between each bank when one party owes the other. This is all done without harping on each other.

My point being: If Wall Street can do it, anyone can do it.

The Supply Chain

Let's Put The E- in Supply Chain!

Procurement. Guardian Of The Purse Strings.

Someone's Got To Move It. Welcome To Logistics

MRP. Plan Your Materials Flow Here.

Performance Metrics. Every Number Tells A Story

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