Tag Archives: Supply Chain Optimization

 

How’s your supply chain running these days? If you’re like most manufacturers, you’re still experiencing challenges. Big challenges. The pandemic threw the worldwide supply chain into chaos and it hasn’t yet recovered, but the truth is, there have always been supply chain issues bedeviling the industry. The pandemic just exacerbated what already had the potential to go wrong and uncovered new problems lurking just below the surface.

Just-in-time strategies, which were (and continue to be) popular methods of having just the right amount of inventory on hand at any given time, left manufacturers vulnerable to supply chain disruptions. The increasing complexity of global supply chains didn’t help the situation, nor did the pervasive lack of visibility into supply chains themselves.

What are manufacturers facing this year in terms of their supply chain? Let’s take a look at these issues, and examine some ways USC can help.

Manufacturers supply chain challenges for 2024

Materials shortages. Global instability, the lingering effects of the pandemic and other factors are leading to shortages of raw materials and components. Production delays, increased costs and unhappy customers are the result. And speaking of costs…

Rising freight costs. As fuel prices ride the same roller coaster we’re all seeing at the gas pump, and labor shortages and ongoing congestion at ports collide, it means costs to get those components and materials are going up, eating into your profits. And speaking of labor shortages…

Labor shortages. This problem is ongoing, and we have to say, it’s one thing that wasn’t caused by the pandemic. Manufacturing workers are aging and retiring, and there isn’t a large pipeline of younger people with the skills to replace them. It means reduced output and productivity, dwindling motivation and drive, and the loss of institutional knowledge.

DRIP. It stands for data rich, information poor. When you’re talking about the supply chain, it means you need to use data to its fullest. Outdated inventory systems won’t cut it.

Tactics that can help

Diversifying supply chains. Having too many eggs in one basket has proven costly when that basket falls apart. Reliance on any one supplier, especially if that supplier is overseas, is becoming yesterday’s strategy that is just not working in today’s market.

Reshoring. Supply chain disruption, ongoing global instability, higher costs (including higher labor costs in China), increased lead times and more hassles are leading companies to reconsider foreign sources. Many are already doing it. Yahoo Finance reported in June 2023 that 80% of manufacturers are now considering or acting on reshoring some or all of their production. A couple of quick examples: General Motors invested $7 billion in production facilities in Michigan to not just manufacture electric vehicles but the batteries that power them. Intel invested $20 billion in a new semiconductor manufacturing plant in Ohio, and is investing $30 billion for a similar facility in Arizona. Some manufacturers are “nearshoring,” bringing production closer to home, from China to Mexico, say. Not only will this reduce lead times, improve quality control and leave companies less vulnerable to global unrest, it will also create jobs here at home.

SIOP. We laud this tactic often because it really does improve efficiency, but in the age of supply chain disruption, it’s crucial. Sales, Inventory and Operations Planning (SIOP) is a collaborative process that aligns all departments. It involves using inventory as a strategic tool, demand management and supply planning, giving you the ability to capture, analyze, integrate and interpret data to give you a strategic advantage.

Learn more about SIOP in our free eBook, Sales, Inventory and Operations Planning: It’s About Time.

Solid training. The labor shortage isn’t going away, and we’re finding that many manufacturers are investing in training, ensuring that everyone is doing the job the same way, with rock-solid operating procedures. It’s a powerful way to keep institutional knowledge within your facilities, instead of losing it when people retire.

At USC Consulting Group, we have over 55 years of experience helping manufacturers ramp up their efficiency, production and operations. It’s especially crucial to be firing on all cylinders during challenging times… and we’re in them, right now. Give us a call and let’s talk about how we can help.

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If your company is looking for process improvements, greater efficiency, operations upgrades and generally a greasing of the gears in order to function at a higher level, that’s great! Now the question becomes: Do you hire an operations management consulting firm or rely on your internal improvement team?

Here’s a look at both options:

Internal improvement teams

What are internal improvement teams, exactly? In general, they’re full-time employees within an organization, usually (but not always) within the HR function. They act as advisors, change agents, process improvement experts, coaches or trainers. But it doesn’t have to be as formal as having a dedicated “internal consultant team.” Oftentimes, companies looking to improve processes pull together a team of people from different departments within the organization to tackle a problem or challenge that is impeding productivity.

