Supply Chains need to add value

Supply chains have been around for centuries but seldom produce results that companies can be proud of. Too many organisations have excessive inventories which not only raise costs but hide waste within inadequate processes throughout the supply chain.

Achieving an increase in the number of stock turns improves profitability while ensuring inventories are at an optimal level. This indicator is important to the health of the operation but often not recognised by organisations as one of their foremost KPIs.

Optimising inventory is challenging and involves key processes across the supply chain to be aligned and performed at the right level with the required disciplines. Achieving optimal inventory levels is also an important enabler for smaller entities to compete with larger competitors.

Supply chains seldom produce results that companies can be proud of as many functions within the supply chain are performed at a basic level. There is a lack of focus on achieving the required performance level to further enable other areas to prosper. There are many reasons for this and some of the common shortcomings include:

• Poorly formed objectives, strategies and KPIs
• Insufficient knowledge, skills and abilities across supply chains
• Incomplete and inaccurate data
• Poor understanding of demand patterns of their products
• Poorly implemented and misaligned processes
• Lack of alignment across functional goals
• Lack of training on IT systems utilised

Internal processes need to be performed at a high level of competence. These processes are not reliant on outside influences and need to be managed extremely well before aligning the business with their external partners that ought to have been carefully selected.

To ensure the supply chain provides more value to the organisation improving the level of expertise is critical. For SMEs this can be a challenge due to the costs involved but option such as qualified and experienced interim managers, consultants or part-time project managers do exist.

The supply chain is the backbone of many organisations. Not having the right level of expertise to extract value can be extremely costly.