Even during the best of times, manufacturers strive to build and maintain the most responsive supply chains possible. Achieving that objective in today’s challenging global economy is imperative, with budgets under fire, consumer confidence shattered, and companies struggling to stay in the black.
Why is supply chain responsiveness so important? Because it enables manufacturers to:
Reduce risk (better supplier performance keeps costs and schedules in-line; underperforming suppliers can be identified and managed).
Improve fulfillment of customer requirements (on-time, on-budget delivery of quality components helps ensure manufacturers meet their customer commitments).
Scale for growth (the supply chain becomes a well-oiled machine that allows the manufacturer to aggressively and confidently pursue new business opportunities).
Typically, an organization focuses on the following factors to build a responsive supply chain:
Business Process Definition – Identifying, capturing and automating business processes that span all manufacturer/supplier interactions delivers the consistent execution, certainty and operating efficiencies that in turn promote improved responsiveness throughout the supply chain.
Situational Awareness – Access to accurate, comprehensive data, both current and historical, is mandatory to properly assess each unique operating scenario as it unfolds and to respond accordingly. Hierarchical, dashboard-style displays prevent information overload and funnel the most pertinent content for consideration, allowing manufacturers to fine-tune their actions based on the specific situation at hand.
Exception Management – Business processes, such as procure-to-pay, define not only the transactions that must take place between manufacturers and suppliers, but the rules governing them. One such rule, for example, might be that a supplier must respond within 48 hours to a purchase order issued by a buyer. If that rule is violated, the buyer should be notified immediately, but no update is necessary if the supplier responds in a timely fashion. Managing by exception limits the flow of status information and allows all parties to focus on just those interactions that require attention so they can be resolved promptly.
Performance Management – Supply chain responsiveness rises when manufacturers and suppliers are on the same page with respect to how performance will be evaluated, as well as when those assessments are conducted consistently and regularly. Doing so requires business intelligence and analytics capabilities that allow for the examination of data in near real time and over the course of time. As a consequence, manufacturers can confirm performance metrics compliance for the current job and for the long-haul.
But how can manufacturers maximize the responsiveness of their supply chains? The most common approach is to focus on speed. The logic is that speed equals responsiveness. As a result, manufacturers look to be faster with regard to: