Supply Chain Management. A Discipline in Reducing Risk.
Let’s face it, supply chain is the lifeblood of virtually any business producing a product. Getting a final quality product out the door on time at the right cost structure is, in the simplest of terms, pretty much the entire point. So why are there so many buyers who seem simply exhausted by the entire process?
First, even though it is one of the most common terms in manufacturing vernacular, let’s start with what exactly we mean when we say supply chain.
Oxford Languages defines supply chain as ‘the sequence of processes involved in the production and distribution of a commodity.’
Investopeida.com takes that definition even further, by correctly stating, ‘A supply chain is a network between a company and its suppliers to produce and distribute a specific product to the final buyer. … The supply chain also represents the steps it takes to get the product or service from its original state to the customer.’
It seems to us the key phrase here is ‘represents the steps it takes’. In other words, supply chain is more than just materials and purchasing. In fact, just consider Robert Weed Corp, where although we definitely manufacture high-quality value-add products, it still is far from being the most complex product on the market. But even so, consider the ‘steps it takes’ just to get our products to market:
Now take that process times multiple products. And if you’re the OEM, you’re doing this for hundreds or perhaps even thousands of products. You get the picture. You don’t need to think too hard to imagine the opportunities for disruption.
So why is it then that serious supply chain management too often is not fully embraced?
Well no doubt the discipline to manage the supply chain can be challenging, especially in high-demand, busy times. However, not doing so actually contributes to the noise and confusion.
If one can make supply chain efficient, especially by integrating systems and processes, then valuable time and energy can be focused on more value-added activities. Such as a focus on product innovation. Quality to market. Research and development.
So, imagine if you will, having data-driven forecasts that accurately project what you need to produce 12-18 months out. Then working with your partners to determine what you need from them to meet that demand…while also having locked in pricing so costs are pre-determined. Because ultimately one issue can – whether it be supply, demand, quality or price – disrupt or even shutdown an OEM’s operation.
In addition, predictability allows you to better forecast labor needs much further in advance and more accurately – at a time when labor continues to be more of a premium than ever before. And when cost of labor preparation is such a significant factor in today’s manufacturing space.
And finally, there is pricing volatility. With on-going, as-needed buying happening rather than properly leveraging quality forecast data and then locking in price, companies are simply buying at market prices – which generally mean higher costs.
Fact is, every business needs to determine the nuances and details of their own supply chain. But they also need suppliers who can be proactive, responsible and customer-focused enough to know their own supply chain. Then work together with complete transparency to reduce lost opportunity costs. More money in your pockets. Greater efficiency in your operation.
In today’s data-driven world…it is just smart business to use what is available. Because ultimately best-in-class supply chain management is simply smart risk mitigation. It is about providing your buyers with the tools and more importantly the authority to improve buying practices. All of which leads to clarity-to-market, which typically means everyone wins.
The above article is the first in our Discipline in Supply Chain (DiSC) series. Watch for more coming soon. If you’re interested in learning more now or talking with our supply chain team on how they can help improve your Supply Chain processes, please contact John Herzig at John.Herzig@robertweedcorp.com.