Supply Chain Optimisation: Part 4

The successful application of these SCM good practices in appropriate businesses should mean that the following should be achievable:

• Procurement - Realistic lead times are built into the Supply Chain Planner; we provide good forecasts so have few short lead time orders placed on suppliers --> High supplier delivery performance
• Shipping - Production completes to plan and we can effectively schedule our picking resources and transportation ahead of time --> High on-time delivery, low overtime & expediting costs
• Manufacturing - We work to a realistic MPS, which incorporates our resource constraints. We can then optimise the performance of operations using Finite Scheduling --> Excellent on-time performance & bottleneck utilisation.
• Planning - We operate a best practice S&OP with integrated forecast/planning software & skilled planners. We use accurate, timely data and tools to test ‘what-ifs’ --> Optimum and accepted plans
• Customer Service - We use delivery dates based on actual supply chain capabilities. There is early warning of problems that could impact delivery dates --> High customer satisfaction
• Forecasting - We use collaborative forecasting using optimum algorithms & historical data. We collaborate with key customers to develop the forecast --> High forecast accuracy and effective promotions

Supply Chain Optimisation: Moving Beyond Estimates, Expediting and Excel

Part 4: The successful application of these SCM good practices in appropriate businesses should mean that the following should be achievable:

• Procurement - Realistic lead times are built into the Supply Chain Planner; we provide good forecasts so have few short lead time orders placed on suppliers --> High supplier delivery performance
• Shipping - Production completes to plan and we can effectively schedule our picking resources and transportation ahead of time --> High on-time delivery, low overtime & expediting costs
• Manufacturing - We work to a realistic MPS, which incorporates our resource constraints. We can then optimise the performance of operations using Finite Scheduling --> Excellent on-time performance & bottleneck utilisation.
• Planning - We operate a best practice S&OP with integrated forecast/planning software & skilled planners. We use accurate, timely data and tools to test ‘what-ifs’ --> Optimum and accepted plans
• Customer Service - We use delivery dates based on actual supply chain capabilities. There is early warning of problems that could impact delivery dates --> High customer satisfaction
• Forecasting - We use collaborative forecasting using optimum algorithms & historical data. We collaborate with key customers to develop the forecast --> High forecast accuracy and effective promotions

The top 10 supply chain cost reduction opportunities that present themselves to businesses / supply chains that relate better to the first set of procurement, shipping, manufacturing, planning, customer service and forecasting scenarios are as follows:

1. Direct & indirect materials - Strategic sourcing, vendor reduction, e-auctions, e-procurement commodity sourcing (5 – 15% saving)
2. Inventory management - Forecast accuracy, inventory visibility, replenishment rules, SKU rationalisation, collaboration with trading partners, VMI, excess & obsolete stock avoidance
3. Order planning - Improved fulfilment processes, better customer service, reduced fulfilment cost
4. Network optimisation - Distribution/manufacturing rationalisation (5 – 15% inventory reduction)
5. Outsourcing - Supply chain operations outsourcing (incl. manufacturing & logistics) can save 10 – 20%. Improved capital efficiency
6. Transport & delivery - Optimise transportation & fleet management, core carrier programme, technology, outsourcing (5 – 15% saving)
7. Warehouse optimisation - Warehouse management systems, warehouse process improvement, people development, continuous improvement (10 – 17% saving)
8. Lean manufacturing - Waste reduction, lead time reduction, SMED, process simplification etc.
9. E-markets - Connect to public marketplaces as part of integrated supply chain strategy; consolidated buying power.
10. Financial supply chain - Integrated financial transaction workflow with tax efficient supply chain management.