For many businesses, success is reliant on effective management and optimization of the incumbent supply chain and logistics networks. For many market leaders, the development and maintenance of this key asset becomes a key tool facilitating competitiveness with significant emphasis on cost, shorter lead-times, quality and compliancy.
But what is a robust supply chain? By considering the key ingredients from inventory, suppliers, logistics through to management systems and relationships with stakeholders businesses can endeavor to highlight weaknesses and consider what improvement opportunities can be leveraged.
Robust supply chains are better equipped to deal with variability in demand, price pressures and increasing globalization of the customer base. Conversely, those that still adhere to more traditional practices, systems and relationships are faced with the pressure to either radically upgrade their system, remove inefficient practices and improve their contribution of value to the business or face the consequences.
Monitoring and evaluation is a must. Risk management both in terms of compliance and performance is a key success factor. Zeroing in on supplier management systems, albeit with the complexities of the supply chain, can highlight key issues but that alone is not enough. Supply chain teams must become familiar with optimization methods and techniques whether deploying improvement initiatives or developing processes such as supplier sourcing tools that can reduce performance or compliancy risks.
The cost of failure in monitoring suppliers may result to devastating consequences.
The development of a supplier relationship based on performance and regular appraisal and regular interaction can help. Coupling effective risk management with appropriate metrics from your supplier pool promotes optimal performance from your suppliers, and allows organizations to create profiles and templates to better equip sourcing processes.