Some other aspects, including pros and cons, of internal teams:

Cost. On the surface, using an internal team may seem cheaper than hiring an outside firm because the company is not paying an outside consulting fee. But figuring in salaries, benefits and all of the other expenses involved with full-time employees that are dedicated to process improvement, those savings can dry up. Also, if you’re using an internal team made up of people from different departments, there is the issue of time away from their usual job functions and the loss of productivity that can result from that.

Company knowledge. Internal people have an immediate understanding of the organization. No learning curve needed. There’s already a deep knowledge of the culture, the processes and the “unspoken rules.”

Accountability. Some external consultants “fix it and forget it.” In other words, they swoop in, offer recommendations for change and swoop out, leaving the company to implement the changes and deal with what comes next. (Note: We do NOT do that at USC Consulting Group) Internal people are there, onsite, through it all, and after it all.

Internal politics. This is one of the big “cons” of using an internal team. In many workplaces, you’ve got internal politics and drama running through everything. Who takes recommendations and advice from whom can become an impediment to progress. Certain people may want to be the one to come up with whatever fix is needed, and if they aren’t, they can put up roadblocks or sow seeds of negativity. The internal pecking order can rule the roost. Not ideal when you’re talking about making process improvements, which typically involve changing the way “we’ve always done it.” That’s a delicate endeavor, even for outside consultants. When you have Phil from HR telling a 30-year veteran on the line there’s a better way to do his job, it doesn’t go over very well.

Internal view. Internal teams have a great view of their organization, but not what’s going on out there in the industry at large. They are also not necessarily on top of the latest developments in process improvements, and certainly aren’t experts in things like Lean Six Sigma.

Operations management consultants VS internal improvement teams

Operations management consultants

Operations consulting, simply put, is a discipline designed to improve your company’s internal operations and processes, making them more efficient, streamlined and ultimately, profitable. At USC Consulting Group, we’ve been dedicated to that since 1968.

Operations consultants will first look at your current operations model, systems and day-to-day processes of getting the job done. They talk with front-line workers, executives and everyone in between. Listening is a big part of the job. They employ methodologies like Lean Six Sigma, the Fishbone, the Five Ms and other tactics to uncover what’s bedeviling your operation and create ways to solve those problems.

Some operations consultants are advisory consultants, or “boardroom consultants,” who perform a two- to three-week study and provide a book of recommendations to help you out, and then hand it to you and go on their way. Implementing consultants, like USC, roll up their sleeves and work with a company’s internal teams to help implement the changes, and ensure the sustainability of those improvements.

Other features of outside consultants include:

Above the fray. This is a main reason execs hire outside consultants. An outside firm is not subject to internal politics and company red tape. They can make the changes necessary for improvements to get results without stepping on anyone’s toes. Oftentimes, recommendations for change go down easier when delivered by someone outside the organization.

A fresh set of eyes. You know what they say about the forest for the trees. Sometimes, when you’re too close to a problem or challenge, you can’t see the big picture of how to solve it. Operations consultants are outside experts who can look at your operations with a fresh set of eyes.

Horsepower. In many cases, operations management firms actually augment the efforts of internal teams and provide “horsepower” to improvement initiatives and help achieve results quicker.

Cost. Outside firms are hired for limited engagements and are not full-time employees. Therefore, a company does not need to provide salaries, benefits and other costs for full-time employees who are part of their internal teams. Yes, the upfront investment for an outside firm is more than you would pay your internal employees. However, once the project engagement is complete, those consulting costs are removed from the ledger, but the benefits are realized for years after.

Industry expertise. Another facet of bringing fresh eyes to a challenge is the fact that those eyes have seen a thing or two. Consultants like USC Consulting Group have worked in the industry for decades and have seen how similar companies have solved similar problems and challenges. While every situation is unique, the decades-long expertise in operational improvements is impossible to duplicate in-house.

