Supply Chain Fundamentals

In operations, most managers are sometimes put in a situation where they had to be assigned to a new role in the organization. This is one of the major strategies in People Development, where some managers are trained to handle new roles that are aligned to their Career Objective. One of which is managing the Supply Chain. Common questions asked are; How do I manage the Supply Chain? What do I need to consider? What would be my focus?

Below are basic fundamentals of managing the Supply Chain that would help you get started in managing your new role in Supply Chain. As SC is complex, you may want to consider focusing on the following areas.

Purchasing / Procurement - get the right sourcing from a qualified supplier, manage per commodity, monitor price changes, and strengthen supplier management. As Suppliers are key to your business, it is also important that you develop a good working relationship by finding the best solution that will benefit both your company and the supplier.

Inventory - Identify your inventory stock level, manage inventory accuracy, review ordering parameters such as safety stock, ordering lead time, frequency of delivery, replenishment status. Inventory Control is key in the operations, a wrong assumption in the ordering parameters will definitely lead to shortage and excess materials, which are both costly to the company.

Warehouse and Material Handling - establish a reliable receiving and picking process, any deviation in the management of stocks that comes in and out of the warehouse will greatly affect your inventory. Best to consider setting up your cycle count process to manage it properly. Need to set up your material flow, consider (kanban, kitting, sequential, lot delivery). Also look into packaging improvement to get rid of double handling aside from improving the cubic efficiency. Fixed locations must be reviewed and designed to follow a layout that efficiently route your materials.

Transportation – manage your inbound and outbound logistics. As transportation cost is a large portion of the supply chain cost, it is important to rationalize the best option in your imports and dispatch. Possible issues to control are frequency of delivery, consolidation, optimize cubic utilization, and develop the best route for your goods.

Planning – need to structure Ordering Process Cycle by considering the service levels among suppliers. Need to work closely with sales and demand planning regarding forecast. Sales and Operations Planning process must be established as well.

It is imperative that all business processes are in place and controls are set. Of course setting up the Key Performance Indicators in each area is a must, as measuring your performance is Key in controlling your operation. The way we manage our supply chain will directly impact on the Organization’s profitability.