Case Study – Circa 2010-2020 Timeframe
Five flows of supply chain Project
Improving Five flows Of SCM
Better Risk Flow Planning
Increase FTL (Full Truck Load) Percentage
Higher equipment utilization
Lower logistics rates and costs
Improved service levels less logistics chaos
company and Industry
Client was an Australian industrial corporation supplying goods all over the continent. The company imported raw materials from overseas and combined them with other raw materials procured locally to create industrial products which were used in a multitude of industries.
The company was mainly an industrial supplier to several large corporations around the continent and managed very complex supply chain in Australia, both in the metro areas, as well as, in remote locations.
Download
Download of Our Book Summary
Management Details
The client head of project in this case was a finance executive who was trying to grapple with a very complex supply chain because the supply chain personnel within the company were mainly acting as logistics coordinators rather than full-fledged supply chain managers. This is still a very common situation in many companies where even the top managers routinely confuse logistics with supply chain.
Company situation
Client company was quiet comfortable in its operations making reasonable profit every year due to a very privileged position in the marketplace.
However the management team was not satisfied with supply chain operations because they could clearly see that supply chain team was mainly managing logistics rather than supply chain.
They appeared preoccupied with the product flow and totally ignored the information flow as well as on the other flows of supply chain. The senior management believed that as a result the company was losing profits, and faced excessive supply chain risks.
Supply Chain Problem
The key problem in this company was the risk management within the supply chain as well as perceived high cost off the shipments when compared with the peers in the marketplace. even though the company could afford the high costs of shipments they would like to get more profits rather than enrich their suppliers and logistics carriers.
We learned from this case work that even when the stated problem is in the physical flow of supply chain, the actual problem may be in rest of the flows of supply chain.
Complicating Factors
It Was Not An Easy Problem
The current supply chain management team was a big barrier to change because in their perception they were doing an excellent job within the company.
This was partially true because they were meeting the DIFOT target quite well. yet the costs were very high when benchmark against their competitors an industry peers.
It was clear that change management would become extremely difficult due to recalcitrant logistics, Team focused mainly on logistics operations, who were masquerading as supply chain managers in the company.
Strategic Question
How to transition from logistics management to sophisticated supply chain management and bring the current supply chain management team into the new way of doing things.
Key actions to Answer the Strategic Question
- Commission just the right size team to be able to make an impact and yet keep the project tightly on leash.
- Understand the situation, problems, complications and the critical question.
- Accurately map the five flows of supply chain inside the company as a one-off exercise to demonstrate the power of 5 flows of SCM.
- Institutionalize the improvement mechanisms and create a plan for transition from a logistics management parading to supply chain management paradigm inside the company.
- Create and deliver workshops inside the company on the five flows of SCM, and the forthcoming transition from single flow to the five flows of management of supply chain.
- Create and deliver workshops inside the company on the five flows of SCM, and the forthcoming transition from single flow to the five flows of management of supply chain.
- Quantify the benefits of systematic management of five flows of SCM and set targets for the next 24 months till completion of the project.
- Follow up to quantify and report benefits delivered from the project.
MOST POPULAR CASE STUDY
- BUSINESS TRANSFORMATION
- OPERATIONAL NETWORK RATIONALISATION
- OUTSOURCING 3.0
- GLOBAL MANUFACTURING FOOTPRINT OPTIMISATION
Project Results
- Improved product flow – FTL percentage increased from low 20% to high 80%.
- Improved financial flow and lower costs to decrease in LTL shipments and pro-active management of financial flow.
- Improved risk management – due to pro-active management of risk flow in the supply chain.
- Improved value flow – and customer/ supplier relationships as evidenced by better DIFOTIS performance – enhancement of over 20%
- Improved information flow – logistics was no longer a black hole. Regular reporting of all five flows of SCM instituted inside the company.
