Important Factors That Can Derail Your Supply Chain
Nick Ostdick - May 11, 2017
We’ve discussed a great deal on this blog about the elements necessary for optimizing or enhancing global supply chain management and logistics. These elements vary from effective communication and breaking down cross-functional silos to the deployment of critical technology platforms such as Industry 4.0, advanced analytics, and Big Data. However, we’ve devoted very little time to examining the flipside of this coin: The factors associated with global supply chain management which significantly hamper or even derail your production and supply streams.
While the most detrimental factors to effective supply chain management have shifted and evolved during the last decade alongside the platforms and strategies planners and managers deploy, many of the fundamental aspects as to why a supply network succeeds or fails have remained since the 1990’s and early 2000’s. Point being: While staying on top of new technologies or software solutions can be difficult, understanding and addressing the critical challenges and pain points is a much simpler task given these elements have stayed unchanged throughout recent times.
With this in mind, let’s examine a handful of critical factors that can derail your supply chain management and logistics and why planners and managers should understand these potential pitfalls when evaluating the overall effectiveness of their supply streams.
Addressing disruptions and bottlenecks
Dealing with supply disruptions or production bottlenecks is just part and parcel with operating a robust partner network on a global stage. While the goal is of course to mitigate the impact of these disruptions, the critical question is: What happens when they occur? What is the contingency plan for addressing these disruptions and ensuring efficient production and smooth supply streams can still continue? Failure to have such plans in place is one of the biggest factors that can derail a manufacturing company’s supply chain because of the ripple effects associated with such breakdowns — if one piece of the puzzle is faulty, the rest of the puzzle is sure to follow suit.
Luckily, today’s planners and managers can leverage a number of technology platforms and strategies to create comprehensive planning to combat disruptions and bottlenecks. Tools such as BOM management, Plan for Every Part, Every Part Every Interval, and S&OE (sales and operations execution) give companies increased visibility into their overall supply situation to alleviate the pains associated with disruptions both large and small.
Lack of vendor and partner management
Because vendors and partner relationships in today’s manufacturing industry can be extremely complex and spans thousands of miles, it can be difficult to effectively manage vendor and partner relations to ensure the best products at the best time at the best facility. In addition, because of the disparate nature of these partnerships, regular on-site visits can be difficult and thus the ability to judge the effectiveness of partner operations. Without a consistent glimpse into the day-to-day operations between partners and vendors, significant oversights can occur relative to consistent flow of raw materials and resources, which can then impact the efficacy of demand planning and production programs.
Insufficient metrics for performance
Today’s manufacturing industry is one dependent on the gathering, sorting, analysis, and distribution of data. As such, Industry 4.0 and other associated elements of a data-driven supply stream — Big Data, advanced analytics, and S&OE — are critical drivers in gathering performance-based data and distributing it necessary parties across the entire value chain, thus breaking down cross-organization and functional silos. The trouble is: So many companies in today’s manufacturing industry either lack the functionality to gather and utilize such in-depth data gathering and monitoring, or simply lack the fundamental understanding of how to apply this data into an actionable plan for a more stable, secure supply pipeline.
In either case, companies often to default to insufficient metrics for performance, thus resulting in inaccurate benchmarks for a wide-ranging spectrum of operations — procurement, resource allocation, production programs, and transportation management.
Poor documentation and tracking
We’ve discussed before on this blog the shockingly large number of companies still relying on manual methods of data input and management. Manufacturing companies, even on a worldwide stage, still base their data management strategy on the spreadsheet model in part because it’s been common practice for such a long period of time. However, as we’ve seen with recent examples of integrating a global supply chain, dependency on the Excel model is not only time-consuming, but it can be costly in terms of data management and tracking errors. Poor documentation management not only gives manufacturing companies a distorted view of their production and supply pipelines, but it can also resonate across a company’s value chain into partner networks, thus creating significant ripple effects throughout a number of touchpoints in a supply stream.
Long story short: Poor documentation and tracking extends well beyond the walls of your company and can impact those with which you work.