Supply Chain - What will be your opinion?

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Supply Chain Survey

Just like any profession, there will be the excellent, the good, the average, below average and down the hill, the bad.

Many managers and company chief executive knew and realize that an above average supply chain system is needed for organization to developed. How often we heard the moan from a sales professional about losing business not due to cost but poor execution of supply chain strategies?

As a person who have worked in this industry for years, I personally have to turn away good marketer (sales professional) who present good presentation on their organization profile and able to do attitude just because of one key reason.

DELIVERY NOT ON TIME.

Organizations world wide need to realize that expanding sales figures and increasing profit are short term gain if not supported with a supply chain pillar which will able to plan and delivered the orders on time to the customer and without any quality issue.

However, we should not think that organization will also will survive with higher cost and higher profit margin with excellent supply chain pillars. Cost will be extremely important and non negotiable in most cases unless your product fall under the Blue Ocean competition category.

But there are competitors out there who can deliver in shorter lead time, with similar quality and same cost compare to your organization and if your support is poor, you will lose out.

What do you personally think of your organization supply chain management? What you wish to have? Which you wish you not having now? What type of leadership you wish your organization have on this area?

The no right or wrong answers to all our problem and what ever we implement, the stake holders have to realize that it all boiled down to the human mind and human behavior. Unhappy employees, no matter how good a system you plan for will not work.

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I promise to published it once it ready and share with my readers








 

BLUE OCEAN Supply chain strategy

Majority of companies world wide are in RED OCEAN businesses where competition is extremely high and quality and cost of production determine if the product are able to led the market or merely been a follower

BLUE OCEAN on the other hand, recommended strong product leadership and unique feature which make competition non existent or weak (until the competitors catch up provided there is no copy right issue)

How can a business itself  escape  from the Red Ocean field and move gradually to the Blue Ocean greener pasture while staying in the same industry?

Unfortunately these opportunity are not in abundance and more often then not, what ever the leadership taken by certain company will be meet with competition of similar magnitude in matter of weeks and months!

One sure method will be thru innovation strategy by introducing new product and copy righted it to protect the inventor and the company business and market it very smartly to ensure the product will be successful in the end. However for every new innovation which are successful, there are many more times new product which failed to brightened the sky. That could be marketing issue or product design by itself.

Now, let us view how a normal business can move further then it competitors and closer to the Blue Ocean field instead of staying in the Red Ocean field and fight your sweat and blood out for survival.

Blue Ocean strategy called for strategic anchoring of strategies which keep competitors at bay. However not a single strategy can stay too  long in current trend and constant upgrading of innovative products and services are required.

Take as an example Apple I phone system. In order to keep competitor at arm length, they have to continue to innovate the concept and ensure they stay ahead. And smart phone industry is a Red Ocean fill up with products fighting for shares and only the best stay ahead with it own Blue Ocean strategy within the Red Ocean.

How can an organization supply chain assist in implementing Blue Ocean, taking into consideration innovating new product is not the responsibility of the supply chain system in totality. That belong to the R & D division.

Let view the total structure of a company and we will able to see how this can take place.

REVIEW YOUR UPSTREAM PROCESSES 


Review your organization structure and investigate and analyses which upstream processes which you do not have and which upstream processes which your organization are involved in.

Definition of upstream processes are those processes which involve the sourcing and procuring of raw material for your industry. For example, let take a typical company manufacturing paper. The upstream process which they should be in will be forest full of trees to harvest the pulp to produce paper.

From the supply chain strategic point of view, any process which an organization which are not in control of, this will put process in the Red Ocean category. If your competitor are involved in an upstream process which you are not involved in, then you already at a vast disadvantage as resources are by nature, scare and the higher the demand, the higher the cost of material.

When you are not involved in the upstream, you are in fact extending the channel of distribution from your supplier and every extension will have a value chain which add up cost.

REVIEW YOUR DOWNSTREAM PROCESSES

Downstream processes are processes which you are involved in the manufacturing of the products your organization is producing and marketing it.

