Supply Chain Flexibility: Does Your Design Pass the Proactive Test?

Global Risk Management Solutions

Spend Matters welcomes this guest post from Eric Robinson, senior project engineer at Kenco Group.

When your supply chain encounters a roadblock, how does it respond? Does one problem spiral into another, leaving you without visibility into the causes?

If so, your supply chain design is reactive. Instead of showing and slowing the roadblock as soon as possible, your design left you wide open.

As an overseer of your supply chain, you want to do whatever you can to arm it against slip-ups. You need to play the offensive to ensure your design (and your team members) are fully prepared for bumps in the road.

Let’s dive into six key questions you need to ask yourself to ensure you’re operating a proactive and flexible supply chain:

1. Has our entire organization embraced our evolution?

The modern supply chain has evolved from a “straight shot” chain to a complex web of intersecting activities. You need to be proactive about ensuring all layers of your organization embrace the change. Have you created a culture that actively eliminates excessive costs and seeks out opportunities to become leaner?

2. Are we using the most advanced technology available in our space?

Decades ago, supply chain managers relied on pen and paper to build detailed physical records. Today, we use incredibly advanced technology to track freight in real-time, optimize processes, and even automate parts of our supply chain. Embracing modern technology helps you naturally gravitate toward proactive network design.

3. What are our “weak links” — and what is the worst possible scenario to pass through that node?

In any industry, we cringe at the word “crisis.” But as a supply chain professional, you understand the snowball effect, which can rapidly cause a small disruption to bring your operations to a halt. You need to be able to identify the weakest links in your supply chain and those areas most susceptible to crisis. What is the worst possible outcome, and what systems or fail-safes can you establish?

4. Do we have a 'plan b' for a changing world for domestic and international routes?

To take the previous question one step further, you need to examine how factors outside your control can affect your network. For instance, how could a steep new tariff affect your overall costs? At what point would you need to change your DC locations or re-design your network without disrupting customers’ expectations? Would a hurricane in South Carolina affect too many of your typical freight routes to recover from without large financial loss? As you identify the possible scenarios that could affect your network this deeply, shift your plan to proactivity. Determine a plan b for as many situations as possible.

5. Is our supply chain design optimization based on advanced data or intuition?

As you seek out new opportunities for optimization, be mindful of your tendency to go with your gut. Sometimes intuition tells us, “This route looks shorter,” or, “Fewer DCs equal lower costs.” An in-depth cost analysis, however, may show us data tells a different story. It’s essential to rely on tried-and-true numbers as the basis for sustainable optimization and initiatives over what we think might be the best solution.

6. Have we optimized our flexible supply chain at its five basic segments?

There are five main subcategories of vital optimization you need to create the most proactive network possible:

  1. Product flow optimization: examining the efficiency of a product's path from creation to the customer.
  2. Product optimization: determining how to create a product at the lowest cost without sacrificing quality.
  3. Inventory age optimization: pinpointing the risks of products aging out, perishing, or unsalable through stagnation.
  4. Safety stock optimization: safeguarding against out-of-stock scenarios by finding the optimal amount of overstock.
  5. Cost-to-serve optimization: showing insight at the granular level to root out unprofitable products or customer focuses.

Summary

Through these six key questions, you can determine whether your supply chain is proactive or reactive––plus see the actionable steps you can take to ramp up your defenses. Flexibility, relentless attention to quality, and innovative preparedness ensure your supply chain flexibility will withstand any situation the fates throw at it.

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