Become a leader and manage efficiently your supply chain!

2017年02月19日 星期日 | Yasmine Bachraoui | Best Practices

Leaders win through logistics. Vision, sure. Strategy, yes. But when you go to war, you need to have both toilet paper and bullets at the right place at the right time. In other words, you must win through superior logistics.”   Tom Peters


Logistics management is a small part of the Supply Chain  Management. It refers to the management of goods in an efficient way. However, Supply Chain is a broader term which refers to the connection of different departments that work together in order to deliver a product to the market, right from the supply points to the very end consumption points all the way through factories, warehouses and wholesalers.

Please notice that you might be interested in the productivity-related articles we’ve published before:

  • Productivity is never an accident

  • 6 Free Tools to boost Business Productivity

 

What are the supply chain challenges faced in the heavy industry?

The heavy industry endures its own particular challenges while managing its supply chain. Global shift in demand as well as long lead time are the main challenges we can face in the heavy industry. These two factors consequently enlarges the swings of inventory holding quantity as well as the order variance which increases as one moves upstream. This phenomenon is called the Bullwhip Effect.

Is your company continuously concerned and worried about the bullwhip effect? Is your company trying to figure out the answer for the following questions?:

  • How to reduce lead time?
  • How to respond to customers’ demand faster?
  • How to ensure compliance along the supply chain?

                   

Reduce-lead-time-supply Chain efficiency

                        

How to improve your Supply Chain to the optimum level

In order to improve the Supply Chain efficiency, you should consider three major systems. Supply points systems, manufacturing systems and operating systems. Several techniques and tools used to improve these three systems mainly; Six Sigma, Lean Transportation and  visibility and transparency of the Supply Chain.

                        

♦ Method 1: Six Sigma

Six Sigma is a collection of management techniques which seeks to improve the quality of the output of the manufacturing process by greatly reducing the probability that a defect or an error will take place. [1] The maturity of a process can be described by a sigma rating indicating its yield or the percentage of defect-free products it creates. A six sigma process is one in which 99.99966% of all the chances to maintain production free of defects, in other words, only 3.4 defective products per million opportunities. This improvement is achieved by following a disciplined process defined by a five steps system: Define, Measure, Analyze, Improve and Control (DMAIC).

              

Icons: thenounproject.com

    

  • Six Sigma success story from Motorola to General Electric

Six sigma concept was introduced by Bill Smith while he was working at Motorola in 1986. In fact, this  method helped the company accomplish strong button line results in the organization as well as save up to a total of $17 billion in the years between 1986 and 2008. Six Sigma is also a registered trademark of Motorola, allowing it to profit every time someone sells their own Six Sigma training program. Likewise, in 1995, Jack Welch has implemented Six Sigma approach for his business strategy at General Electric. This strategy hepled GE gain $700 million in corporate benefits after only two years from adopting it.

       

♦ Method 2 : Lean Transportation

Delays and unnecessary transportation can raise freight costs and reduce profit margins. Understanding lean concepts is key for identifying waste and optimizing the supply chain without spending a lot of money on new equipment or personnel. [2]

               

  • 1. Eliminate Transportation Waste

Transportation in excess is a huge loss of money and resources, thus you should think smartly how to eliminate it. By focusing on transportation efficiency and how it can be a strategic change maker in the industry can cut down the cost significantly.

                 

  • 2. Measure Transportation Performance

To build a lean supply chain, organizations need to build long term relationships with strategic quality carriers partners that are stable, dependable, and committed to servicing the organization. Indeed, transportation service providers have distinct levels of performance, and choosing the right partner create a huge difference in your Supply Chain performance.

                  

  • 3. Understand Transportation Cost Structure

Unit costs and productivity costs are the two main costs of transportation. The significant opportunity for transportation cost reduction is in productivity costs. By focusing on trailers’ utilization, total miles ran, equipment waiting time and commitment to core carrier routing guides, the transportation cost can significantly decreases.

                   

  • 4. Perform Transportation Daily Event Management

Optimal and sustained cost reduction cannot be achieved with several infrequent transportation events. Cost savings is the result of a disciplined, daily event managements and hour-to-hour focus on waste identification and reduction. Every day, start with a transportation plan, execute the plan, and keep continuous evaluation and surveillance over the system. This investment and focus on the process discipline is the leading way to a lean transportation.

         

Icons: freepik.com

          

♦ Method 3: Visibility and Transparency of the Supply Chain

Visibility of the Supply Chain is important to all sections of the chain; from supplier all the way to retailer. Without transparency and visibility, it is hard to minimize the hidden risks and improve lead time which plays an important role in enlarging the swings of inventory holding quantities and order variance. Visibility indeed helps identifying the exact position of different defects whether in quantity or in quality and the reasons behind it.

Nowadays, thanks to technology you can have better tracking applications and faster access to all the information needed. Therefore, better communication and faster transfer of information can be established between different teams of the chain. One of the efficient and useful ways to improve visibility of the supply chain is by having access simultaneously to all your suppliers and providers. This is possible by using digitalization [3] as well as by automating your supply chain.

                  

digitalization-supply-chain-efficiency

Source: content-loop.com


As a conclusion, the world of the Supply chain and logistics has developed to become really complicated and intricate. With the tight schedule of managers, it is very hard to maintain smooth and efficient flow of goods and services. However thanks to technology and digitalization, you can improve your supply chain transparency and visibility. As well as, you can build trusted long-term relationship with partners. Consequently this will reduce significantly the lead time and the order variance of inventory between different departments of your supply chain. This can be cost and time effective.

If you want to have more information about the article or you want to share your opinion with us, contact us at .


We are Steel Available, an online supplier relationship management and sourcing platform connecting suppliers and buyers from the heavy industry. We are developing the first ecosystem in the heavy industry, which allows clients to efficiently manage and automate their supply chains using web-based tools and services. Our goal is to reduce the hidden risk in value chains by providing the information that matters, from compliance to quality assurance, creating value for all stakeholders.

To get more information you can download our brochure.

  

Written by:  

 

 

Yasmine Bachraoui

Business Developer @Steel Available

yasmine@steelavailable