Down stream processes impacted your customer directly as this include your channel of distribution and marketing strategy beside actual production of the goods.

The key note in down stream processes are any cost which you are not efficient in managing it and no way to manage it, if a cheaper alternative are found for example outsourcing of the processes, then this will be the best method.

However, if your competitor are able to do it alone without outsourcing it, then your organization supply chain need to be overhauled and review why it is so. Outsourcing for manufacturing and distribution although add up cost which your organization wish they can save but the bottom line is how the decision made will save the day will be more important.

Large multi - national organization for example HP computer or Apple may able to have a world wide marketing offices to handle distribution of the products made by them. This may not be cost factor alone but overall protection of the product quality and brand building.

The cost of handling your own organization branding and distribution will be a good feel factor but if this is not advantageous to your organization on cost and this make your organization at a disadvantage then thoughts have to be put in on how best to handle such decision.

REVIEW YOUR OVERALL COST AND NEEDS

The basic component of any organization will be cost and cost and cost.

Nothing else matter.

Reviewing upstream and down stream activities is also about cost and when we mentioned cost here we have to review the highest standard achievable. Lean manufacturing standard, six sigma black belt methodology, agile supply chain system and world class production standard. These are common name but all serve the same function,i.e. to reduce your cost and improve efficiency.

Review where your organization stand compare to your competitor. Never provide any excuse to yourself why your organization cannot do it when your competitor can. The excuses are self defeatist strategy by itself.

Analyze why your overhead are higher then others?

Common statement i usually heard and feel are classic example, "our quality is better" which is why our cost is higher.

The real truth is frankly the quality gap can be close easily by your competitors in matter of months and year but the cost of your higher production can be a trouble maker for your organization in the near future.

Do we remember the Japanese car manufacturers decades ago when they offer cheaper car compare to western cars?

Frankly unless your product is on a very much higher echelon level, the cost factor will be a extremely important factor to consumers purchasing pattern.


REVIEW YOUR COMPETITORS STRATEGIES 


Check your competitor supply chain strategies from supplier management to cost reduction and product costing.

Running a business is like running an endless marathon where the finishing line is not visible until you decide to give up your business or you manage to swim away by miles to the Blue ocean field via innovative strategies and products.


REVIEW YOUR CUSTOMER SUPPLY CHAIN STRATEGIES AND ANTICIPATE 

Understanding and anticipating your customer demand and interest far ahead before they arrive at your door steps with demand and some of these demands may spell trouble for you.

Successful company understand their customers needs and assume the relationship like a married couple. *(refer my blog on threat at negotiations) and anticipating it will keep the "wolves" from stealing your "wife" away.

Your organization must be able to sustain customer relationship not only on current tactical needs but strategic needs as well. Tactical needs are covered by your day to day operational efficiency like delivery on time and good quality but strategic needs are very important.

I will like to compare this to a married couple physical needs (tactical) and emotional needs (strategic).

Keeping your large account and smaller account for lifetime is an achievement which cannot be compare with the actual return in profit to your company. And be a "wolves" to attack your competitor "wives" or "husband" will put your company away from the rest of the field.

Example of supply chain excellence in customer management will be VMI system to your customers and anticipate future order peak or low season and not taxing your customers vice versa. Of course new product offering will add more points to your company to swim further away but new product without checking on excellent quality and not supported by overall supply chain structure will not work.


EVALUATE YOUR PROCTOR FIVE FORCES STRATEGIES

Proctor 5 forces of competition remain relevant and all the upstream and down stream context mentioned above plus reviewing your supplier supply chain needs and competitor strategies boiled down to Proctor 5 forces strategies.

The strength and weakness of your competitors, the barrier to competitions, bargaining power of suppliers and customers, threat of cheaper substitutes and intensity of the businesses itself are all useful tools to apply when handling your organization desire to swim from the Red Ocean to the Blue Ocean field.