When a gizmo you’ve ordered lands on your doorstep in its cardboard box, the simple packaging and unceremonious delivery can make this element of modern life seem unremarkable. But stop to consider the full breadth and scale of the logistics it takes to get that completed item to you, and the complexity of end-to-end supply chain management comes into focus.
End-to-end involves the entire supply chain process, from product design and procurement of raw materials to delivery of the final product and after-sale customer service. In the early days of retail, the steps in this process were siloed, each handled separately with little sense of how one related to the other. But as business operations have become more sophisticated and technology advanced, the conception of the supply chain evolved into a dynamic end-to-end vision encompassing supplier management, scheduling, production, and distribution.
The main difficulty is determining how to weave all the stages of a supply chain into a seamless system. What are the tools and techniques that make a potentially unwieldy series of stages become self-responsive, dynamic, and flexible enough to bend against challenges without breaking? How do you develop full supply chain visibility so your workforce is empowered with valuable real-time data? Beyond the goals of efficiency and more confident decision-making, effective management of an end-to-end supply chain creates a strong competitive advantage for businesses in crowded markets.
The most important principle in end-to-end supply chain management is collaboration. That’s according to the white paper “End-to-End Supply Chain Collaboration Best Practices” released by the Global Supply Chain Institute (GSCI) at the University of Tennessee, Knoxville’s Haslam College of Business. True collaboration comprises a range of thoughtful measures to improve supply chains, but with challenges that, surreptitiously, appear to be beneficial on the surface.
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New technology, particularly in the areas of shipping and transportation times, have introduced complexity that has increasingly become unmanageable by any isolated team or division. Likewise, most supply chain management theories are built on the principle of cutting costs. But research out of the GSCI suggests that though companies continue to seek improved cost-efficiency, “the opportunities to improve appear to be dwindling.” The solution to these problems lies in the development of collaborative practices.
One important principle in designing an effective end-to-end supply chain is to form good relationships with your suppliers. It’s important to establish positive, long-term partnerships. These relationships should be built systematically and maintained with care. Think of your suppliers as strategic partners, not simply vendors. The greater degree to which your suppliers can become invested in the outcomes of your business, the greater your ability to manage the supplier relationship.
There are many best practices for implementing an end-to-end supply chain. Here are a few other things to consider as you start looking at the bigger picture:
- Take a lean approach to inventory management to reduce waste and unnecessary actions, leading to faster and more accurate order fulfillment.
- Engage in demand planning to better predict your customer needs, enabling a more effective planning process for your supply chain.
- Do human capital planning to ensure that your workforce is capable of managing the supply chain and responding to sudden changes.
- Use root cause analysis to get a data-driven picture of weaknesses and challenges in the supply chain and to design effective solutions.
- Implement a benchmarking process to measure the efficacy of the supply chain at intervals. You will be better positioned to monitor progress and identify problems in areas such as productivity, inventory management, shipping accuracy, storage density, and quality control. Benchmarking can be done qualitatively or quantitatively. Qualitative benchmarking involves applying best practices and using data from others in your industry, while quantitative benchmarking analyzes key performance indicators.
How a business designs its supply chain will depend on its products. Two key factors are inventory volume and inventory turn rate. Start at the end of the chain and work backwards to measure how long it takes and how much it costs for goods to flow to customers. Based on a combination of these factors, you’ll be able to figure out whether to maintain low or high inventory volume and engage in low or high inventory turns.
You can design a supply chain appropriate for your business and your products by focusing on tactical supply chain management, which implies a focus on logistics and processes. Tactical planning can zoom in on any aspect of the supply chain, including procurement, manufacturing, suppliers, and product design and development.
The tactical planning process will prompt informed decision-making on a variety of issues, such as which suppliers to work with and how to manage risks associated with procurement, where and how to manufacture and warehouse goods, which market segments to target with which products, and how distribution channels are to be established and maintained.
These tactical decisions should ideally be taken in the context of strategic thinking about the business’s goals. But it’s only possible to align your supply chain with corporate strategy if that strategy is clearly defined and articulated. Failure to specify why you are better than your competitors will lead to a failure to design a supply chain that supports such a vision of the business.
Planning an end-to-end supply chain requires mapping out a series of functions, each of which requires considered action. Here are the basic elements of collaborative end-to-end supply chain planning:
- Collaboration is top-down. Supply chain leaders have to take responsibility for driving collaborative efforts. This manifests in many different forms, among them: one-on-one discussions, leadership meetings, performance reviews, organizational information meetings, monthly scorecard reviews, and strategic action plans.
- Develop supply chain leaders with varied experience. Professionals in supply chain management need opportunities to learn and grow. GSCI research gives the example of a company’s workforce that needed to improve customer relations. They were able to do so, but only after management implemented real-time systems to keep employees aware of customer needs.
- Create a collaboration culture. Though difficult, a key element is to ensure that model collaborative behavior is routinely seen by your workforce and external partners. This can be displayed in action planning meetings, reviews, picnics, hiring, and promotions to name a few areas.
- Think total-value, not just price-value. The increasingly rare opportunities for effective cost-management exist through more sophisticated overall management. Supply chain planning has to work hand in hand with an institution’s financial department in a holistic look at the business’s value.
- Employ tools, systems, and data. Supply chain managers will never face a shortage of new technological solutions for virtually any problem. The paramount concerns when deciding upon a particular system are 1) is it easy to understand and b) can it be consistent across internal and external teams. McKinsey & Company offers further insightful advice on how to move toward “Supply Chain 4.0,” including being vigilant about managing data and digital waste.
- Strengthen external team structures. The more you want out of a relationship, the more you have to risk. And with that greater investment, you gain the advantage of a committed partner. Make sure to evaluate every node of external contact to ensure that you are linking your business with your third-parties in the most advantageous way. Share information, make confidentiality agreements equitable, and arrange for you and your partners to tour facilities jointly.
- Effective sales and operations planning. Demand and supply integration is the ultimate test of a collaborative enterprise and, unfortunately, no method is one-size-fits-all. However, any business benefits from making sure they have clear and open communication at all stages of decision-making. Conversely, any business will suffer if its system of rewarding employees promotes behavior that undermines collaboration.
The Haslam College of Business at the University of Tennessee, Knoxville’s Master of Science in Supply Chain Management (MSSCM) offers comprehensive training to navigate operational challenges in setting up supply chains. Students learn how to plan out a supply chain that can benefit a company, design its functions such as sourcing and manufacturing, and explore factors like technology and trade that can affect supply chains. In addition, Haslam’s faculty have deep perspectives on end-to-end strategies garnered from years working in a range of sectors: technology, engineering, government, military, furniture, and consumer packaged goods.
Learn more about the online MSSCM today.
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