What are some best practices for planning and implementing an end to end supply chain?
Investopedia defines an E2E SCP as, “…a term used to describe products or solutions that cover every stage in a particular process, often without any need for anything to be supplied by a third party. It also embraces a philosophy that eliminates as many middle layers or steps as possible to optimize performance and efficiency in any process.”
E2E Supply Chain graphic via LeanCorp.com
Traditional supply chains involve individual organizational silos that often result in inefficient overall performance and constrained supplier relationships. An end-to-end view of the complete supply chain begins with product design, supplier selection and management, then scheduling, production, distribution, and should include after-sale customer service. A holistic E2E Supply Chain integrates all revenue and expense streams. Effective E2E Supply Chains enable disruptive innovations in customer experience by delivering greater visibility of product design & performance and manufacturing capabilities, as well as order management and inventory status.
Building an effective E2E Supply Chain requires the implementation of an Enterprise Resource Planning (ERP) system that bundles top-level business processes such as Concept-to-Launch, Procure-to-Pay and Order-to-Cash functions as well as Hire-to-Retire and Sustain-and-Retain human capital asset management processes to present a holistic view of supply chain operations, while improving organizational strategic planning & deployment, decision-making, workforce planning and overall business growth.
Best Practices in E2E Supply Chains:
- Inventory Management via Lean principles to eliminate waste (including unnecessary inventory) and reduce non value-added activities thereby reducing lead times and order fulfillment errors, resulting in improved customer perceptions of organizational responsiveness.
- Customer Demand Planning that uses the customers’ order history, market analysis, seasonality, competitive landscape, and other factors to understand your customer needs better than they do enabling a more stable and predictable planning process.
- Human Capital asset planning and management that assesses current workforce capability and capacity in response to strategic plans, focusing on the organization’s core competencies and strategic advantages.
- A Lean Management System deploying data-driven root cause analysis where everyone from the CEO down to the intern is a problem solver, coupled with stronger supplier & vendor collaboration can strengthen an organization’s ability to plan effectively and respond to changes with greater agility.
Superior network connectivity between the supplier – manufacturer – customer can be a distinct competitive advantage to building strong business relationships. Working within and across the network to improve quality, service and cost at all touch points is a winning formula to help assure business success.
Supply chains are the lifeblood of any business, impacting everything from the quality, delivery, and costs of a business’s products and services to customer service and satisfaction to ultimately profitability and return on assets.
Stank, T., Scott, S. & Hazen, B. (2018, April). A SAVVY GUIDE TO THE DIGITAL SUPPLY CHAIN: HOW TO EVALUATE AND LEVERAGE TECHNOLOGY TO BUILD A SUPPLY CHAIN FOR THE DIGITAL AGE. Whitepaper, Haslam School of Business, University of Tennessee.
Industry 4.0 enabling technologies like affordable sensors, more ubiquitous internet connectivity and 5G networks, and reliable software packages for developing intelligent systems have started fueling a profound digital transformation of supply chains. Although the transformation will be a gradual evolution, spanning years (and perhaps decades), the changes will reduce or eliminate key pain points:
- Connected:Lack of visibility keeps 84% of Chief Supply Chain Officers up at night. More sources of data and enhanced connectedness to information will alleviate this issue.
- Intelligent:87% of Chief Supply Chain Officers say that managing supply chain disruptions proactively is a huge challenge. Intelligent algorithms and prescriptive analytics can make this more actionable.
- Automated:80% of all data that could enable supply chain visibility and traceability is “dark” or siloed. Automated discovery, aggregation, and processing will ensure that knowledge can be formed from data and information.
Since the transformation is just getting started, best practices are few and far between — but recommendations do exist. Stank et al. (2018) created a digital supply chain maturity rubric, with highest levels that reflect what they consider recommended practices. I like these suggestions because they span technical systems and management systems:
- Gather structured and unstructured data from customers, suppliers, and the market using sensors and crowdsourcing (presumably including social media)
- Use AI & ML to “enable descriptive, predictive, and prescriptive insights simultaneously” and support continuous learning
- Digitize all systems that touch the supply chain: strategy, planning, sourcing, manufacturing, distribution, collaboration, and customer service
- Add value by improving efficiency, visibility, security, trust, authenticity, accessibility, customization, customer satisfaction, and financial performance
- Use just-in-time training to build new capabilities for developing the smart supply chain
One drawback of these suggestions is that they provide general (rather than targeted) guidance.
A second recommendation is to plan initiatives that align with your level of digital supply chain maturity. Soosay & Kannusamy (2018) studied 360 firms in the Australian food industry and found four different stages. They are:
- Stage 1 – Computerization and connectivity. Sharing data across they supply chain ecosystem requires that it be stored in locations that are accessible by partners. Cloud-based systems are one option. Make sure authentication and verification are carefully implemented.
- Stage 2 – Visibility and transparency. Adding new sensors and making that data accessible provides new visibility into the supply chain. Key enabling technologies include GPS, time-temperature integrators and data loggers.
- Stage 3 – Predictive capability. Access to real-time data from supply chain partners will increase the reliability and resilience of the entire network. Enterprise Resource Planning (ERP), Manufacturing Execution Systems (MES), and radio frequency (RFID) tagging are enablers at this stage.
- Stage 4 – Adaptability and self-learning. At this stage, partners plan and execute the supply chain collaboratively. Through Vendor Managed Inventory (VMI), responsibility for replenishment can even be directly assumed by the supplier.
Traceability is also gaining prominence as a key issue, and permissioned blockchains provide one way to make this happen with sensor data and transaction data. Recently, the IBM Food Trust has demonstrated the practical value provided by the Hyperledger blockchain infrastructure for this purpose. Their prototypes have helped to identify supply chain bottlenecks that might not otherwise have been detected.
What should you do in your organization?
Any way to enhance information sharing between members of the supply chain ecosystem — or more effectively synthesize and interpret it — should help your organization shift towards the end-to-end vision. Look for opportunities in both categories.