As supply professionals, we have a responsibility to all other segments of our businesses to ensure we are engaging and teaching those segments about what our discipline entails. Supply chain is not easily understood. It takes time and patience to help others in different areas of a business to understand the interconnectivity of the various aspects of supply chain and how they affect each other. Any easy way to begin this conversations is by asking co-workers, “what does supply chain mean to you?”
From sales to production to customer service, it is crucial that all teams in a business understand the supply chain and how one issue may affect getting the end product to a customer. We are seeing this every day with the rise of finished good shortages on the customer side. When teaching someone somewhat green to the field of supply chain, an easy starting point is to discuss the bullwhip effect. The bullwhip effect explains very simply how changes in the downstream supply chain (closer to the customer) can impact the upstream supply chain (toward the suppliers). A great way to illustrate this is through a simulation called the “beer game.” This is an inventory exercise that demonstrates these changes by varying the end customer demand and having the various pieces of the simulated supply chain react to those changes usually causes huge shortages or overages of “material.” Anyone can participate in this simulation and can not only show how the supply chain is impacted, but also help participants understand the different departments within the supply chain.
Departmental understanding is also important for those outside of the supply chain. Often, coworkers will look to communicate with whoever they are comfortable with or already know, but that does not mean that is the person they should be working with on the issue. For this reason, the supply chain should have a robust organizational chart that has high level details about what each department is responsible for to streamline finding that correct person to help.
Finally, supply chain has a duty to communicate processes. Processes are a major part of the supply chain and the related processes to another department can be extremely valuable in gaining traction between the two groups. This includes helping groups understand ERP systems and the impact they play on the business. This can help other departments understand the supply chain and the roles they play within it as well as how to positive impact it to make it more efficient. Groups outside the supply chain can also begin to learn the value of supply chain and where the supply chain can be beneficial in helping create need value. The supply chain is able to play a role in new process development, which can save money. It can also be part of the product development process to understand bottlenecks and capabilities, but can also work to avoid design flaws that others may miss not having a different perspective in the room. It is this type of collaborative effort that allows the various business departments and a supply chain to work to develop a strategic competitive advantage.
One of my favorite supply chain topics to discuss is how supply chain can be more than simply getting one item to a particular location, but can also develop a competitive advantage for firms. The standard definition of supply chain focuses on the flow of products, information, materials, services, and payments. Executives can view supply chain as a competitive advantage within this context, but can dig deeper into how to create a strategic supply chain advantage.
Supply chain departments can play an even stronger role in a business as they couple with business partners to influence the organization more. This means the supply chain group of a company works collaboratively with product innovation/design, marketing, sales, finance, HR, and information technology. Working with all these various groups allows the supply chain team to have input on how they are able to help reduce costs or ease struggles in the business environment. A supply chain organization should also work to create valuable technology whether that be through alternative materials, innovative logistics processes, or reworking the network design.
Supply chains are intended to add value to a business rather than be a sunk cost for a business. The best supply chains in the world are able to reduce the cost of doing business and the variability of the business while also improving customer service. Supply chains can expand even further beyond partnering with the internal business groups by working with external business partners, such as suppliers and customers to understand and navigate challenges. This can lead to creative solutions that are favorable to both the company and their external business partners. Perhaps a supplier is having trouble getting space on a cargo ship to move materials to the United States from Asia. If the supply chain has more pull with the carriers, there may be an opportunity to work together to help alleviate the issue.
We want to challenge you this week rethink how you are working within your supply chain. Are you simply doing what is needed to move materials from point A to point B or are you adding further value to the business? There is never a better time than today to start to rethink and reshape how a company is approaching their strategic supply chain advantage considering the ever-growing business challenges on a day-to-day basis. Get creative, be a leader, and initiate change!