Current supply chains are not responding to the fast pace of technological change. Some businesses have found it difficult to modernise their approach to address these challenges – many continue to work around the supply chain rather than make it work for them. Businesses must adapt to overcome these challenges. Combining sourcing principles and applying lean principles provides the key to successful supply chain management.
Wasted business models
In all businesses, the stripping of waste is key to maximising profit margins. Outsourcing often seems like the logical option, but the decision to outsource is too often based on short-term benefits such as cost reduction, with no assessment of the long-term impact.
The issue with the traditional outsourced supply chain model is that with multiple suppliers come multiple opportunities for disconnects. For example, if one outsourced supplier is waiting on a goods delivery, and it’s delayed, then this may disrupt distribution operations.
The same principles apply to insourcing, which may seem like a quick fix in the short term but ultimately ties up valuable staff resource that could be focused on other core business critical tasks, and is not scalable.
The logical solution is to implement a simple end-to-end approach that incorporates stock management and logistics. By closely coordinating these elements, not only is the potential for delays and disconnects removed but the ‘blame culture’ which can often form part of these infrastructures is eliminated.
It is vital businesses consider the long-term impact of decisions such as outsourcing. Any change in the supply chain that doesn’t add value is a waste.
I fear that the fast-changing world of technology has led to a huge increase in the complexity of the supply chain, which is leaving businesses ill-equipped to react to, and work within, the larger supply chain and manage their own supply chain efficiently.
Organisations should consider a ‘leansourcing’ approach that takes the core principles of lean manufacturing and applies them to the supply chain, allowing the business to get an end-to-end handle on the supply chain they work within. This methodology questions what, where, when and why sourcing decisions are made. It can enable businesses to streamline the supply chain, removing complexity, unnecessary suppliers and service providers, and granting greater control over the supply chain. Fewer suppliers can also result in more flexible and responsive distribution operations that can respond quickly to customer demands as they change.
I believe a lean approach provides the key to long-term successful supply chain management. It enables organisations to eliminate waste, improve service and radically change the mentality applied in the typical supply chain – allowing them to put the customer at the heart of the service, adding value to their service supply chains and enabling them to rise above the competition.
☛Mike Heslop is founder of Centrex Services and creator of leansource