The smart way to do Supply Chain.

Part 1

4 topics come to mind when you think of supply chain:

1. Suppliers - Where do I find them? onshore?, offshore?, what tradeoffs must I make? 2. Inventory: How do I balance making sure my products are available vs investing in inventory I may never sell, if consumer tastes shift? 3. Sustainability: Wow! now I have to think of weather conditions too? Are my suppliers vulnerable to floods, droughts and how will these affect supply today and in the future? Is my business causing a net increase or decrease in carbon emissions in the environment? Is the value I create for my customers built on the deprivation of others in the supply chain of my manufacturers? Is my business (or a company in my value chain) depriving communities of access to clean water or worse polluting their water supply… for example? 4. Transportation - What types of transportation gives me the least cost per shipment and per order. Will my products come by sea, by air or over land? How will it impact my unit cost?

So what’s a smart woman CEO to do? Each of these 4 topics could take hours to cover in detail.

First Why it matters

 If your business involves sourcing raw materials or finished goods, getting them at the right quality and the right cost is a major part of your cost structure and your value proposition to your customers. As the COVID pandemic made clear, the global economy is interconnected. A single falling domino such as a severe weather event in Sri Lanka, a war in Ukraine, a blight in cocoa crops in Ivory Coast can make your carefully structured supply chain come undone.

Enough said, you get the picture…

Now let’s start with Suppliers and Inventory

1. Keep a good mix of local and international suppliers for your key raw material and other inventory on a short leash, ready to be activated if it gets bumpy with your current suppliers. Develop backup supplier relationships for each key inventory item and keep them warm. 2. Sometimes local suppliers may be more expensive on a per unit cost basis but if mayhem strikes and disrupts international shipping, with it, your local sources may be more reliable. It’s often a tradeoff between cost, capacity and reliability of different suppliers. You do the math 3. Understand the internal operations of your key suppliers and who they are relying on. Obviously if you are leaning on a tree, it helps to know if it has strong roots or not. 4. Connect your Sales and Supply chain teams with performance KPIs that force them to work to common goals. “Sell through rate”, “Demand forecast accuracy”, “Gross margin return on inventory investment” “Inventory turnover ratio” and “Order fulfillment rate” are examples. Connecting them means no one earns a bonus till all KPIs are met. It forces them to solve problems together instead of defaulting to a blame game.

Have questions or comments or want to suggest a topic for the series? Send Juliet Anammah a short email at info@cgandrstrategy.com

Disclaimer The content in this blog is intended to provide helpful and informative material on the subjects addressed. It is not intended to be exhaustive on any given subject. The content is offered “ as is, with no guarantees of completeness, accuracy, timeliness, or the results obtained from the use of this information. The author and publisher of this blog disclaim all liability and responsibility for any actions or results arising from the use of the information contained in this article, to the fullest extent permissible by law.