Process improvement expertise. It’s a fair bet that companies don’t have many black belts in Lean Six Sigma on staff. LSS is focused on eliminating waste and improving throughput, and it takes years to become an expert in it. External consultants like USC bring that expertise, and even train your staff to implement these tools.

A final thought: Sure, we’re biased. We’re a consulting firm with 55+ years of experience helping companies improve their efficiency and ultimately boost their bottom lines. However, there is a stigma about consulting that seems to be rumored. To clear up this misconception, read our blog “Debunking Myths About Operations Management Consulting.”

Which option should you choose?

Bottom line is you need to make a decision that is best for your business. Whether utilizing your own internal improvement teams or employing an outside consultant, the main focus is reducing your operating costs and improving your productivity and efficiency.

If you would like to talk with one of our subject matter experts to see if USC would be the right fit for your improvement project, give us a call.

Contact USC Consulting Group

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In many industries, globalization has resulted in the consolidation of suppliers and increasingly interdependent Supply Chains. Globalization has increased efficiencies and economies of scale, but it has led to decreased diversity of sourcing and supply options.

Increasing geopolitical tensions, pandemic related lockdowns, and ideological polarizations have increased supply chain disruptions for many products and materials.

Supply Chain Risk Management System

An active Supply Chain Risk Management System cannot ensure continuity of supply, however, it can provide a playbook with options when sources of supply are threatened.

Download our free eBook “The Supply Chain Risk Management Playbook: Navigating Through an Uncertain Supply Chain Future” as we advise how to identify and respond to the unique risks that affect your business.

This Playbook details the various concepts that will secure your operations, including:

Planning the Risk Management Assessment

During the planning stage you will define the project charter and assess your organization’s Risk Tolerance.

Conducting the Risk Management Assessment

Once management has defined success and risk tolerances, it’s time to take action and conduct the assessment.

Check your findings

This step must be tailored to the risk being assessed. Here you will build the risk models and validate the assumptions with your stakeholders.

Act on your findings

Once all appropriate stakeholders have agreed to the change, put the risk mitigation strategy into action.

For full details on each of these critical stages, download the complete Playbook below:

Supply Chain Risk Management Playbook eBook CTA

Installing a well-functioning Supply Chain Risk Management Operating System is a journey, not an event.

Enhancing responsiveness to risk provides competitive advantages, especially in industries where competition for key vendors, access to resources, and logistics constraints are prevalent.

USC Consulting Group’s Supply Chain experts have over 50 years of industry experience with the latest risk management practices and can help you with your unique challenges. Contact us to remove the risks and start driving operational improvements in your business.

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Supply chain analytics refers to the collection of data and information that provide insights into logistics performance, from inventory management to fulfilling and shipping orders.

How Data Analytics is Changing the Supply Chain Landscape

The ever-increasing reliance on big data is altering the landscape of supply chains as we know them. Historically, the majority of supply chain management was dependent on intuition and experience. However, with the introduction of powerful data analytics technologies, supply chains are now guided by data-driven decision making.

The ever-increasing availability of data is driving this transition. Previously, data was dispersed across numerous silos inside a business, making it difficult to provide a comprehensive perspective of the supply chain. Organizations, on the other hand, may collect and store data from all areas of the supply chain in one central location owing to data warehouses and data lakes. This enables supply chain managers to see the entire picture and make data-driven decisions to increase efficiencies and performance.

The rising availability of strong data analytics tools is another factor pushing the change to data-driven decision making. To examine data in the past, supply chain managers had to rely on manual procedures or limited software tools. However, a wide range of powerful data analytics technologies is now available to assist managers in making sense of massive data sets and uncovering hidden patterns and trends. The transition to data-driven decision making is reshaping the supply chain landscape and has far reaching implications for how businesses function.

Organizations may improve the efficiency and performance of their supply chains by leveraging the power of data, providing them with a competitive advantage in the marketplace.

The Advantages of Data Analytics in Supply Chain Management

Data analytics can aid in the smooth and effective operation of supply chains. Supply chains can uncover patterns and trends in past shipments by examining data from previous shipments. This can help them minimize disruptions and stock-outs while also improving inventory management. Furthermore, data analytics can assist supply chains in optimizing their routes and schedules, as well as tracking their success over time.

