Author : Randall Mauldin

Copyright (c) 2010 Randall Mauldin

A holistic approach to supply chain management measures critical points in the process Business that continue to manage functional areas need to evolve their thinking to end-to-end synchronization of the procurement process If a reduction in costs can make up for lack of sales, organizations should consider the value of strategic procurement, supply chain metrics, and performance evaluation throughout the process

In 2003, Cook and Hagey discuss the fundamentals of an effective supply chain in their article published in the Journal of Business Strategy entitled “Why Companies Flunk Supply Chain 101 An effective supply chain consists of five fundamentals: one, the correct strategy; two, talented managers; three, effective metrics; four, broad vision; and five, understanding the differences between components of the supply chain Although each is important, replacing hunches with metrics enables managers to track quantifiable measures with rigorous methodology and quality data The most successful metrics link operations to customers, suppliers, and logistics providers by monitoring the entire supply chain so that decisions can be made before problems impact customer service Another critical component of the supply chain is flexibility allows a company to change as required to reduce cost, improve responsiveness, and fulfill customer requirements

The process develops measurements meant to be flexible and enable the supply chain to be tailored to the unique needs of any organization Five steps create an effective procurement foundation: mapping, validation, collection, analysis, and documentation of results and findings Relationships, planning, positioning, and delivery can be improved with supply chain re-engineering The results of transformation are improved forecasting, distribution, collaboration, and automation Managers require key personnel to monitor and evaluate key measurements of performance Effective supply chain management ensures finished goods are available at the distribution centers, enable reliable and responsive production capabilities, make certain efficient use of production resources, and provide for effective production planning

With standardization comes efficiency and flexibility, and methodologies, such as Six Sigma and Lean manufacturing, provide systemic methodology for the establishment of process standards In 2004, Ramakumar and Cook stated in ” Process Standardization Proves Profitable” for Quality Journal that companies engaged in process standardization are able to manage complex value chains and are 73 percent more profitable than organizations that do not use standards Defining metrics, enforcing business rules, developing a logical flow of data and remaining flexible are essential to implementing standardization When sales are down and costs are rising, supply chain management enables an organization to maximize resource utilization and cash optimization Explore supply chain management strategies as a way to improve the bottom-line of your business during these challenging economic times

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Syndication Source: Article Mind

Filed under: Wealth Method

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