Supply Chain Management offers companies tremendous opportunities
for improving profits. But over half the companies that
undertake this strategy only get minimal results or fail
altogether. Why? There are numerous reasons, but most can
be traced back to a failure to plan. With over 200 different
opportunities for reducing costs, most companies focus on
the few that everyone else is focused on (which are usually
limited to inventory, processes and price paid). The failure
to look at other issues, the risks involved, the performance
needs of the users, or the investment requirements to accomplish
your plans, often means short term gains and long term loss.
The first step for any company that wants their supply
chain efforts to flourish is to create a commodity / service
plan, basically an investment strategy, for each group of
supplies and services in order to determine how to maximize
their company's profits through its suppliers. Without a
commodity / service plan, it is difficult to evaluate suppliers
effectively to ensure the right supplier is chosen and to
achieve the improvements in profits that a company desires.
One of the most effective aspects of commodity/service planning
is the development of teams for identifying the issues important
to each group of supplies/services. Teams are important
to utilize because different areas within a company are
impacted by suppliers differently. These teams often make
the difference between success and failure. In effect, they
are the means to achieve your goals by:
But these teams should be used for every stage of implementation:
commodity/service planning, implementation and maintenance
(keeping the supply chain savings coming and finding more
opportunities to reduce costs). Each of these stages require
different steps be accomplished in order to achieve the
greatest results possible. Planning where you want to get
to with your supply chain efforts, and constantly updating
these plans, is the foundation to a successful, and profitable,
Supply Chain Management process.