Here are some of the primary advantages of employing data analytics in supply chain management:

Check out the following infographic by 2Flow which takes a deep dive into ‘Analytics In The Supply Chain’.

Supply Chain Analytics infographic

Supply chain analytics are guiding managers into the future with data-driven decision making. If you need assistance properly analyzing your data and setting up your supply chain management for success, contact USC Consulting Group today.

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Supply chain executives dealt with a variety of headaches over the past two years. Disruptions, delays, workarounds and all-out stoppages became all too familiar as COVID brought the fragility of the world’s supply chains into full view. Even consumers are now experts in supply chain woes. As 2022 draws to a close and 2023 waits just around the corner, what can supply chain executives expect from the coming year?

Unfortunately, challenges still lie on the road ahead. Disruption is still with us. Those headaches haven’t gone away. But, hang in there. We see reasons for optimism, too.

Supply chain trends for 2023

Here are some of the trends we’re seeing, and challenges supply chain executives will likely be experiencing in 2023.

Backlogs and logjams

Shortages and congestion at ports worldwide are expected to continue into 2023. If you didn’t see this coming, you’re not alone. In October 2021, economists said supply-chain bottlenecks would be the “biggest threat to growth” for the next 12 to 18 months, but predicted those bottlenecks would ease up during mid-2022, according to the Wall Street Journal.

That didn’t happen. Shortages will continue to make product more difficult to get. Similarly, port congestion remains an issue, but not due to the COVID restrictions that kept cargo ships floating in the harbor, unable to dock. With the exception of China and its zero-tolerance COVID policy, this time, the cause of that congestion will be the lack of trucks to take that cargo where it needs to go.

Lack of skilled workers

Speaking of the shortage of truck drivers … all industries are experiencing problems recruiting, hiring and retaining employees, and jobs all along the supply chain are no exception. Unemployment rates are at historic lows, but talk to any hiring manager and they’ll tell you they can’t get people in the door. The U.S. trucking industry estimates it is down some 60,000 drivers. Warehouses and manufacturing facilities are experiencing labor shortages, too, as a result of an aging workforce and high turnover rates. All of this directly impacts the supply chain, causing manufacturing and delivery delays and creating a ripple effect that extends all the way out to the end user.

Unsteady global relationships

The war in Ukraine doesn’t show any signs of resolving soon, and its impact on the supply chain will continue until the situation there improves. According to Consultancy.eu, the continued war will have an “impact on the costs of raw materials, energy, logistics and digital services.” The report further stated that oil and gas prices in Europe have skyrocketed, due to the high dependence on imports from Russia.

But the war in Ukraine isn’t the only geopolitical cause of disruption to the supply chain. China is continuing with its zero-tolerance COVID lockdowns. If you saw reports of the recent closure of Shanghai Disney, with thousands of guests trapped inside and unable to leave for days until they showed a negative COVID test, you’re aware of this ongoing situation in China. It will undoubtedly affect the manufacturing industry there, even potentially shutting down factories and ports.

Extreme weather events

Are you noticing that we seem to be having a “100-year flood” or the worst hurricane on record or extreme droughts and wildfires regularly? All of these can contribute to a situational supply chain backup, affecting not only manufacturers and truckers in areas that are hit by extreme weather, but those relying on that delayed supply down the line. Climate woes in the U.S. are also contributing to issues like historic low water levels. In October 2022, the water level was so low in the Mississippi River, it resulted in a jam of more than 2,000 barges carrying corn and soybeans.

Inflation

There is a kind of chicken-and-egg scenario with inflation and supply chain disruption. Prices spiked because of supply chain disruption, helping to increase inflation, which in turn feeds price hikes … which in turn affect the supply chain. According to U.S. Bank, the cost of living in the U.S., as measured by the Consumer Price Index, rose by more than 9% from June 2021 to June 2022. The November 2022 rate hike by the Fed, the sixth this year, is intended to mitigate inflation in an effort to help solve the problem.

Bottom line: Hang in there

While these challenges persist, signs point to an easing in supply chain woes in 2023, especially in the area of port congestion. Sea-Intelligence reported in October 2022 that 50% of congestion issues have been or are being resolved. The report predicts the industry being back at “normal” capacity in early 2023. When the logistics industry can get product to where it needs to be on time, that’s half the battle.

