Supply Chain Management

 There is no disputing the fact that the key success factor in this pursuit, simply put, is exploiting data.  It's all about data and harnessing what is hidden from the decision makers and utilizes a triad of Mathematics, Operations Management and Technology to make life more fact-driven and moving beyond applying hunches and 'guess'timates to take routine decisions which on an incremental basis would yield an iceberg of benefit.  Even if processes and philosophies are in place to mine this gold, professionals usually are buried in the puzzle of how to get a notch higher for assessment and articulation. This is particularly true for operations and supply chain engagements as they attack the very core the way an organization conducts or operates its businesses. A perfect supply chain is often compared to a well oiled watch or a clock, where behind the needles are countless parts and gears working at their respective distinct speeds yet all harmonized to show you the correct time. That's precisely what supply chain managers grapple with, keeping the different network stakeholders in harmony for that elusive perfect order.
What is a good framework to evaluate supply chain/network competitiveness which could be a tool for the Consultant and an Operations Manager alike? Can there be a handful of key aspects which best summarizes and gives a capsule view of the state of the heart (Supply Chain)?.Here I would like to put forth my thoughts on how the 4V concept suggested by APICS helps in this regard.

APICS body of knowledge talks of four Vs and feel every supply chain network can put itself though this road test which comprises of: a) Variety b) Variability c) Velocity and d) Visibility
This below table filled in with KPIs and considerations would be the end state; an exercise trying to assess and quantify a supply chain organization or more precisely, aligning the network competitiveness with SCOR

 My propensity is to talk further from Planning through Return, but I am in two minds. Let me take the APICS route for planning in this edition which include areas like Sales & Operations planning, Mix /Assortment planning, and Production planning.

Variety: Variety in a planning problem would mean maintaining the optimal mix of SKUs and hence the aggregate families which are a basic unit of planning processes.  This mix is to be optimized in such a manner that it represents the popular mix at that time of the year as well as does not lead to loss of customers who look up to you for specific offerings. Increasing variety could serve niche customers but could pose customer service a challenge including demand planning and forecasting. So this is a key consideration for the planning phase.

Variability:  Here again the Pareto principle applies where 80 percent of the products have lesser variability/predictable behavior and 20 percent would have greater demand variability.  Variability can be better managed by synchronizing sales and operations planning and even better if the variants or product mix is optimized. From a production planning perspective this is achieved by effectively agreeing on the frozen to slush zone and institutionalizing the same. Better managing variability has a direct impact on working capital reduction as it impacts the stock/inventory carried in the network.

Velocity:  A responsive supply chain is a competitive edge where every cog in the wheel and more importantly the source of every product in the factory is able to scale and up and down. A chase strategy in capacity and production planning could ensure the desired pace in the network.  The max and lower boundary values of capacity would define the max and min of velocity that the source can attain. Additionally, if a healthy mix is attained in mix planning, the same would lead to higher inventory turns and keep the drum part of Goldratt's D-B-R at desired levels.

Visibility: This is an easy one. S&OP processes and tools increase visibility across the sales and operations organizations. CPFR aims at better planning processes capitalizing on the collaboration aspect of conducting one's business. Visibility by sharing business plans and constraints (be it capacity or material) helps transform functions like procurement by enabling regional buying of difficult to forecast part of the portfolio. This brings in tangible benefits like reduced lead time and at the same time, reducing stock levels required for the same.

The above key considerations help at arriving at ways to measure and quantify the competitive quotient(CQ) of the network. The SCOR along with the 4Vs streamlines the thought process on each critical phase in the supply chain.  I would like to know your thoughts on the above and applying it to the remaining phases as prescribed by SCOR viz-a-viz source through make and deliver to return. What would the key KPIs be that you all think could be associated with each phase? It would be great if you can share your experiences.

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