Page 20 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 1: 21st Century Supply Chains

Radio Frequency Identification (RFID), Six-sigma Quality, Lean Manufacturing, Outsourcing, Notes
Vendor-managed Inventory (VMI), Collaborative Planning, Forecasting and Replenishment
(CPFR), Spend Management and Regulatory Compliance. All these initiatives promise to improve
the speed of transactions, streamline processes, optimize throughput and minimize risk. But the
effectiveness of these initiatives should also be evaluated as they relate in overall performance
goals.
Financial measures are poor ways to evaluate, direct and manage supply chains. The key
performance indicators are orders (if it is delivered complete, on time and accurate), lead-times,
reliability, inventory levels, potential out of stock conditions and logistics costs. The metrics for
these have to be got right.

1.4.3 Technology

Technology is a process enabler. Corporations invested trillions of dollars over the past two
decades in supply chain management software and systems. Historically, however, their focus
has been on improving transaction processing, streamlining processes and optimizing
throughput – in short, on improving efficiency. Few firms, if any, have applied resources to
supply chain effectiveness and the ability to plan strategically and detect exceptions before they
become expensive problems.

!
Caution Without a strong process, many of the benefits of technology are lost or lessened.
Technology is vital for supply chain execution to provide event management, exception
management, complete supply chain visibility from purchase orders to delivery orders, and as
a tool for collaboration.

1.4.4 Supplier Performance
Supply chain success depends on supplier performance. Supplier performance, or the lack of, can
create havoc on revenue, inventory and profitability. Companies and their supply chains must
control suppliers, and gain insight into operational issues through interactions by identifying
root causes and understanding the impacts of various actions. It is critical to align performance
with demand planning. They should not let suppliers control their business as it will lead to
much variability in performance.

1.4.5 Integration and Collaboration

The supply chain process requires integration throughout the organization and beyond with
suppliers and customers Operations managers often make decisions about demand, supply,
manufacturing, fulfilment and distribution without clearly understanding the impacts of these
decisions on performance targets. This may result in gaps and blind spots in the supply chain
that can significantly hinder results. Collaboration with key supply chain participants is important
to provide additional focus and resources to the total supply chain.

1.4.6 Risk Mitigation

A supply chain is effective if the entire supply chain can be assessed to identify critical areas,
including suppliers, logistics service providers, ports and other potential risks that could disrupt
the company’s supply chain and corrective action taken.
All this factors are critical for supply chain effectiveness. The supply chain, in the ultimate
analysis, has to have agility and responsiveness to better adjust to changing market conditions
and, to some degree, to control those forces.

LOVELY PROFESSIONAL UNIVERSITY 15