5 Principles of Supply Chain Excellence

The ultimate goal of a supply chain manager is to achieve end-to-end supply chain excellence. Supply chain managers who command global supply chains at international corporations, though, continuously grapple with how to manage and enhance critical production constraints effectively.

According to a JDA Software whitepaper, the business environment for manufacturers has become more challenging in the last years. The need to achieve and sustain long-term supply chain excellence is, thus, of paramount importance. The paper compiles five core principles to which global market leaders adhere to in order to achieve supply chain excellence. According to JDA, organizations on the road to supply chain excellence must:

  1. Embrace customer centricity. Better understanding customers means understanding their different needs, i.e. what they buy, the influence that leads to the purchase, and how they buy. In turn, this allows manufacturers to be able to define different customer personas and associated buying behaviors, By being able to serve diverse customer needs more efficiently, manufacturers become more competitive and profitable.
  2. Differentiate service through segmented supply chains. Adopting different value positions in order to meet the needs of diverse customers may be the result of customer-centric business strategies. Too often, organizations erroneously fear that this might bring complexity to the supply chain. However, benefits from this segmentation are significant and include reduced complexity and costs.
  3. Design for business agility. Business agility, or the ability to make intelligent decisions faster, is all about adapting effectively and rapidly to all types of change i.e. internal, or external. This implies designing and implementing a learning program towards an adaptive supply chain that will balance excellence in customer service with speed, flexibility, scale, and cost.
  4. Drive end-to-end synchronization. Due to the multiple specialized disciplines that characterize supply chain management, leading manufacturers across the globe have focused on driving rapid synchronization across different functional stakeholders both internally and externally. This is accomplished by a systematic deployment of sales and operations planning (S&OP), also known as integrated business planning. Developing an integrated business plan with retail partners aiming at bridging demand, supply, and financial gaps, and keeping up with weekly collaboration is what keeps the extended value chain synchronized.
  5. Leverage advanced optimization.   Leading manufacturers place optimization techniques as the backbone of the intelligent decision-support technology they use today. In recent years, this has translated in using such optimization techniques to help end users in manufacturing corporations drive real results. To enhance their supply chain, leaders have upgraded the skill sets of their supply chain personnel in diverse ways from internal training to college recruitment programs.

Even though global supply chain excellence has been greatly improved in the past years, the day-to-day continuation of constant optimization cannot and must not be overlooked. Let us know where you are focusing your efforts in the comments section below.

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