Fifteen years ago, I embarked on what I know now is a right career choice for me: supply chain management. Back in those days, we talked about how an effective supply chain is about ensuring products can be made available at the right time, at the right place and at the right cost. We preached about the four supply chain priorities that every company should think about — cost, quality, flexibility, sustainability.
Today, supply chain managers continue to walk on a tightrope balancing business requirements for product quality and availability in the most sustainable way possible, versus. the ever present cost considerations. The four topics mentioned above continue to be discussed today, albeit with slightly different buzzwords like agility, resiliency, and transparency.
What has changed from when I started in the industry though, is that there is now greater recognition that having a strong, yet flexible supply chain can be a key differentiator for businesses. Take for example Apple and Tesla, both highly successful companies that prioritize their supply chain at the top of their business strategy. In recent years, with the increased frequency of trade disputes, weather disasters and pandemics, having a resilient supply chain has proven to be integral to keep businesses alive.
The good news is, there are many more tools and technology available today to enable this balance. Low-cost sensing technologies for example, are allowing products to be monitored for quality in transit. New analytics capabilities are bringing better decision-making tools to frontliners in a more timely way. Automation is helping us achieve productivity levels that wasn’t possible before. Still, even though many new tools are coming in to play, the fundamentals of what makes a good supply chain are still the same.
Here are five time-tested supply chain practices any business should consider:
- Actively manage your supplier landscape. How dependent are you on your key suppliers and the key suppliers of your suppliers? How resilient are your suppliers’ supply chain? What can you do to mitigate supplier’s supply chain risks?
- Review your physical network on a regular basis. As business requirements change, like a big shift to B2C channels or manufacturing shifts, supply chains will be need to be re-set to weed out inefficiencies and quality issues that may have creeped in. Can you consolidate stocking points and transportation? Have you looked into direct shipments? What about changes in transportation modes?
- Set differentiated inventory policy and review them regularly. This is common knowledge, yet businesses tend to set inventory policies and hardly look at them again. Inappropriate inventory policies create many downstream problems in supply chains. Stock obsolescence, lost sales, wrong stock at the wrong location – these all drive increased costs and infuriate customers. There is absolutely no excuse in today’s context to review stock holding policies on a regular basis at a detailed SKU level.
- Set a sustainability goal for your supply chain. Supply chains cannot ignore it’s role in sustainability any more. Introducing a carbon-efficient infrastructure and transport mix, reviewing packaging design, and optimizing your network utilization are levers that not only reduce costs but also supports the sustainability agenda. Every little effort counts!
- Provide your teams with the right tools and environment to work together. Supply chain is considered a dedicated function in many companies, but in reality it is a cross functional activity. With recent innovations in this space, many new tools are available in the market to enable supply chain practitioners to facilitate cross functional decisions better! A simple dynamic, well-designed dashboard that pulls data from different systems such as Finance, Operations, and HR to provide a single source of timely truth every time and anytime can help teams plan better, react to disruptions faster and be in control as a team.
At DHL, we constantly ask these questions of ourselves, and it is even more important now that we are facing one of the greatest logistics challenges ever – storing and transporting COVID-19 vaccines. We have looked closely at our capabilities in terms of infrastructure and experience in handling vaccine distribution and shipping temperature-sensitive products, and we have established a global cross-divisional task force to oversee the readiness and upscaling of our current capabilities to tackle this mammoth task. In fact, our strong fundamentals is one of reasons why a German federal state has already commissioned DHL Supply Chain to store and transport the new COVID-19 vaccines to vaccination centers and hospitals across the state.
So what other supply chain practices are you doing to stay relevant in the new normal?
