How Do You Know if You Have a Supply Chain Issue?
Supply Chains are the final frontier for business. Once we’ve improved reporting, beaten all of the easy costs out of the business, and received every concession our vendors can give, then we look at improving the supply chain. But maybe we should start there.
Supply Chains aren’t a glamorous part of the business, yet every business, no matter its size, has one. From the lemonade stand on the corner to the largest manufacturer, from the local plumber to the world’s largest services company, everyone has a supply chain. If you have a supply chain, you have supply chain issues.
I spend a lot of time with companies helping them leverage their data to improve operational performance. My two favorite questions to ask any prospective customer while discussing supply chains are:
1) Do you have commitments you care about? And, 2) What’s the cost of missing those commitments? If the answers come back 'Yes' and 'A lot' then you can have the discussion on what it takes maximize supply chain efficiency and how to gain end-to-end supply chain visibility.
But, how do you know if you’ve got a Supply Chain issue? All you have to do is listen to the different departments in your company and they will tell you. Here is a guide to the types of things you might hear that should set off the warning bells.
You know you have a Supply Chain issue if MARKETING says:
1. We could run more promotions but we couldn’t meet the demand
2. We don’t know the impact of promotions on product availability
3. Weather impacts our sales but we don’t know what to do about it
4. We don’t know who our customer is or where our customer is
You know you have a Supply Chain issue if SALES says:
1. We knew were missing a big customer order last month but there was nothing we could do
2. I have to go through too many applications to find the right customer answers
3. Average call times are too long due to poor data and manual data entry
4. I’m not sure which products should have promotions and which products we face stock outs on
You know you have a Supply Chain issue if OPERATIONS or FINANCE says:
1. We have no way of telling good payers from poor payers
2. We don’t have the materials, parts or services necessary to produce what we need to fulfill this order
3. There’s no easy way to incorporate data from sensors, robots and other machines
4. We can’t easily optimize inventory to prevent stock outs
5. Inventory systems show items sales deemed OK to sell while suppliers may have marked obsolete or recalled
6. We have multiple GLs and not one single version of financial truth
You know you have a Supply Chain issue if IT says:
1. Our data is all over the place and we need it in one place to support our customers
2. We are not in the report writing business, we can’t support every department’s information needs
3. We could share data with customers/suppliers, but we have no data security or governance in pace to protect us
4. Customer Data types (B2B, end user in B2B, customer in B2C, account owner B2C) and status (active, trial, cancelled, etc.) changes for the same customer over time and it’s difficult to keep track without exerting herculean manual effort
You know you have a Supply Chain issue if HUMAN RESOURCES says:
1. We use contractors with employees on watch lists
2. We have a lot more workers compensation claims than our peers
3. We receive either raw materials or finished goods from countries that exploit their labor force
4. We don’t have the right skill sets internally to meet the needs of new systems and processes
You know you have a Supply Chain issue if PROCUREMENT says:
1. It’s really difficult for us to find replacement suppliers
2. We don’t understand our total supplier spend
3. Supplier management takes too much time
4. Multiple entities: 1) Logistics, 2) Plants, 3) Engineering, 4) Product Management, enter or create Material Master information. We cannot get spend analytics
You know you have a Supply Chain Issue if PRODUCT MANAGEMENT says:
1. We don’t really know how well this new product will launch
2. We’re not sure how many of this type of product or that color of product to produce
3. We’re not able to see product trends compared to our production data
All of these areas suffer either individually or together due to poor Supply Chain management and a lack of end-to-end visibility. All of these issues impact corporate performance which impacts stakeholders which impacts corporate management. If you’re hearing any of these statements from any of these departments you have a Supply Chain issue that needs to be addressed. And that is especially true if you’ve exhausted your cost and efficiency efforts elsewhere.