Transforming Your Supply Chain
Processes span organizational limitations while connecting people, information flows, systems, and other key elements to establish and convey value to your customers and key stakeholders. The fundamental, underlying objective is to embrace transformation and improve efficiencies, along with the pliability to adapt to an evolving marketplace. It’s not about what we know but to learn from you and develop effective solutions.
Created by:
Geoff Chambers
Director, Supply Chain Services
a Division of Scarbrough Consulting
TRANSFORMATION CHALLENGES
According to a recent study in 2023, there were ten top company-wide internal challenges that presented themselves – all related to growth and applicable distinctions. While transformation is necessary to stay competitive, improve efficiency, provide visibility, change can create challenges. The fact challenges are across an enterprise, the Holistic approach to transformation vs. Functional Siloed Planning in your supply chain becomes even more important to the business.
- Insufficient budgets and or unrealistic project time frames for transformation
- Competing or conflicting functional priorities
- Inconsistent data management across operational and financial reporting
- Lack of the right talent to leverage technology and solve business issues
- Lack of time to partner with the business due to daily work volume or responsibilities
- Lack of interdepartmental process coordination
- Status quo ways of working or resistance to change
- No clear road map or plan
- Lack of change management maturity
- Lack of collaborative planning and performance management
KPIs & METHODOLOGY
One of the most successful ways to advance directives across your enterprise is to create a tree of KPIs for transformation. This tree will allow input from every department with collaborative recommendations. KPIs should be indicative of your Company’s guidelines, not an arbitrary off-the-shelf idea. There should be a harmonic approach with parameters. To complete Supply Chain transformation and execution, departments in each company would be interviewed, determining their overall role in the supply chain as well as respective KPIs. Each department has an intricate position in the holistic approach to applied supply chain modeling and planning. It is our responsibility to listen intently while communicating holistic ideas and methodologies as an extension of your internal Team. This will enable us to help you pursue best-in-class services to achieve superior results in the marketplace. After 40 years of industry experience, we understand what it means to be an industry leader in products, services, and continuing education.
The Tree of KPIs
In another industry-wide study in 2023, manufacturers were assessed on where they fell short of expectations. As noted below, excess inventory, as well as obsolete or expired, were a top priority. On-time in full, forecasting, and logistics utilization also contributed. Let’s break down these categories into profiles for discovery:
INVENTORY
While 25% of the 64% was directly related to forecasting errors, in early 2023, most all shippers had an excess of inventory on hand. Through 2023 there was an uptick in inventory movement, 50% of which was moved to a different warehouse or back to the shipper for assessment and/or reworking. The remaining 50% was shipped to the end users. While the pandemic certainly created complexities in supply and demand, most thought 2022 & 2023 would continue like 2021, and customer spending would extend through the years. This includes both durable and non-durable goods. Nevertheless, with the spike in fuel, Federal interest rate hikes, and an economic slowdown, many shippers were left with a larger supply of inventory than predicted.
OTIF
Shortly after the pandemic started, most carriers lifted their service guarantees. This was due to the high volumes of shipping along with their inability to honor published transit times. Moreover, their contract language continued to evolve, releasing them from any liabilities revolving around OTIF. Therefore, only about two-thirds of 2023 shipments arrived as scheduled. With the downward trend in overall shipments, the question remains, why are they still upholding this non-guaranteed clause? OTIF is an intricate part of the value to the customer.
LOGISTICS UTILIZATION
This is an area of great significance in 2023. Companies are re-evaluating their supply chain and applicable planning. Some have moved completely away from an in-house operation to outsourcing. Since the average ROI on outsourcing is 12% savings, this is a very feasible solution. Moreover, a new supply chain methodology with a focus on efficiencies and integrated business planning to create resiliency along with risk management is another avenue to generate savings, transforming your core business principles.
5 Levels of Supply Chain Modeling
5 Levels of Supply Chain Planning
UNDERSTANDING SUPPLY CHAIN TRANSFORMATION THROUGH LEAN METHODOLOGY
It is critically important to develop a baseline of performance to quantify opportunities based on data-driven insights. There are multiple levers within an organization to unlock savings and promote transformation. The identification of cost reduction based on the tree of KPIs, along with 3rd party technology and data analytics, supports the building of a scalable and agile model. Scarbrough Supply Chain Services, a division of Scarbrough Consulting, is very familiar with lean methodologies to drive initiatives and opportunities to reduce costs and gain efficiencies – prioritizing chances for speed and insight while supporting continuous improvements and cost management support for organizational buy-in.
EXPECT MORETM FROM YOUR LOGISTICS PROVIDER.
Founded in 1984, The Scarbrough Group has grown its global logistics operation, one client and one employee at a time. Whether international freight forwarding, customs brokerage, transportation services, or warehousing, The Scarbrough Group manages supply chains differently. We remain a people-first organization with dedication to traditional values and support for our community.