Competition is now tougher than ever before. Collapsing product lifecycles coupled with the accelerated growth of low cost economies and increasing demand for consumer choice have made it difficult for organisations to win business through traditional product differentiation and overhead cost reduction alone.
Making the impossible possible - Building a high performance supply chain
This PA publication comprises the following sections:
Supply chain takes pole position
Increasingly, organisations of all sizes and in all markets are looking to the supply chain to deliver differentiation, reduce costs and mitigate risk.
Building a high performance supply chain
Many companies remain uncertain which supply chain approaches and solutions should be adopted to establish a leadership position
Managing spend and sourcing to reduce cost of procurement
For many companies, external spend represents in excess of 50% of the total cost in their supply chain - a very high proportion.
Managing cash to invest for growth and reduce risk
Evidence tells us that there is a direct correlation between a reduction in the cash-to-cash cycle and an improvement in overall profitability. This makes cash-to-cash one of the best ways to measure supply chain performance, because it demonstrates how well the supply chain manages time and leverages cash.
Managing time to accelerate flow and reduce operating cost
Despite substantial investment in resources and technology, companies spend less than 5% of their time adding value. A 1% reduction in non-value added activities could potentially deliver an increase in productivity of 20% and a reduction in unit cost of the order of 10%.
Adding flexibility to the lean supply chain - responsive fulfilment
Successful companies recognise that building a rigid and inflexible infrastructure and ways of working, in a world that is characterised by change and uncertainty, is a risky option. While the result may be efficient, it will not be responsive to change.
Managing demand to deliver improved supply chain performance
Just where is the high peformance supply chain heading? Consider the following sequence of events: The customer wants a product from the retailer. The retailer immediately wants to fill the order and also simultaneously place a replenishment order with the supplier and/or distributor. The supply chain needs to line up behind the customer.
Integrated supply chain planning - planning for success
Effective planning is the backbone of a high performance supply chain. It masterminds the flow of material and use of resources by managing supply and demand in order to deliver the right product to the right place at the right price (cost), in the right condition and at the right time. At its simplest, effective planning enables a supply chain to do more for less.
Conclusion
Forward-thinking companies are recognising the role of the supply chain in providing service differentiation, cost advantage and risk mitigation. They are making their supply chains more responsive and basing their organisation on managing information not inventory, collaboration not conflict, and networks not chains. Those that take the lead will succeed. Those that follow will at best survive.
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