„I have no idea why we have problems with our supply chain, but my department is doing fine. Everybody else needs to get their act together.“
Heard this before? The various departments in your company involved in your supply chain are all trying hard to optimize their actions and operations. Sales, logistics, controlling, purchasing, service and so on. Each department manager has targets to fulfill, and will do everything possible to succeed.
So why are there still so many hiccups in daily operations? Why are deliveries late when you have had a customer forecast in your system for 6 months? Why are safety stocks down and not restocked in time? Why are there overstocks of the wrong material while the needed product is out of stock? Why do your suppliers deliver the wrong quantities? Why do you have to buy missing parts on the spot market for higher prices than originally anticipated?
It might well be that the various department targets don’t mesh. Sales needs maximum forecast and delivery flexibility, controlling needs minimized capital exposure, purchasing needs solid volumes to get planned prices or rebates, production makes their planning based on uninterrupted processes and logistics is trying to avoid partial shipments. Obviously these targets are not always in synch, and the result is a suboptimal supply chain process.
Thinking in silos is still common in a huge number of companies. Organizational structures that have been in place for a while very often support this behavior and can lead to counterproductive actions and routines in day-to-day business. There is no end-to-end transparency or overall perspective of all processes. The department heads’ responsibility very often ends right at their office doors. The danger of getting caught in a bunker mentality is imminent. So what’s the solution?
First of all, you need to understand all relevant processes and get your company’s fingerprint based on real-time data. A detailed analysis of the whole supply chain, from end to end, regardless of departments, locations and systems needs to be the basis for a new holistic supply chain concept.
This necessarily includes transparent exchange of information and materials between departments and business partners as well as a clearly defined end-to-end responsibility. Mutual understanding on all levels about customers’ needs to be established and backed by a solid information system. Commitments made in customer contracts must be shared with all relevant departments so any necessary arrangements can be made.This does not necessarily mean, however, that you need a completely new ERP system. Very often tools can be integrated into existing systems and customized to your needs.
What is essential, on the other hand, is the recognition and acceptance on all levels that improved results will require change. Everybody needs to be on board. The necessary changes will be huge and like paradigm shifts for companies. When structures and mindsets have been in place for a long time, the implementation of a new philosophy will most certainly face obstacles. Don’t expect everyone to embrace it from the get-go. The driving force for change needs to come from the very top of your company, which is where innovative and successful end-to-end supply chain management starts.
Assign the task to a competent in-house team and get a professional partner who can support you all the way from concept to implementation. Talk to us, that’s what we’re expert at.