Supply Chain Assessment
The first step of improving your Supply Chain Design is to conduct a Supply Chain Assessment. Our Assessment uses the Supply Chain Operations Reference (SCOR) Model and other key supply chain decisions. The SCOR model is also the foundation for creating your Supply Chain Strategy.
The first pillar of Supply Chain Management Best Practices is Planning. This pillar uses tools to balance supply and demand to create a plan that will meet customer expectations and internal requirements. The two tools we most often use in Supply Chain Planning are Demand Forecasting and Sales & Operations Planning. Demand forecasting uses historical demand and other inputs, and calculates (using simple algorithms, math optimization and machine learning) the predicted demand for the product or services you sell out into the future. Demand Forecasting seeks to minimize forecast error (the same as maximizing forecast accuracy) so you can have the inventory and resources needed to fulfill customer orders. Sales & Operations Planning balances supply and financial resources to meet customer demand through a series of coordinating monthly meetings and alignment of Sales, Finance and Operations / Supply Chain. (See also our whitepaper, “Sales & Operations Planning (S&OP): S&OP Sticks When the Benefits Outweigh the Effort”.)
The second pillar is Sourcing. This pillar involves the procurement of goods and services to meet actual or predicted demand. Inclusive of this is strategic sourcing, supplier evaluation and selection, project procurement and replenishment. In these activities the focus is on the level of supply chain collaboration and supply chain partnership you want to achieve with suppliers and customers. We have written a summary of these considerations, Supplier Evaluation, Supplier Selection and Strategic Sourcing. This summary helps you choose your Supply Chain Sourcing Strategy, ensuring you build the appropriate level of supply chain collaboration, which can be transaction-based up to equity partnerships.
Make (or Operations)
The third pillar is “Make”, “Production” or “Operations.” This pillar transforms materials and information into a saleable product or service. Often the focus is on manufacturing, but it is applicable to any company with operations including hospitals, home-repair or construction companies. At Supply Velocity our world class operations consulting uses Lean Manufacturing / Lean Process Improvement to help our customers improve their operations by understanding their current state and working towards a more lean future state. An additional tool for Supply Chain Assessment of Operations is The Ideal Lean Assessment Scorecard, which can be found in our Whitepapers.
Store (or Warehousing)
The fourth pillar is storage or warehousing. This was not included in the original SCOR model but with the importance of ecommerce and omnichannel, we think warehousing and inventory management require its own supply chain strategic pillar. This pillar uses inventory management and warehouse operations to optimize warehouses and distribution centers that are increasingly multi-channel, shipping to factories, stores or individuals via ecommerce. At Supply Velocity we have developed significant expertise in Lean Warehouse Layout / Process and Inventory Optimization.
Deliver (or Transportation)
The fifth pillar is delivery. Delivery processes choose the optimal transportation mode for inbound and outbound shipments, balancing speed with cost. Transportation modes may include ship, barge, train, truck (full truck and less-than-truckload), local delivery truck, drone and gig-economy / on-demand delivery companies. You may also use a third-party-logistics (3PL) provider to handle your transportation needs. This pillar also includes supply chain optimization tools such as routing optimization software (transportation management software or TMS) to minimize distance travelled.
The final pillar is the return loop. This includes two supply chain decisions. The first is handling returns from customers, which is a greater share of total supply chain costs, given the growth of ecommerce. The second is how to create close-loop systems to reduce the impact of supply chains on the Earth. This is a growing field and problem for supply chain consultants and professionals to solve.
Supply Velocity’s Supply Chain Assessment
We have a quick, painless and complete Supply Chain Assessment. Our vast experience in supply chain consulting allows us to accomplish in a few days what can take other firms’ weeks. Supply Velocity’s Clients benefit from this Assessment by the identification of all Supply Chain Optimization and Supply Chain Analysis opportunities. The Assessment provides a road map for organizational improvements that the client can use on their own, or often we are asked to assist and facilitate the development and implementation. This may include implementing Lean Supply Chain or creating a Supply Chain Strategy for a Lean Supply Chain.
Assessment Timing & Summary
A Supply Chain Assessment is a 2 – 4 day process. Our Supply Chain Consultants 1) interview key personnel (executives, managers and individual contributors), 2) analyze financial and operational data, and 3) tour the facility.
Supply Chain Assessment Outline
- Interview key personnel
- Supply Chain
- Inventory management
- Customer Service
- Analysis of financial and operational data
- Facility tours
- Evaluate key improvements in the development of your Supply Chain Design
- The five pillars of Supply Chain Strategy
- Supply Chain Optimization opportunities
- Supply Chain Analysis opportunities
- Integrating Supply Chain Management Best Practices
- Calculate return on investment from implementation
- Determine team members and timing to ensure project success