At USC Consulting Group, we’ve been helping our clients up their efficiency, deal with supply chain disruption and create more profitable operations for more than 50 years. We’re here to help. Give us a call today.

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The global supply chain is a delicate framework in which every participating business needs to stay nimble and adaptable — because, as we saw during the pandemic, one singular event can throw a wrench into the entire system. Innovation and optimization need to be top of mind.

But what qualifies as effective optimization? Given the complexity of the flow of goods, cash and information between multiple producing, storage, delivery and consuming partners, companies can easily neglect key areas, or focus too hard on others. Disruption anywhere along the supply chain line can (and does) create major headaches, stifle throughput and force manufacturers into a dance of optimizing supply and demand.

We can help with that. At USC Consulting Group, we’ve been helping companies optimize their operations for more than half a century. We’ve learned a few things along the way. Here are some important do’s and don’ts for optimizing your supply chain. It’s about helping your business through the ongoing disruption and preparing it for unforeseen events in the future.

Don’t: Use outdated systems

There’s a tendency for many businesses to take an “if it ain’t broke, don’t fix it” approach. However, just because something is working in real time doesn’t mean there aren’t improvements to be made. In today’s data-rich environment, one of those improvements involves data analytics.

Outdated inventory systems, suboptimal communications and disconnected information are some of the biggest areas that hold an organization back. The limitations of legacy technologies thwart the goal of end-to-end transparency along the line and impede rapid-response decision making. Before you know it, you can end up in a data-rich, intelligence-poor environment. It’s so common a scenario now, there’s even an acronym for it: DRIP. Aptly named, because the potential power of all of that data is dripping down the drain if you’re not equipped to use and interpret it.

Do: Use SIOP

Sales, Inventory, and Operations Planning (SIOP) is a method we use here at USC Consulting Group that emphasizes inventory as a strategic tool to allow businesses to get a better look at their operations and formulate superior strategy decisions.

SIOP takes advantage of the wealth of digital data available to business owners to gain a strategic advantage. Having the ability to capture, analyze, integrate and interpret high-quality data is the key to staying ahead of the market. The aim is to achieve process automation and glean predictive analytics, which allow you a clearer look at your operations to make better-informed decisions.

Don’t: Segregate internal planning and communications

Silos! How often do we hear about the dangers of silos in businesses? It’s the concept of departments working separately, having poor communication and perhaps duplicating or negating each other’s efforts. We like to identify it as “the left hand doesn’t know what the right hand is doing.” Any way you refer to it, segregating internal planning and decision-makers leads to trouble in your supply chain.

These systems separate workers into independent subsections with little to no visibility between external partners. These separate groups work in their own ecosystem, unable to effectively communicate with other departments or relevant groups. This not only slows an operation down, but extinguishes any potential spark of collaboration or innovation that may arise from working in conjunction with each other.

Do: Increase information flow

Uncertainty in the supply chain is caused by disconnected information. A truly effective and innovative workplace allows all relevant personnel to communicate with each other.

Internally, abandoning legacy email and phone methods of communication in favor of end-to-end, 3-way knowledge sharing and open social platforms speeds up collaboration and enhances efficiency. Externally, keeping a concurrent, continuous and completely open demand plan is essential for maintaining healthy, profitable business relationships.

Enhancing communication and information flow internally and externally is another key for staying ahead of the curve and fostering innovation for supply chain businesses.

Don’t: Test out a new system on a limited basis

There can be hesitation for a business to roll out a new system, opting instead to test it out in certain departments or methods of communication. This can be a mistake.

Without full implementation, a business never sees the full power and potential of a new system and will be quick to abandon it in favor of the legacy methods they have been operating with for years. The right system can revolutionize operations on all fronts, from internal communication to vendor relationships to future workplace innovations. Without every aspect of a business running on a new method, a business owner may never see the full payoff.

Do: Find a trusted method and go all in

While there certainly are challenges with implementing a new system, it’s important to find a trusted method and go all-in. For example, let’s look back at our SIOP system.

