Supply Chain Management Efficiency
With global demand increasing annually, the need for maintaining high efficiency levels in supply chain management services has become quintessential. It is not about managing the logistics and packaging only. SCM planning methods and approaches have entered the third decade where things have become more complex than ever before, especially due to the extent of technological integrations that have been made.
Identification of Drivers of SCM Planning
The planning solutions in the first decade focused on the delivery of decision based support system that enabled organizations to optimize cash, customer service and cost against the selected strategy. The second decade bore witness to the rise of ERP solutions where the major share was captured by companies like Oracle and SAP. With this approach, the projects managed to work with reduced expenses and indicated better alignment with the consulting model.
However, the harsh reality in this scenario is that there was no significant value addition with the improvements made to SCM planning. Apparently, the move to adapt to SCM software and integrated ERP actually led to the industry displaying a backward trend. In simple terms, the new additions and technological enhancements did not bring much benefits. This situation occurs mainly due to the fact that the respective leadership teams end up struggling with the trade-offs between customer service, cost and cash. The lack of a proper fact based debate on the planning model is what causes the system to fail. Unless this is addressed, it would be very difficult to ensure the progress of the industry in the right direction.
Ideal Number of Planners
Irrespective of whether you have a big organization or a small firm, there is a certain number of planners that can actually drive your planning efficiency in the positive direction. Too many or too few planners could complicate the problems further. It has been observed that the most satisfied SCM service providers are those who have a small organization with a team of up to 15 planners. High item complexity is also absent from such organizations and this is enables them to possess an effective planning process.
Unless the organizations align themselves to a specific operating strategy, they would not be able to maximize the planning effort. A supply chain function that is solely focused on logistics, customer services and distribution. In order to achieve the desired planning efficiency, it is important to optimize the responses that are received for end to end value chain.
Adapting to a Demand Driven Approach
Another harsh truth facing supply chain management services is that most of them are clueless about the handling of data that keeps piling up. The dynamic of this data is such that it changes and increases considerably faster than the ability of an average organization to implement the technology to make use of the data. If you were to analyze the technological support system that exists today, you would not be able to find any system that is capable of using the data that is available with the companies.
As of now the systems and technologies are in an evolutionary phase and it would take quite a while before a robust system is developed. The problem does not lie in the availability of data. Advanced communication and processing systems have made it possible to acquire huge amounts of data on the basis of various factors. However, it is not yet possible for companies to use this data for responding to true demand in accordance to the customer-centric values of the of the supply chain network.
When all 3 aspects are understood and brought under perfect harmony, the prospects of a highly efficient SCM system increase tenfold. It has been observed that people often shy away from approaching questions related to these aspects because they might not have the answer or they have not given due consideration to it yet. It is high time that the supply chain planning methods and support systems be questioned and then implemented instead of believing in them blindly. Moreover, these systems would never be able to deliver the expected value unless the organization is able to make the necessary modifications by means of which the perfect operating environment is created for it.
Anissa Lee is the marketing head at Capital Star Global Logistics Group, A 4PL company with its headquarters in Abu Dhabi; Capital Star has become a leading logistics provider delivering innovative solutions to complex logistical quandaries for companies both within the Middle East and around the world.
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Keywords: Supply Chain Management Services, Logistics company Freight forwarder