The old joke about herding cats is easy to apply to supply chain management. This process is essential to the effectiveness of any manufacturing operation, and by extension any enterprise. But as supply chains have become longer, larger, globalized, and highly technical, supply chain management has followed suit, becoming much harder to perfect or even correct. It is worth taking the time to step back from your daily operations and honestly evaluate if your current approach to supply chain management is working.
Here are some questions to ask as part of your assessment:
Are You Utilizing Your Storage Space Effectively?
Storage space utilization is not the first performance metric that people focus on, but it is revealing for a lot of reasons. If there is never enough storage space, it suggests that the pace and output of the supply chain have accelerated to a rate faster than a facility can accommodate. As a result, the consequences of bottle-necking are compromising everything that happens further on in the supply chain. Conversely, if there is a lot of underutilized storage space, it suggests that capabilities and needs are no longer in line with each other. That is evidence of a systemic problem that will only grow as perception and reality drift further apart.
Is Your Order Fill Rate Where it Needs to Be?
The higher an order fill rate is, the more balanced an inventory is in terms of supply and demand. But determining exactly what materials, equipment, labor, and other resources need to be on hand at any given time causes the rate of filled orders to fall short of what many managers would like. When this happens, it suggests that there are a number of small problems that can generally be understood to be issues with access to timely information. In the absence of a tool like ERP supply chain or ERP manufacturing, the data necessary to make meaningful process improvements is unavailable. As that problem continues, supply chain management will decline further.
Are Your Delivering Accurately and On Time?
Delivery is the final point in a supply chain, which makes it a reliable indicator of the overall performance of that supply chain. If the ratio of orders that are shipped on time and without errors is high, then supply chain management is likely working. But if the ratio plummets suddenly or declines steadily, it suggests that an accumulation of errors and inefficiencies throughout the supply chain is culminating in defective deliveries. Order quality has a huge impact on the customer experience, meaning that a supply chain that can’t reliably deliver on time will only hold a company back.
Have You Prioritized Supply Chain Management Correctly?
This one is more of a general observation. Supply chain management needs to be a priority is any manufacturing setting. But the priority should be on making improvements, refinements, and innovations. It should not be on fixing problems, making apologies, and offering excuses. Basically, if supply chain management seems like more of a burden that you bear than an opportunity that you seize, it’s defective. The goal of any supply chain management effort should be to push things further rather than simply maintain the status quo.
If you have concluded that your supply chain management strategy is not working, you are hardly alone. For most companies, the supply chain is a greater source of irritation than excitement. But beware of scrapping your approach entirely and starting from square one. This creates an unavoidable disruption, and commits you to an uncertain alternative. The better strategy is to implement new tools, take advantage of IT, and look for overarching solutions rather than microscopic fixes.