Value & Supply Chain management

“Organizations no longer compete one-on-one; their supply chains do. To compete successfully, all members of your supply chain must add value to the supply chain thus creating a value chain” – Professors and experts of logistics at Berkeley, 2011

The set of business processes through which your product or service goes from inception to its final delivery to the customer, is the typical ‘supply chain’ that runs your organization. Supply chain management is all about integrating those business processes, from original suppliers through to the end user and then the management of information between and among those processes to maximize the ‘end to end’ supply chain efficiency and profitability. The three basic components of supply chain management include:

 

Supply chain strategy— the strategy for managing all the resources required to meet the customer demand for any product or service.

Supply chain partners— the partners chosen to deliver external inputs (raw materials, delivery and payment process) to the supply chain along with partner relationship monitoring metrics.

Supply chain operation & logistics — the production activities and the product delivery processes including testing, packaging, and preparation for delivery, orders, warehouses, carriers, warranty product returns, and invoicing. Measurements for the operations will include productivity and quality.

By automating and improving the information flows throughout and among the different supply chain components, a Supply Chain Management software can enable an organization to maximize efficiencies within these components.  For example, a  Supply Chain Management system can allow internal and external players linked in a supply chain to operate on ‘just in time’ and zero inventory basis i.e when an order is generated in one company, the external supplier immediately and automatically  gets the alert in real time to start manufacturing or packaging the product and so on.

However the key is to convert that supply chain into a value chain, by ensuring that all the participants put in a meticulously calculated effort into providing value to their internal and external customers and into eliminating waste from the process. This way the product will pass through all activities of the chain in order, and at each activity the product will gain some value. The chain of activities gives the product more added value than the sum of the independent activities’ values.

The million dollar question though is, how do you measure value? Especially when most processes can be tangible or intangible or a little bit of both at the same time. Value can be measured as the ‘result achieved’ against the ‘cost’ that has gone into the process. The result achieved can typically be the quality, the reliability, the percentage cost of the product and so on. Costs on the other hands can be typically quantified as the cost of the process in dollar terms, the time taken by the process, indirect cost, its imperativeness as an operational requirement for the product and so on. Key techniques in controlling time and movement of the goods and materials to the customers and users should be used to redesign / reengineer the processes. The organization needs to ensure that each link in the chain is de engineered, keeping in view that

–       time is cash

–       movement to the customer is all that adds value

–       all of the supply chain players are worked with

–       all the “outside of the box” solutions are scanned

–       all the rules for effective Supply Chain Management are applied

–         all the effects of uncertainty and unresponsiveness are scanned

–         all Strategic approaches includingsegmentation and product formatting are scanned

–         lessons learnt from similar international supply chain experiences are applied

–         a competitive advantage is derived from effective value chain management

–         all resultant changes that will be needed with suppliers and customers are also implemented and communicated

OliveLit Businesses have industry experts with international Ivy league academic as well as FTSE-100 corporate experience, having developed and successfully implemented supply and value chain analysis and strategy in large corporates, SMEs as well as new entrants globally. We help an organization plan and re engineer its supply and value chain (including the placement and integration of a cost effective IT based supply chain management and value chain monitoring tool), with significant improvement in its operational and financial efficiencies.