UNDERSTANDING SUPPLY CHAIN RISK AREAS, SOLUTIONS, AND PLANS

A FIVE-PART SERIES / Protiviti Inc. and APICS

Introduction

The purpose of this paper is to interpret and discuss the results of the recent supply chain risk survey carried out by APICS and Protiviti.

The document is intended to help business leaders to better understand these results and use this information as part of their overall information pool when evaluating and managing supply chain risks and opportunities.

Supply chain management incorporates a wide range of very significant and inherent risks and opportunities. These risks and opportunities apply to activities within the company’s organization as well as outside the organization at suppliers, at the suppliers’ suppliers, and outward at the organization’s customers and customers’ customers. In other words, these risks and opportunities can affect the entire chain. For most organizations, it is clear that supply chain management processes can greatly influence the organization’s performance and the predictability of that performance.

For some industries, supply chain performance can be a real competitive differentiator. For others, successfully managing supply chain and its inherent risks has become a prerequisite for success or even survival. At the mention of supply chain management, consumer products, retail, energy, construction, and manufacturing are among the industries that spring to mind. However, supply chain processes affect all industries in some form or fashion. For example, procurement processes contain many major risks and opportunities in supplier management, product and services sourcing and outsourcing, contract management and control, purchasing execution and control and so on. These risks exist at all kinds of organizations and in every type of industry.

In today’s risk-sensitive world, companies can become preoccupied with risks such as international terrorism and homeland security, natural disasters, SARS, and the like. But supply chain risks are many and are often considerably more mundane and controllable than some of these high-profile scenarios. These areas of risk include:

• A variety of supply interruption risks • Demand and supply planning and integration risks

• Purchase price risks • Inventory and obsolescence risks

• Regulatory and compliance risks • Information privacy and security risks

• Customer satisfaction and service risks • Contract compliance and legal risks

• Process inefficiency risks • Employee and third-party fraud risks

• Product introduction and cycle time risks • Human resource skills and qualifications risks

• Project management risks • Corporate culture and change management risks

• Information integrity and availability risks

Organizations of all sizes have recognized the need to put strategies and capabilities in place to identify, prioritize, and manage risks and opportunities across their entire supply chains and within and across their internal supply chain processes.

Benchmarking de la Supply Chain

par Dominique Estampe

Directeur de l’Institut supérieur de logistique industrielle (ISLI)

Bordeaux école de management

et article présente les résultats de la première étude de benchmarking effectuée en Europe selon le modèle SCOR (Supply Chain Operations Reference model). Elle a été réalisée par Nicolas Roman, Vincent Poisson, Coralie Ceccarello, Cecile Pestre et Gus Neser de l’ISLI (Institut supérieur de logistique industrielle, Bordeaux École de Management) en collaboration avec le SIMTech (Singapore Institute of Manufacturing Technology) et le SCC (Supply-Chain Council) qui a conçu et développé le modèle SCOR.

Cette étude a été dirigée par Dominique Estampe, Directeur de l’ISLI et John Paul Senior, Research Fellow du SIMtech.

Le Benchmarking de la supply chain (chaîne logistique) permet aux entreprises de communiquer leurs problématiques, de mesurer leur performance objectivement, d’identifier les axes d’amélioration, et d’influencer les développements futurs du Supply chain management.

En effet, la mesure de la performance est vitale pour toute entreprise qui souhaite survivre dans un environnement de concurrence accrue. Si une entreprise n’a pas une vision claire de sa performance, sa gestion opérationnelle en sera d’autant plus difficile. Elle doit connaître la performance de ses concurrents tout autant que le taux de satisfaction de sa clientèle (cf. à ce propos l’article « Mesurer la valeur de la logistique » [AG 5 010] dans ce traité).

Logística Versus Cadeia de Abastecimento

Açúcar ou Recheio?

Joaquim Pereira

Tem havido um alto grau de confusão entre "Gestão Logística" e "Gestão da Cadeia de Abastecimento", a questão que se colocaé se elas são realmente diferentes ou não.

Reshaping Industries with Internet Supply Chains

New technology has led to the steady improvement of supply chains, but dramatic restructuring lies ahead. Companies that want to reap the benefits will have to adapt.

by GARTH SALONER & A. MICHAEL SPENCE

We live in an extraordinary time. The Internet and related technologies have opened new forms of communication, reduced the costs of many kinds of market interactions, and brought firms and consumers around the globe into closer proximity than ever before. At the same time, many of the impediments to efficient market performance are being swept aside. ...

Creating Sales & Operations Planning Processes (S&OP):   Key to Effective Supply Chain Optimisation

Sales and Operations Planning, S&OP, supports the notion that making good decisions all of the time is preferable to making outstanding decisions some of the time.  Tom Wallace (MRP II: Making it happen) defines S&OP as follows:

• Sales & Operations Planning (S&OP) is a business process that helps companies keep demand and supply in balance.
• S&OP is cross functional… including the executive in charge of the business unit
• Used properly S&OP enables the company’s managers to view the business holistically and gives them a window into the future. ...

Supply Chain Optimisation: Part 5

... IT is critically important to the realisation of these cost reduction opportunities as it supports and enables supply chain agility in the following ways:

• Complex, rapidly changing business
  • IT tracks the numbers
  • IT avoids confusion
  • Allows for frequent & rapid preplanning & scheduling
  • Allows rapid quotation, ATP & CTP response
• Collaboration
  • Platform for true collaboration between partners
  • Rapid exchange of information between partners
  • Rapid preplanning across the extended supply chain ...

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: Part 3

... Having developed this provide a convenient and useful conceptual framework for us to consider the lean vs agile debate as per the diagram below.  Lean, with its efficiency focus, is more suited to relatively stable markets where cost (and therefore the risk of substitution) is an issue.  Agile, on the other hand, with its focus on responding quickly to market needs, is better suited quickly changing markets such as are experienced by fashion goods.  Complex products having uncertain demand being better suited to a project management style of control.  This leaves the fourth quadrant which was deemed to be under the remit of the approach recently coined as ‘leagile’. ...

Supply Chain Optimisation: Part 2

Having established SCO to be a very worthwhile exercise a route map of undertaking it and achieving the associated business benefits needs to be laid out.  Before this is discussed however it is useful if we consider the ‘agile’ supply chain which can be characterised by:

• A focus on core competencies
• Small, flexible production units
• A very high speed of response
• The ability to manage unpredicted events
• Partnerships & extended enterprises
• A customer/demand driven supply chain
• A process and project based organisation
• Rapid response, re-configurable, robust business processes
• Integrated, re-configurable IT infrastructure

Supply Chain Optimisation: Part 1

... A supply chain can be defined, not without contention, as: “a supply chain is a series of enterprises which must share information and cooperate to ensure a smooth flow of goods”. Striving for efficient, high velocity material flow and effective information flow will facilitate the synchronisation of demand and supply.  From this a working definition of supply chain management can be derived as: “Supply Chain management refers to the total management of material flows from suppliers, through your own factory and, via a distribution network, to the end customer”. ...