Here are 5 tips to ensure that the volatility in supply chain does not disrupt your business:
1. Analyze the supply chain
This is step numero uno in proactive
supply chain management. While many organizations tend to look at operations exclusively
within their own enterprise, the extended network outside their vicinity remains unknown terrain. So,
it’s a good idea to start with knowing what’s going on in the offshore factory, or who is
coordinating with the shipping partner while moving a shipment.
Sample this: ecommerce retailers look
only at consumer-facing technologies and needs that they have no idea what their shipping
partner does. Such negligence can come back to haunt them.
Companies with successful proactive
supply chains analyze their weakest links and they don’t stop with their own four walls. They
need to look at every process between source and destination.
2. Connect Electronically
From vendors, shipping vendors, core
organization, other ends of the supply chain are all connected electronically to a common
set of data, transactional information is communicated to everyone at the same time. In case
there is an exception, changes can be broadcast to appropriate parties across the supply
chain. In fact, new age supply chains connect the chain with social networking and cloud
computing. All these greatly facilitate data collection and sharing. There is the advantage of
having pre-set alerts that trigger need-to- know parties and a central repository of information for
partners to access.
3. Anticipate road blocks
Most transactions in a supply chain do
not go as per plan. That is reality. There are weather related issues cropping up everywhere, any
time. The chain will encounter hiccups all the time. So, for every
anticipated issue, there needs to be a pre set plan of action. And
yet, there will be unprecedented issues. The people and systems in
the supply chain need to be able to manage process and change by
exception. A good proactive system looks out for early warning signs
and alerts and acts on them accordingly. If something other than
usual happens, the system changes path in accordance with a set of
pre-determined parameters and necessary parties are notified
immediately. To identify exceptions before they become emergencies,
companies have thresholds for parameters that determine tolerance
levels: yellow, orange, red flag triggers. With all this, there is
also a system of escalation procedure that scales response according
to urgency and alerts appropriate people.
4. Set up Alternative Plans
For every plan A in a proactive supply
chain, there is a Plan B and Plan C. This is very important.There needs to be alternative
destination paths set up in case of emergencies. And these need to be integrated with standard operating
procedures. There are also trial runs for these contingency plans to make sure they are fool proof.
5. Manage by Exception
Running a business today is
overwhelming. The number of parameters that impact your supply chain
is mind boggling. And apart from all this, exceptions occur. When
these occur, the company needs to make fast and informed decisions.
That is very different from rushed and rash decisions and such rash
mistakes are because they do not have a bird’s eye view of the
situation. So, an exception based plan of action is very important.
