Building Supply Chain Resilience in the Mid-Market
Trying to predict and plan for every type of world pandemic is a practice that some larger organizations might say they are routinely exploring with multiple “what-if” scenarios being played out on their existing supply chain network design, however, for mid-market organizations, this may not be practical. The amount of resources and time spent to predict every supply chain disruption is not a realistic expectation with the limited resources that normally exist in mid-sized markets.
So what is a more pragmatic approach? Start by determining WHEN to focus and WHERE it makes the most sense for your business to start exploring.
Changes within the political, environmental, social, technological, legal, or economic (PESTLE) climate that impact a specific key part of the business are a great opportunity to increase focus on resilience. These changes occur daily, so focusing on every change is not going to work, but using the PESTLE approach to identify when to bring more resources to the conversation is a great place to start.
Coupling together the severity and probability of the risk with PESTLE will help prioritize where the focus is needed first. Remember, the key point is determining when to increase visibility, communications, planning scenarios, and so forth. Learning to know when to focus is a good place to start, but the first priority should be identifying where to focus and what questions to consider.
Process Resilience during ERP Implementation – “T” of PESTLE Example
Introducing new technology, such as a new Enterprise Resource Planning (ERP) platform to better manage the everyday challenges of delivering the highest level of value for the least amount of cost internally, is something that should initiate additional communication and focus within a team. The communication frequency should escalate and key organization indicators should be watched closely. When monitoring an organization end to end, it can be difficult to determine where to place the additional focus once the need is known.
Some might utilize the impact on sales volume, revenue, and total costs to drive more of the team’s focus. Others might look at it more from a people, process, and technology standpoint. However you choose to strategize is up to your specific business, but the important thing is to start strategizing before the storm. If an organization’s supply chain risks are not evaluated routinely, typical volatility within the economy goes unnoticed until a problem becomes too large to overlook and be prevented.
Questions To Consider When Discussing Supply Chain Resilience?
- How many of your critical materials are sole or single sourced?
- Are your decisions utilizing total cost calculations vs. the more traditional material and labor cost approach to better understand the real bottom line impact of changes as they could occur?
- Are your materials stored at locations that are geographically diversified to reduce the impact on an entire network if a disruption were to arise?
- Are you reviewing your logistics and transportation contracts & pricing model trends at the right frequency levels to be responsive to the market shifts when they adjust (ie: fuel prices, warehouse pricing, etc.)?
- Is all inventory order management the same or do different policies exist for different types of inventory pertaining to replenishment practices?
- Is demand planning for upcoming months having discussions at the product family level and does each of those product families have a forecast accuracy that is sufficient?
- Does asset management utilization rates exist for all required equipment needed to produce goods or service customers?
- Is team members’ cross-functional development routinely occurring and are defined backups to all roles and responsibilities established?
- Is OTIF (On Time In Full) used versus just OTD to measure service from suppliers and to customers (especially if shipping partial orders is a common practice)?
- Is there an opportunity to rationalize finished goods and bills of material in order to respond to issues faster and drive higher data management integrity?
- Mid-size resources are not the same as larger enterprises, so if characteristics are different then the approach to supply chain risk management should be different.
- Use PESTLE as an indication of WHEN to increase communication and visibility of your supply chain.
- Building resilient supply chains enhances transformations such as ERP implementations.
- Use the shared questions to directionally get you started to minimize supply chain risks if you are looking to determine a good place to start.
Contact KnowledgePath today for assistance finding the right ERP for your Supply Chain environment.