Corporate / SME | Interviews

A Resilient Supply Chain is a boost to manufacturing strategy

Published: June 7, 2015

“A Resilient Supply Chain is a boost to manufacturing strategy by keeping it prepared during unforeseen disruptions and be ahead of competitors.

The Competitiveness of Manufacturing Operations is dependent on many support functions. A company might have a brilliant business strategy but at the same time its operations functions should meet the mark. It’s important to integrate the business strategy to Manufacturing strategy keeping in view the Supply Chain Initiatives to gain operational Excellence. For Manufacturers, along with product development, inventory strategies it’s also important to have a broad view of sourcing and commodity management, Supplier distribution networks and logistics. Therefore, it’s very important for manufacturing to establish a good integration with the Supply Chain for better productivity and market share leadership.

As per the research by a BOSTON based Firm, it says companies that excel in supply chain operations perform better in almost every financial measure of success. When supply chain excellence improves demand forecast accuracy, companies have 5% higher profit margin, 15% less inventory, 35% shorter cash to cash cycle times than their peers. Thus, they have better earning per share and better return on assets.

A perfect supply chain is something which delivers on time and without errors while documenting and invoicing.

The supply chain can be disrupted by both external and internal disruptors. External disruptors can be natural calamities, sudden demand shocks, terrorism, and political unrest and import/export restrictions. Internal disruptors can be manufacturing risk, business risk and planning risk. But few organizations cope far better than others with minimal risk. These companies share a critical train called RESILIENCE. It is the ability of an organization to successfully confront unforeseen situations.

In order to control internal disruptors, we have to recognise the sources of internal risks. These can be:

  • Demand risk: loss of major account, volatility of demand, short life cycles, smaller customer base or innovative competitor.
  • Supply risk: dependency on key supplier, consolidation in supply market, potential disruption at 2nd tier level.
  • Process risk: manufacturing yield variability, inflexible process, limited capacity, equipment reliability or lengthy set up time.
  • Network / control risk: poor visibility along pipe line, lack of collaborative planning, proper forecast etc.

The reasons behind the risks are:

  • Wide spread adoption of lean practises.
  • Move to off shore manufacturing and sourcing.
  • Outsourcing in supplier base.
  • Fragmentation of supply chain ownership.
  • Conflicting objectives like Sales want more SKU while manufacturing want bigger batch size etc.

Therefore, Supply Chain resilience not only means managing these risks but also being well prepared and positioned than competitors to deal and gain advantage during disruptions.

A Resilient Supply chain is characterised by four pillars: Visibility, Flexibility, Collaboration and Control.  They are supported by governance structure and key enablers: People, Process and Technology.

Resilience Supply Chain is built by

  1. Policy: Trying to get resilient international standards
  2. Strategy: Deep Communication and relationship at ground level.
  3. IT: Building a common data sharing platform.
  4. Collaboration: Encourage Collaboration of manufacturing with vendors/ job work.

Therefore, the key Success factor is the CULTURAL Switch in Corporate and Manufacturing Supply Chains. Distribution of power and empowering employees for better decision making at multiple levels in the hierarchy and the passion to work harder and smarter and quickly come over to normal conditions are two important factors for a cultural shift.

By- Mr. Harish Chatterjee , VP – Operation , Raymond Limited.

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