Supply Chain
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People in many organisations believe that the supply chain is the goods delivery and channel distribution system. In fact the supply chain has a far wider meaning.

The supply chain is the total flow of materials, information and cash,  from the suppliers' suppliers, right through an enterprise to the customers' customers... (Ahmad & Benson, "Benchmarking in the Process Industries" IChemE 2000). If Einstein had studied supply chains he may have come up with S = mic !

Materials flow one way; cash (ideally) flows in the opposite direction and information needs be visible throughout to give control over what is happening in the chain. Looks like the real "supply chain manager" is the CEO.

       

Most importantly, the information needs to mirror the physical and transactional process along the supply chain in real time.  It is not enough to have a huge spend on information technology to do this: the processes themselves need to be set up so that the information can be gathered quickly and correctly. In a well designed system supply decisions can be made effectively and efficiently.

In many supply chains what actually happens deviates significantly from the ideal. As a consequence the supply chain does not perform as well as it should.

Examples of less-than-ideal supply chain performance include:

bulletgoods are delivered late, or not in full, or to the wrong address
bulletincorrect invoices are sent out - or none at all! (Yes it does happen).
bulletwrong inventory in the warehouse verses what is in computer
bullettoo much inventory - or not enough of what is wanted (stockout)
bulletoverall worse return on investment

Do any of these happen in your company ? Do you wonder why ?

Clermiston has significant experience solving supply chain problems.

This doesn't necessarily mean big dollars in a huge IT project. Sometimes it helps just to chart out the flow, or to do simple simulations like "The Beer Game". But solving a supply chain problem does require management commitment, from the CEO right through the company.

We want to work with our clients to develop supply chains to be reliable, responsive and robust. Nothing frustrates customers more than not being able to get the materials they need, when they need them.

Down Load Supply Chain Value Improvement (pdf)

Logistics forms a specific part of the supply chain. Logistics is concerned with the physical distribution and storage of products and services.

(What's the difference between a product and a service ? One definition which we like is that a service is consumed at the time and point of delivery. Think about it).

Logistics has its own set of specialised processes. Like any other set of business processes these are susceptible to drift in performance if not well managed. Read Clermiston's presentation on  Internal & Logistics Processes (download pdf) to gain new insights.

 

Contact John Croker at Clermiston (02 9416 8865 or 0418 263 795) for practical advice in turning these ideas into improvements in your profits.

(c) Clermiston Consulting Pty Ltd. 2004 All Rights Reserved