Ditch mediocrity and transform supply chains in 2017

next-big-thing

It is that time of year where a significant number of articles are written about the key trends that will be happening in the year ahead. I don’t know about you but I find that businesses don’t really pay any attention to these types of predictions and it takes forever for companies to adapt to market changes. There are only ever a few individuals who are willing to take a risk and actually set out to make a real difference to their business by implementing real change.

So this is for you, the mavericks, the pioneers and the risk-takers who won’t accept the status quo and where the word “mediocre” is consigned to the dustbin.

I am specifically going to focus on non-core supply chains. So here is my list of predictions for 2017. To be honest, it is more a wish list than a set of trends, but in my mind the individuals and teams who follow these principles will add significant value to their companies and transform how supply chains are managed.

1.SaaS (Software As A Service) will become Software And Services

Many people see software as a means to fix broken processes in companies but this is just not the case. Software is an enabler. It provides organisations with the opportunity to be more efficient about how they manage part of their business BUT it cannot fix underlying problems where processes are broken or skills are deficient. The challenge with supply chains is that they are complex, multi-disciplinary and require every element to function efficiently. If they don’t and one element is broken then the supply chain falls over. This is why TCO (Total Cost of Ownerhip) was introduced to ensure that there is responsibility defined for the entirety of the process.

In many cases, organisations don’t have the depth of experience and skills to ensure that a supply chain operates in the way it should and so they rely on suppliers to fill in the gaps. The end result is that these suppliers act in their own best interests rather than putting the customer first. This has created an opportunity for a new type of software company that not only provides software but wraps services around it in a highly transparent way that addresses these market shortfalls. Supply chain leaders need to embrace these new types of organisation and transform their supply chains.

2.Networkers will become the leaders

I have to say my biggest bugbear is when individuals within large organisations create barriers to information flow. They never respond to a communication, their phones are automatically directed to voicemail and worst of all they say they’ve passed on your details to colleagues who will get back to you if they need to. So how likely is it that these people have conveyed the opportunity successfully? I doubt if they even understand what the opportunity is.

The individuals who will prosper in this new networked economy will be those people that “Pay it Forward” and seek to help people both internally and externally connect. Too many people believe that an organisation comprises employees only. This is just not the case. The success of any organisation depends on all stakeholders; employees, partners, suppliers and most of all customers. Everyone has a contribution to make to the success of the company and their voices must be heard. So, if someone calls, set aside 5 minutes and take the call. You will never know what you can learn and what opportunities might await.

3.Transparency will be the No1 priority

There is a lot of focus on analysing data but the question I always ask is do you have the data you need? In so many supply chains there is little to no real transparency. You may have prices but you don’t know what the true costs are from your suppliers. It is like the iceberg, you only see a small part of the puzzle. It is imperative that supply chains are opened up and every element and every cost is transparent, so a real understanding develops of what all the cost drivers are from start to finish.

Strive for transparency but do this with the principle that transparency will help create additional value that can be shared. If you see transparency just as a means of reducing margins, with no other end result, you will promote and encourage the lack of information sharing that you face today.

4.Real-time updates will take precedence over historical reporting

The vast majority of company reporting has been focused on historical reporting. The problem for procurement and for supply chains is that this information comes too late to address any issues that have arisen or to create additional value. The problem with complex supply chains is that if an issue is not addressed immediately then the problem only gets worse. How often have you received that call from the supplier that your shipment will be three weeks late? Clearly a problem like that did not happen overnight.

It is imperative that real-time data becomes a priority. This should take precedence over any other form of reporting. Remember if you can’t influence the outcome then the data and subsequent analysis has limited merit.

5.Procurement will switch from margin reduction focus to removal of waste

Lean manufacturing principles have transformed a number of industries and functions, but procurement have been slow on the uptake to adopt these principles. Procurement’s main focus has to be to obtain the best possible price and this in general has always been focused on reducing the margin taken by the supplier e.g. negotiating the final delivered price. This needs to change. Procurement need to take ownership of the process and to switch their focus to finding ways to remove waste, where resources (people, time and money) do not contribute to the final outcome. This requires leaders to look internally as well as externally.

Consider this: A one hour meeting attended by seven people is the equivalent of one Full Time Employee. Also consider how long it takes to get anything done. Perhaps your diary is so booked that you are not able to see a supplier for 6 weeks. Well that is 6 weeks of potential opportunity to add value back to the business that has been lost. It doesn’t take long to identify significant opportunities to dramatically reduce waste in this way and to add real value back to the business.

How many of these principles will you be supporting next year?

If you would like more information on how LeanPie can transform your retail fixture and permanent POP supply chain, please feel free to contact David at david@leanpie.com

2016-12-09T08:40:51+00:00