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03.27.09 Opportunity And Challenge For Design Makeover  By Thomas Craig Supply chain management is a complex responsibility. There are supply chains within supply chain. Supply chains are not linear from one customer to one supplier. They involve multiple customers and multiple suppliers each of whom has a supply chain. Compound that with presence of three different supply chains-product, information and financial. Balancing and meeting conflicting requirements of customers while minimizing costs and doing so with an extended international supply chain is a challenge that no other part of a company has. Add to it dealing internally with almost every function of the business and with customers and suppliers located across the country and across the globe to broaden the scope of interactions. Despite the scope and complexity, supply chain management is often not a vital part for many companies. It is viewed more in terms of costs, such as freight. Supply chain executives are not presidents of retailers, wholesalers or manufacturers. Supply chain departments are often positioned somewhere down in an organization, below their importance. The impact to companies of their treatment of supply chain management has handicapped its effectiveness resulting in: 1) Wasted capital and resources 2) Increased costs to perform activities and transactions 3) Lost customer sales and poor customer service 4) Sacrificed competitive advantage to the point that it has created opportunities. Non-US companies are assessing going Direct to Market by entering the US market to compete directly, which increases the US firm's competition Supply chain managements biggest challenge and obstacle is internal and begins with the company it is a part of. The reasons for the situation are numerous and include-
• Companies are dominated by a focus or corporate culture such as manufacturing, accounting/financial or sales. These are traditional. • Supply chain management is not viewed as a core competency. It is viewed as a cost center. • Organizations are built from the inside out. Despite the attention to customers, companies are not designed from customers and markets back into the firm so as to best serve them. Firms are not truly customer centric. • Supply chain management is a horizontal process that runs across the organization and outside the organization to include suppliers, logistics service providers and customers. Companies though are vertical. Processes, products and information do not flow smoothly across the vertical barriers created by organization silos. Companies with a strong use of fire-fighting are often a sign of a lack of process. • Accounting has its roots in manufacturing when companies were vertically integrated and labor costs were large and when variable costs and fixed costs control dominated attention. Now outside suppliers located around the country and around the world, outsourcing, product life management and cycle times are important. Accounting does not adequately address supply chain management. Freight and warehouse costs are reported monthly on the profit and loss statements. Inventory is viewed as an asset and is reported annually on the balance sheet. This is what is reported to shareholders and stakeholders. Customer service, including lost sales and lost opportunities with discount sales, are not reported on any financial statement. Continue reading this article. About the Author: LTD provides logistics consulting for strategic and tactical needs. The scope of capabilities is broad--supply chain management, outsourcing, transportation, warehousing, inventory management, and more for both domestic and international needs. Clients include retailers, wholesalers/distributors, manufacturers, logistics service providers and 3PLs. |
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