Every budget cycle I hear supply chain professionals asked to squeeze more from the already-dry towel laying on their desk. International competition and customer pressures are driving prices down, and shareholders are still expecting the same returns. To say this is a new trend would be a lie, but the brave new world we live in makes it harder for supply chain managers to sandbag and deliver results. They have to think differently about their supply chain.
Here are five supply chain projects in which I've participated that have driven major results for organizations looking to take their supply chain to the next level.
1. Network Re-Design
If your network has been stagnant for a year or more, and you haven’t asked questions such as: Do we have the right number of cross-docks or distribution centers? Are we fully utilizing our transportation network to our advantage? How can we get higher velocity of material movement with lower transportation costs? -- Now is the time to take a look at these areas. Soliciting the help of a partner that performs several network designs a year can give you an expert eye on your network design, and can often uncover savings opportunity in the ranges of 15-20%.
2. Warehouse or Distribution Network Transformation
Very few distribution cities are overflowing with labor, and distribution centers are often plagued with high turnover and costs that can make the supply chain uncompetitive. While this isn’t an easy fix, partnering with a team of supply-chain and distribution experts can help you with facility design work, inventory strategy and slotting, and process transformations that can double throughput potential, and eliminate overtime. The right training and SOP’s can stabilize the labor force to drive up quality and productivity. In my first year of consulting I saw a warehouse increase the volume going through its doors while right-sizing headcount from 120 to 70 without a single layoff. The results were dramatic, and the friendships gained in the process are still sustained today.
3. Total Cost Model
Most companies track the cost of sourcing and supply chain decisions on a very surface level; they achieve results only on paper that are never realized when turned over to operations. I worked with a major corporation that realized almost 50 percent of its sourcing decisions were incorrect. These errors were due to a lack of understanding international transportation fees and the additional complexity of unplanned transportation. Another firm was able to avoid many of these mistakes by taking a longer look at costing models -- making decisions with supply chain practicality in mind.
4. Operational Playbook
LeanCor has had the privilege of developing operational playbooks for clients -- several of which ended up "disrupting" their industries. A company on a growth path will often run into the challenge of scaling quickly. Acquisitions and integrations move slowly, and integration costs are often double or triple what they should be. An operational playbook can provide the right balance of strategic oversight and education with localized autonomy. In the hands of a newly acquired company, or even a new manager in a seasoned area of the organization, a playbook can guide decision making and provide the right foundation for improvement to occur.
5. End to End Supply Chain Assessment
When it comes to end-to-end improvement, many supply chain leaders are overwhelmed and unsure where to start. They sense their businesses are too complex and changing too quickly to maintain positive improvement momentum. Unfortunately, these individuals may not reach out to the right people for help. A well-executed supply-chain assessment can provide an external eye on what may seem like a complex current state, and give clear direction to drive out supply-chain waste and take a supply chain to the next level. If executed properly, the external partner will gain a solid understanding of the current state of the business, and offer a customized roadmap to move forward. The road map is discussed with the appropriate individuals so immediate execution can begin. One supply chain assessment that LeanCor performed uncovered almost 46% in savings.
The supply chain world can be difficult, and pressures are mounting daily. If you haven’t explored any of the above opportunities with internal or external resources, you are probably leaving supply chain profit on the table.
Take the first step in improving your supply chain.
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Posted by Derek Browning
As a Director of Consulting services, Derek directs a portfolio of end-to-end supply chain projects for companies in a wide array of sizes and industries. He's trained thousands of professionals in lean, six-sigma, leadership, and supply chain through LeanCor and leading education partners. Derek complements his experience with an MBA, a bachelor’s degree in marketing, and several professional certificates.Facebook LinkedIn Twitter Google+