The Key to a Synchronized Demand Driven Value Network—Start with a Good Supply Chain Strategy
By Chuck Spangler, COO, South Carolina MEP
The research shows that only 8% of companies around the globe have a supply chain strategy. How do you know if you have a successful or efficient supply chain without a plan? A study by Georgia Tech shows that a company’s stock price drops by 8% when the company experiences a glitch in its supply chain. Accenture Consulting research shows a supply chain can account for 50% to 70% of a manufacturer’s total costs of doing business and more than 50% of its assets. This same research shows that 89% of all executives say supply chains are core to business success. So do you have a good supply chain strategy??
A good supply chain strategy needs to answer one key question: What is your company’s value proposition? Does your company compete on cost, differentiation, or focus (flexibility, speed)? Some other key components of a good plan should cover your operating model (Lean, Six Sigma, etc.), your people, and what your demand looks like.
A few other pointers or questions to think about as you develop a plan:
Does your supply chain strategy fit with your corporate strategy?
Does your company build in supply chain flexibility to extract or moderate risk?
Does your company manage your supply chain holistically rather than just managing individual components of your supply chain?
Does your company have demand visibility from the customer down to the lowest tier supplier?
Does your company invest more money than necessary in low return, low impact areas?
Your plan doesn’t have to be perfect, but it should be one that every employee and supplier can understand and execute.
Chuck Spangler is one of MEP’s Supply Chain Optimization experts. He has private industry experience with Michelin, Milliken and Willis Hosiery. He has also helped numerous manufacturers to adopt improvements and principles in lean manufacturing, constraint management and supply chain management. He is especially adept at training and implementing the Theory of Constraints methodology. He can be contacted at cspangler@scmep.org.
Image courtesy of shoodan.com.
2 responses to “The Key to a Synchronized Demand Driven Value Network—Start with a Good Supply Chain Strategy”
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Chuck,
Great suggestions on how to think about one’s supply chain.
Barry
“a company’s stock price drops by 8% when the company experiences a glitch in its supply chain.”
For something most people in the C-suite never think much about, clearly the supply chain has a noticeable impact on your bottom line! A glitch could happen because of a 101 reasons. What if several happen at once? What is a major upset happens that you can’t recover from quickly enough to bounce back?