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Vivek Sood: Sydney based managing director of Global Supply Chain Group, a strategy consultancy specializing in supply chains. More information on Vivek is available on www.linkedin.com/in/vivek and more information on Global Supply Chain Group is available www.globalscgroup.com
Vivek is the Managing Director of Global Supply Chain Group, a boutique strategy consulting firm specialising in Supply Chain Strategies, and headquartered in Sydney, Australia . He has over 24 years of experience in strategic transformations and operational excellence within global supply chains. Prior to co-founding Global Supply Chain Group in January 2000, Vivek was a management consultant with top-tier strategy consulting firm Booz Allen & Hamilton.
Vivek provides strategic operations and supply chain advice to boards and senior management of global corporations, private equity groups and other stakeholders in a range of industries including FMCG, food, shipping, logistics, manufacturing, chemicals, mining, agribusiness, construction materials, explosives, airlines and electricity utilities.
Vivek has served world-wide corporations in nearly 500 small and large projects on all continents with a variety of clients in many different industries. Most of projects have involved diagnostic, conceptualisation and transformation of supply chains – releasing significant amount of value for the business. His project work in supply chain management has added cumulative value in excess of $500M incorporating projects in major supply chain infrastructure investment decisions, profitable growth driven by global supply chain realignment, supply chain systems, negotiations and all other aspects of global supply chains.
Vivek has written a number of path breaking articles and commentaries that are published in several respected journals and magazines. Vivek has spoken at several supply chain conference, forums and workshops in various parts of the world. He has also conducted several strategic workshops on various aspects of supply chain management. He received his MBA with Distinction from the Australian Graduate School of Management in 1996 and prior to these studies spent 11 years in the Merchant Navy, rising from a Cadet to Master Mariner.
Sometimes, people focus too much on one or two things that happened and generalise it as a common occurrence. However, focusing solely on isolated incidents and exceptions can lead to flawed assumptions and misunderstandings about what truly drives success. To address this issue, a team of researchers led by the author conducted a six-year study of the top 1,200 corporations worldwide to determine which companies had the most successful supply chain networks. After careful analysis, they identified 62 companies that scored high enough to be considered Supply Chain 3.0, meaning they excelled in at least three of the five key cornerstones. We can explain how these companies performed well , so that other companies can learn from them and improve too.
In this blog post, we’ll explore the methodology and findings of this ground breaking study, and how it can inform businesses looking to improve their own supply chain operations.
SCM networks and performance
One of the key areas that businesses tend to focus on is their supply chain network. A well-functioning supply chain can make all the difference in a business’s success or failure. However, when it comes to supply chain networks, people often focus on isolated incidents and exceptions, which can make them seem like the norm. To avoid this, a team of experts conducted a six-year study of the top 1,200 corporations around the world to determine which companies had the best supply chain networks.
Our team analysed data from various sources to evaluate each company’s supply chain network, including financial reports, annual reports, and interviews with their C leel and managerial executives. After six years of research, the team found that only 62 companies scored high enough to be considered Supply Chain 3.0, meaning they were excellent in at least three of the five key cornerstones of supply chain management.
We have identified the four key cornerstones of supply chain management , which are:
- Strategy and Design
- Planning and Control
- Execution and Operations
- Measurement and Analytics
Strategy and Design
In SCM 3.0, a key aspect of strategy and design is the use of advanced technology to optimize the supply chain network. This technology can include software for demand forecasting, inventory management, and transportation fleet planning, as well as hardware such as automated warehouses and delivery drones. By leveraging these tools, companies can improve their supply chain network’s efficiency and responsiveness, reducing costs and increasing customer satisfaction.
Another critical element of SCM 3.0 strategy and design is collaboration. Companies must work closely with their suppliers, distributors, and other partners to ensure that the entire supply chain network is functioning optimally. Collaboration can involve sharing data, coordinating logistics, and aligning incentives to promote mutual success.
Planning and Control
Planning and control in SCM 3.0 involves five key components:
- Demand planning: This involves forecasting customer demand for products and services, using various statistical models and historical data to estimate future demand. By accurately predicting demand, companies can better plan their inventory levels, production schedules, and distribution processes, which can ultimately lead to reduced costs and increased customer satisfaction.
