SUPPLY CHAIN Best Practices A White Paper Written for SME Indonesia

SUPPLY CHAIN Best Practices A White Paper Written for SME Indonesia

Maria Lantu
Dr. Maria Lantu.PMP - Consulting Principal Ajilon, Live in Australia dan Expert Dalam Layanan Teknologi Informasi – Many challenges faced by organizations today are related to their Supply Chain network, which can be fairly complex as it has aspects of people, materials, and asset to manage. The term Supply Chain Management (SCM) was introduced in the 1980s to express the need to integrate the key business processes, from suppliers through to the end users.

With that in mind we define Supply Chain Excellence (SCE) as an end to end supply chain management from planning to execution involving internal and external parties involved in the network for operational efficiency and effectiveness. It is a balancing act. One cannot be good in everything, must take conscious trade-offs to ensure all is working at its best.

Let’s start with understanding the typical challenges in the Supply Chain network. There are 3 facets to manage: Materials, Asset and People. The materials management aims for availability (including the usability factor as there is no point having the materials available it if they are not ready for use) at the right time and the right place. This will require coordination between the Purchasing, Logistics and Inventory departments. A good master data and material tracking capability are important as well as the need for optimization and segmentation or category management.

SME Indonesia members could ask for a specific training on Supply Cataloguing and/or Inventory Optimization to understand the basics for materials management with some case studies to show the significant benefits and cost savings when the tools are applied appropriately. For companies with extensive assets, the asset management aims for assets reliability and with it comes the cost to maintain the assets. The Supply Chain network must work within two important trade-offs: • The high cost and impact of downtime • Expense of carrying slow moving critical parts and ageing materials The real challenge is obtaining Effective and Efficient maintenance.

Using a Formula 1 Pit Stop analogy, we must ensure all the required activities are done (Effective) in the shortest time frame possible (Efficient). Adding the materials management consideration to the Effective and Efficient maintenance increases the challenge to the already complex equation as material planning and availability have traditionally been managed through contingency.

While this could secure the activities are done in the shortest time frame possible, the cost associated with it can go off the roof. There are some best practices on Effective and Efficient maintenance (‘Mistake Proofing’ from the Lean principles, Opportunistic Maintenance and the Importance of Known Unknowns) which are made possible with good collaboration between the two areas (materials and assets management) that is also available as a specific training upon request by SME Indonesia.

The people management is the most difficult part as it is the human factor of the Supply Chain network. It contributes the skills and experiences to the overall capability and performance. It is interesting to see no matter how advance technology has become over the years there are things that stay the same with the basic human behaviour to maintain the ‘status quo’.

People keep things that matters only for themselves and leave the rest as the others’ problems. This makes it difficult if not impossible to understand the root cause of a problem: is it the people or the process that broken or the technology inadequate? We need to break down the barrier; a challenge is better managed when the expectation is known. A good communications between all parties involved in the Supply Chain network is a must to resolve all of these challenges.

Now that we understood the challenges in the Supply Chain network, we must also understand the quality concept to determine how far we can resolve the challenges. As we all know, for a particular quality there is a limit where no matter how many more time you spend or effort you add to the work it will not give you a better result. This is where you need to ‘fine-tune’ your network, i.e. to negotiate a different quality (read: scope of work) when we are limited by time and the resources available to do the work (or in fact are unable to deliver their expectation).

This is the trade-offs to ensure all is working at its best. Quality translates into the values that the customers are willing to pay for our services, hence we need to understand the quality they are after (the customer expectation) as well as the threats to achieve or deliver it (which translates to our cost, i.e. time and effort).

The Supply Chain best practices training are shared with common sense, there is no single answer and one size does not fit all. The blue thread connecting all of these best practices is communication as the mean to connect people and skill sets including the selection and application of the right tools and technologies.

In the open discussions at the end of each event, it is critical for you to understand your current position (in terms of the available resources, the quality to achieve and potential threats) to maintain a good collaboration with all the parties involved. Communication is the key to sustain your Supply Chain journey and support the next continuous improvement initiative, be it in Materials, Asset or People management.


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