By Max Moriarity | Manager, Supply Chain Operations
I was speaking with an industry colleague of mine about the topic of supply chain assessments and he remarked,
“Assessments are great, but we don’t really do anything with them.”
I asked him to describe a recent assessment he had done to help decrease their transportation spend due to expedited shipments. He stated,
“Our assessment showed that the majority of our shipments were being expedited because of customer delivery time windows being so tight.”
Beyond that, there were no comparisons made to “best-in-class” companies’ operations, no gaps identified, and no action plan to correct any root cause to help improve their operation. I told him that the vast majority of the companies that perform supply chain assessments fail to understand the complex dependencies each area of a supply chain has on the other parts.
Treat Supply Chain Assessments like Solving
a Rubik’s Cube
Companies should treat assessments like solving a Rubik’s Cube, but with a catch. Imagine a Rubik’s Cube, with each color representing a various component of your company’s supply chain.
So often a supply chain assessment seeks to solve just one part of the supply chain (or one color on the cube), and has no consideration for the impact on the other parts (or sides). While a company may improve one area using this method, they may actually end up hurting their overall supply chain performance.
Expand the Scope of Your Supply Chain Assessments
To really get the most out of your supply chain assessments, I suggest looking at all areas that touch the supply chain, both operationally and technologically speaking. It may sound like a daunting task, but it can actually be straight forward when this holistic approach is utilized.
It was only when my colleague broadened his scope and considered the end-to-end supply chain ecosystem that he was able to get to the root cause – his order management system was allowing certain orders to be allocated and accepted, even though there was no stock in the warehouse to fulfill the requirement. What initially appeared to be a transportation problem, actually flowed back through the supply chain to the warehouse, to the suppliers, and finally back to the order management system.
To conduct a supply chain assessment that correctly arrives at the right business solution, you need to first ground efforts by starting with a baseline for all areas to be assessed. Once you know how your company is performing, it is important to know where your company stands by comparing those results to others that are best-in-class.
From this vantage point, it is much easier to identify gaps and arrive at a solution that properly addresses the root cause while being mindful of the impact the proposed solution will have on the other areas of the supply chain.
Create and Execute a Transformation Plan
The last step in the assessment is arguably the most important: Creating and executing a transformation plan. After an organization attains an objective assessment of current state and a benchmark against best-in-class companies, a transformation plan should be formed. This resulting transformation plan should consider the timing of financial benefits and the ability for the organization to handle the change needed to enact the business solution.
Ultimately the goal is to build momentum based on success. So often, a company does everything correct in their assessment, but they do not implement the changes properly, and all of their hard work is lost.
Finding the right partner for transformation is critical. Your company needs a partner that understands both transformations and supply chains. If you would like to discuss this more, feel free to drop me a note on LinkedIn or continue the discussion on the Supply Chain Intelligence Network™ group.
Max Moriarity is a Manager of Supply Chain Operations at Chainalytics. In addition to leading supply chain strategy and transformation projects, Max is responsible for advancing Chainalytics’ project delivery methodology, co-op program and mentoring consulting staff within the practice.