Re-Configuring Supply Chain Management

Supply chain management, as we know it, grew into its own in the 1980s, evolving from the logistics-oriented model that most manufacturing companies then had in place. As resource optimization and efficiency became business buzzwords, this function soon became a central part of business strategy and planning.

Today, with globalization emerging as a dominant business trend, manufacturers have to contend with greater intricacy and complexity in decisions concerning products, prices and profits. It also means that companies have to re-examine their manufacturing, distribution and sourcing processes spanning multiple suppliers and business partners. In short, companies have to reconfigure their Supply Chain Management (SCM) systems in order to retain a competitive edge.

The globalized era demands speed, agility and responsiveness from companies operating in it. Delivering on these aspects can be challenging in the face of weak logistics, fluctuating fuel prices and volatile financial markets. Additionally, global competition and dynamic customer demands increases complexity in optimizing the regular flow of goods and further impacts the decision making process. These challenges can truly expose a poorly developed supply chain infrastructure resulting in a significant impact on the bottom lines of an organization.

Lack of visibility along the supply chain will result in inaccurate forecasting and will impact the entire functioning of the organization. To consolidate their advantages in manufacturing and distribution, companies will need greater visibility into work-in-process, cycle times, productivity and equipment utilization across their production facilities. To achieve this, manufacturing intelligence tools can significantly help increase responsiveness to operational issues by identifying bottlenecks and quality issues while providing other valuable insights.

Since constraints often manifest themselves further down the supply chain, manufacturers need visibility into every level of the chain. With the help of collaborative planning tools, organizations can work with suppliers to streamline enterprise operations. These solutions also help to collaborate securely with trading partners, reduce planning cycle time, and identify and react quickly to supply chain exceptions. Current generation IT tools have the capability to perform simultaneous material and capacity planning across multiple manufacturing and distribution facilities.

Successful SCM Strategy

Data explosion is another modern phenomenon that organizations have to contend with. Since the accuracy of decisions predominantly depends on timeliness and relevance of the data generated, this is a present day reality that has to be managed. The latest business intelligence systems can help organizations mine real time data for valuable and accurate insights. Furthermore, analytical tools enable organizations to drill deeper into various aspects of Supply Chain Management including procurement, inventory management, delivery effectiveness, finished goods and supplier performance.

Flexibility and responsiveness are critical attributes of new supply chain models. With demand management tools, organizations can better gauge customer demand and match it with appropriate levels of inventory or manufacturing runs. Demand Management tools generate accurate forecasts by analyzing various demand sources, order histories and marketing data which would be difficult to collectively analyze through conventional methods.

A successful SCM system needs to be integrated with an effective transportation management strategy. In a country like India, volatile fuel prices adversely impact the cost structure of the product. For organizations, the challenge lies in developing flexible transportation and logistics management systems that can withstand such price fluctuations. Transportation management tools minimize this risk for companies by enabling them to make informed decisions on rates, routes and contractual commitments.

Enahncing Customer Experience

Finally, organizations can't overlook the need for enhancing the customer experience while scaling their supply chain capabilities. They can do this by utilizing channels for quoting, order capture, configuration and fulfillment processes.

Today's businesses are becoming truly demand-driven, with tighter links between sales planning and operations planning. Changes in the business environment are likely to test the strength of companies and their supply chain models. However, a flexible SCM strategy engineered with a flexible IT approach will help mitigate business risks and result in greater productivity and faster growth.