By:- Israr K.

Raja
Islamabad, Pakistan
Why Supply Chain Management?
 Whether you are the CEO of an expanding corporation
or the owner of a fledgling enterprise, its fortunes are
subject to an undeniable truth.
 The success of your business links inextricably to
the performance of your supply chain.
 If you want business success ,you have to make your
supply chain successful too.
The Top Supply Chain Points to be
Addressed for Business Success
 Strategy
 Network Design
 Service Performance
 Costs
 Supplier Performance
 Inventory Management
 Supply Chain Strategy
 Supply chain in not a standalone business
operating function.
 In other words, it is close alignment between supply
chain and general business strategies.
 So for the success of a business SC Strategy should be
closely aligned with the business strategies.
 A properly designed supply chain strategy is
an enabler for achieving commercial goals and
consequently, corporate success.
A Case Study: Walmart
 Walmart may be the most famous example of a company that has
succeeded primarily because of a well-developed and aligned supply
chain strategy.
 Some of the company’s most notable strategy wins are as follows:
 Strategically removed links from the grocery supply chain
 Pioneered the use of vendor-managed inventory
 Built strategic partnerships with vendors to drive down prices
 Developed a process of excellence in supply chain collaboration
 Implemented cross-docking in its supply network to enable inventory
reductions
 Established the strategic use of technology to gain supply chain
efficiencies
 All of the initiatives listed above support the company’s business
strategy to be a leader in low-cost grocery retail, making Walmart a
prime example of what enterprises can achieve when supply chain
and overall business strategies are aligned.
Supply Chain Network Design
 The design of the supply chain especially the part
dealing with outbound distribution from plants or
warehouses, is instrumental in the success or failure of
businesses.
 There may be no predefined structure for moving
materials and products through the stages of
fulfilment.
 Usually networks evolve through a series of discrete
changes and developments, each addressing needs as
they arise and few considered as deliberate steps
toward a strategically integrated supply chain.
Case Study: Whirlpool
 After the acquisition of competitor Maytag in 2005, Whirlpool found
itself entering an unprecedented period of growth, at which point the
management team recognised the need to continuously optimise its
supply chain design and make it more flexible and adaptive to ride out
economic fluctuations.
 As a result, the newly merged company developed a systematic
methodology for network design optimisation, based on the following
four principles:
 A continual process of high-powered modelling and network design
analysis
 A disciplined approach to the collection, cleansing, and standardisation
of supply chain data
 Development of analytical and network design skills within the
company’s supply chain teams
 The perpetuation of knowledge surrounding supply chain network
design (eliminating the reliance on tribal knowledge)
Supply Chain Service Performance
 One of the most critical factors driving profitable
growth is customer service and most importantly,
customer satisfaction.
 Customer satisfaction is highly dependent on the
supply chain and to be successful, your business must
manage its supply chain with that in mind.
 That means the customer must be a primary focus
when considering supply chain strategy, network design,
and performance management.
 A study found 89% of companies expected to be competing
primarily on the basis of customer experience.
Supply Chain Service Performance
 The performance of your supply chain will absolutely
impact customers’ perception of your business and the
service they receive from it.
 The following supply chain performance issues can all have
a negative impact on customer satisfaction and therefore,
hamper the success of your business:
 Slow time to market for new products
 Long delivery lead times
 Delays in response to customer service requests
 Poor order fill and on-time delivery performance
 Inventory shortages
 Poor product or service quality
 Supply Chain Costs
 The cost of meeting demand is one of the most telling ways
in which the supply chain matters to business success.
 Supply chain outlay can make up a large proportion of
product costs, while excessive inventory in the system
can tie up working capital and stifle cash flow.
 Investigating the costs of serving customers is one way
to understand the way supply chain costs affect business
success.
 The use of a methodology known as “cost to serve analysis”
often reveals shocking realities about supply chain costs.
 Supply Chain Costs
 Some of the ways by which poorly managed supply chain
expenditure can inflate product costs are listed below:
 Excessive transportation costs
 Procurement costs
 Inventory and storage costs
 Waste in the supply chain
 Inadequate inventory management
 Poor forecast accuracy
A great deal of cost can be saved not by making cuts per se,
but by improving, streamlining, and optimising the supply
chain.
Supplier Performance
 Supplier Performance
 The supply chain, as its name suggests, is only as strong as its weakest
link.
 Unfortunately, some of the links are unlikely to be under the direct
control of your business organisation.
 To some extent, your suppliers hold your business success (or lack
of success), in their hands.
 That’s why it’s essential to work in collaboration, at least with primary
suppliers, to try and minimise supply chain uncertainty.
 Uncertainty in the supply chain costs money and impacts customer
service, making it a particularly disruptive factor in overall business
performance.
 Collaboration between your organisation and its key suppliers is the
only sure protection against supply bottlenecks and inventory
shortages, both of which can otherwise get in the way of business
success.
 Supplier Performance
 Remember that in the eyes of your customers, there is
no distinction between the performance of your
suppliers and that of your own company.
 Businesses leveraged supplier management to
maintain exemplary service standards and same
time achieved reductions in supply chain costs.
 Inventory Management
 Even if yours is a service, rather than product-oriented
enterprise, the chances are you have some need to move items
through a supply chain.
 It might be spare parts, consumable items, or perhaps
equipment, but if it’s something you need to store and
transport, then it requires treating as inventory and
managing accordingly.
 Of course, if your company is providing products, the need to
manage inventory efficiently is paramount.
 Just as customers are something on which your business
depends, so is inventory.
 Your handling of inventory once it passes from the suppliers’
hands to yours makes a huge difference in the fortunes of your
business as a whole.
 Inventory Management
 Why is inventory management so important?
 Primarily because it can dramatically affect working capital and potentially,
cash flow too.
 If you want to reduce working capital within your business, you should
certainly take the time to investigate inventory management and ask the
following questions:
 Is it possible to improve forecast accuracy to reduce the need for holding
safety stock?
 Can you find a way to reduce inventory holding costs?
 Are you taking sufficient steps to prevent the costs of inventory obsolescence?
 Are you achieving the shortest possible lead times from suppliers?
 Can you speed up customer delivery lead times?
 Are you losing money as a result of inventory shrinkage?
 The answers to these and similar questions will help you to secure business
success by improving your working capital situation.
 You should also find that improvements in these areas will support increased
levels of customer service and make your business more profitable.
 Conclusion
 If you want to be sure your business will be not just surviving,
but thriving in future, your supply chain must be at the centre
of management attention.
 If you can honestly answer “yes” to the following questions, you
have little cause for concern:
 Do you have closely aligned supply chain and business strategies?
 Do you regularly review and optimise your supply chain network?
 Are you continuously and actively seeking supply chain service
improvements?
 Do you have visibility and control of supply chain costs?
 Have you implemented a supplier performance management
program?
 Are you taking steps to mitigate risk in your supply chain?
 Is your inventory being managed effectively?