Written by: Terry Weiner
The following post is #4 of a series and defines how to create a road map to supply chain optimization. This series of posts will provide an overview of the Supply Chain Optimization process and preview some of the concepts and tools that are part of the Manufacturing Extension Partnership (MEP) Supply Chain Optimization Initiative. Click here to read earlier posts.
How to Create a Road Map to Supply Chain Optimization
In the first three posts of this series we discussed Supply Chain Optimization at a high level – looking at the components and concepts. First a quick review, then let’s get specific.
In the 1st blog of the series I said that an optimized high performing supply chain requires management attention to the following 5 critical areas:
Alignment - The supply chain strategy needs to actively align and support the corporate goals of future growth, innovation and sustainability.
Value - The supply chain strategy should identify suppliers who will assist us in achieving our future goals through collaboration and providing a means of growing our mutual businesses through sharing of ideas, capabilities and capacity.
Managing Risk – A well thought out Risk Management Plan is necessary to prevent supply chain interruptions and unexpected events that would render our product uncompetitive, unavailable, or unattractive to the marketplace.
Comprehensive View – The performance of the entire supply chain must be examined in order to identify current and potential future constraints. If we only look at suppliers who represent current bottlenecks we will fail to recognize potential future constraints.
Metrics – We can’t improve what we don’t measure. If we don’t measure the “right things” the problems will persist.
Now we will discuss the specifics of how to accomplish an approach that achieves that requirement.
Stage One - Top Tier Strategy Development
Stage One begins with a supply chain assessment and strategy development session. During the work session, participants learn Theory of Constraints concepts in a supply chain simulation. The impact of variation and dependency is demonstrated and techniques for reducing their effects are discussed.
The session focuses next on the areas most in need of improvement and addresses the challenges specific to the organization’s supply chain.
Using the concepts learned in the simulation and applying them to the challenges identified, a supply chain vision is established and strategic objectives needed to achieve that vision are developed.
Once the strategy and objectives are established, a game plan is developed for the deployment of each of the actions in the strategy to all partners in the supply chain. The game plan is a specific set of activities, with metrics to track progress. Each of the game plans is assigned to a team that is responsible for implementation by a specific date.
Stage Two - Implementation Planning
A critical path analysis is performed to identify the supply chain constraints and the suppliers who are on the critical path (see Figure 3).
A Supply Chain Risk Management Plan is developed in a hands-on one-day workshop.
A one-day Total Cost of Ownership workshop is conducted to introduce strategic sourcing with the use of the Total Cost of Ownership. A case study exercise is used to teach the use of the Total Cost of Ownership Calculator for determining total cost and for testing multiple scenarios for strategic sourcing.
At this point, the strategy has been developed and is understood, we know what the short term and long term goals are. We understand the challenges that need to be overcome and we have a game plan to get there. We have examined our supply chain and understand where the risks are, where the bottlenecks present and future are located, and who the critical suppliers are.
We are now ready to communicate our strategy and game plans to our supply chain and begin the deployment phase of our optimization process.
The next blog post will discuss how the deployment phase is carried out in a collaborative manner with our suppliers.
In future posts, we will look at the following components of the Supply Chain Optimization Initiative - Link by Link:
||How to Deploy Your Supply Chain Strategy and Communicate to Partners?||
|How Can You Determine Supply Chain Optimization vs. Supplier Development?|
|What is Your Risk Management Strategy?||How do I Assess Supply Chain Maturity?|
|How Do You Determine Total Cost of Ownership?||
||The Final Link - Creating Supply Chain Visibility|
|What are the "Twin Killers" of an Efficient Supply Chain?|
Terry Weiner is a Senior Consultant with California Manufacturing Technology Consulting® (CMTC). He has over 20 years experience in process improvements, quality management implementation and supply chain optimization.