- Production planning: This involves developing a production schedule based on demand forecasts and available resources. Companies need to ensure that they have the right amount of raw materials, equipment, and personnel to meet production targets while minimizing waste and maximizing efficiency.
- Inventory management: This involves managing inventory levels to ensure that the right products are available when and where they are needed. Companies need to balance the costs of holding inventory with the costs of stockouts and lost sales. With SCM 3.0, companies can use advanced technologies like RFID and IoT to track inventory levels in real-time and optimize inventory levels accordingly.
- Logistics and transportation planning: This involves managing the movement of goods and services through the supply chain network, including transportation and storage. Companies need to optimize transportation routes and modes, and ensure that products are delivered on time and in good condition.
- Supplier management: This involves developing and maintaining relationships with suppliers to ensure that they deliver high-quality products and services on time and at a reasonable cost. With SCM 3.0, companies can use data analytics to evaluate supplier performance and identify opportunities for improvement.
Execution and Operations
Execution involves coordinating all the activities required to deliver products to the end customers, including production, transportation, and delivery. SCM 3.0 recognizes the importance of real-time information sharing to enable efficient execution. Real-time information sharing enables suppliers, manufacturers, distributors, and retailers to react quickly to changing customer demand, supply chain disruptions, and other issues that could affect the flow of goods and services.
SCM 3.0 encourages companies to leverage technology to automate execution and operations. This can include automated material handling systems, warehouse management systems, and transportation management systems. Automation can improve efficiency and reduce errors in the supply chain, resulting in faster order fulfilment, higher customer satisfaction, and lower costs.
Measurement and analytics
The first step in measurement and analytics is to establish key performance indicators (KPIs) for the supply chain. These KPIs include metrics such as on-time delivery, order fulfilment accuracy, inventory turnover, and cost of goods sold. Once the KPIs are established, companies can collect data from various sources, including internal systems such as enterprise resource planning (ERP) software, as well as external sources such as supplier performance data. Data analysis is a crucial component of measurement and analytics in SCM 3.0. Companies may use data visualization tools to make sense of the data and identify trends and patterns. This data can be used to optimize operations, identify areas for bottlenecks , and make data-driven decisions. One key aspect of measurement and analytics in SCM 3.0 is the use of real-time data. By collecting data in real-time, companies can monitor supply chain performance and respond quickly to any issues that arise. For example, if a shipment is delayed, the company can quickly identify the issue and work to resolve it, minimising any disruptions to the supply chain.
During the course of five years, approximately 20% of the companies included in our database dropped out due to various reasons such as mergers, acquisitions, change of ownership, or falling out of the top 1200. Additionally, we found that companies operating in regulated market environments such as utilities, insurance companies, and finance companies provided useless data for comparison purposes as their internal workings were not transparent.
It should be noted that the ranking mentioned in this article is based on data collected over a six-year period and may not reflect current business dynamics. As companies have merged, some have been dissolved, and new ones have emerged, the landscape of the top 1,200 corporations has likely changed significantly. However, the approach and methodology used in the study serve as an example of how companies can evaluate their supply chain networks and identify areas for improvement. It is important for businesses to continuously adapt and evolve their strategies to stay competitive in today’s rapidly changing market.
A well-functioning supply chain network is crucial to a any business’s success, and Supply Chain Management 3.0 offers a comprehensive framework to optimize the supply chain. By focusing on the four key cornerstones of strategy and design, planning and control, execution and operations, and measurement and analytics, companies can leverage advanced technology and data analytics to improve efficiency, reduce costs, and increase customer satisfaction. To address this issue, a team of researchers led by the author conducted a six-year study of the top 1,200 corporations worldwide to determine which companies had the most successful supply chain networks. After careful analysis, they identified 62 companies that scored high enough to be considered Supply Chain 3.0.
The global supply chain of products is an immense and complex system. It involves the movement of goods from the point of origin to the point of consumption, with intermediate steps that involve resources, materials and services to transport them. A supply chain encompasses activities such as purchasing, production, distribution and marketing in order to satisfy customer demands. Companies rely on a well-managed supply chain to meet their business goals by providing quality products and services at competitive prices.
Efficiently managing a global supply chain requires considerable effort, particularly when dealing with multiple suppliers located around the world. Complex logistics tracking systems are needed to monitor product movements from one place to another. Technologies such as artificial intelligence (AI) can help companies keep track of shipments across different locations for greater visibility into their processes.
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