Different areas of a business have different roles and objectives. Sales is eternally optimistic, operations wants to know precisely what is going to be produced and shipped, purchasing makes conservative commitments to suppliers, and finance has to predict performance and cash flow. Getting everyone pushing in the same direction for a system change can be a daunting task.

We have found that SIOP works optimally if your entire enterprise uses it. If you allow a facility, business unit or a customer team to continue to operate outside of the SIOP process it will undermine your efforts. That is why it’s so important to get everyone on board for a new process to truly see the difference it can make.

At USC Consulting Group, we’re dedicated to helping our clients weather any storm, including the kind of supply chain tsunami we’ve all experienced recently. Give us a call today to talk about how we can put our expertise to work for you.

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Are you always putting out fires? Not in the literal sense, of course. We’re talking about operational problems that pop up at the most inconvenient times. Once you take care of one issue, two more seem to appear in its place. Issues such as:

If you’re busy troubleshooting today, it’s hard to focus on improving tomorrow. Opportunities for growth can be missed.

Get ahead of problems before they catch fire by watching this video:

At USC Consulting Group, we’ve been helping clients for over 50 years to implement strong Management Operating Systems that assist them with breaking that firefighter mentality.

The best management operating systems center around four main components:

  1. Processes
  2. Systems
  3. Roles
  4. Structures

A well-designed MOS will have your company operating like a well-oiled machine, making your bottom line stronger and your operations more efficient.

So put down the fire extinguisher and enhance your management operating system today by contacting USC Consulting Group.

Phone: +1-800-888-8872

Email: info@usccg.com

Learn more about the benefits of an effective MOS in our article How Can A Management Operating System Help Your Organization?

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Supply chain management is a crucial part of every business, which has a wide range of effects, from the streamlined transfer of goods and services to improved customer satisfaction. In this digital age, it has become easier to understand the complexities or risks that affect the supply chain. In general, the supply chain exists in both the services and manufacturing organizations. However, the risk of complexity varies in different organizations.

Managing it effectively is not a simple task. It consists of several challenges and demands to constantly develop a new skill and update the existing one. By implementing effective tactics, you can easily enhance high supply chain performance.

Supply-Chain Essentials Every Manager Should Know

Here are a few things managers should know about managing the end-to-end supply chain from raw material to finished products.

1. Business Communication

If you want to be a leader in supply chain management, you have to communicate well. Depending on whether your company is dealing internationally or locally, being an efficient communicator will surely help you to gain some position in the marketplace. As a supply chain leader, you should be aware of the terms like ROIC, EBITDA, and economic profit. These technical terms must be part of your everyday vocabulary as you would be delivering schedules with suppliers.

2. The Know-How To Negotiate

Negotiation is pivotal in supply chain management. If you want to be successful in this industry, you have to be a good negotiator. Whether you are a lead or participant in negotiation, your skill will influence the relationship of the opposite party.

If you have negotiation skills, you will enter into the discussions looking for an outcome that will satisfy the results. Ask as many questions as you can. It will clear the doubt. An excellent negotiator pays close attention to the opposite parties’ behavior.

3. Customer-First Thinking Is The Key

Supply chain organizations should think about the customer first. This means thinking for the customer when making a decision about the supply chain. In order to gain a good relationship with your customers, you need to spend some time with them and understand their needs and considerations. By focusing on these parameters, you can shape a supply chain that satisfies the customer.

Building a customer-centric supply chain is not easy. All the departments, from suppliers to manufacturers, are involved in the supply chain. You must find new ways to meet customers’ needs and exceed their expectations. In 2021, Assignment Assistance UK formed a customer-centric marketing campaign, and the results were amazing, as the sale ratio exceeded their expectations.

4. Understanding Cost-To-Serve

Cost-to-serve is basically a cross-supply chain method used to focus on process-based costs. It helps in calculating the cost-effectiveness of product and market routes along with the customer profitability. Furthermore, it provides you with a fact-based focus to make decisions on operational changes and service mix for each particular customer.

If you can understand the cost-to-serve, you will be able to make decisions to improve the customer’s outcome. Some supply chain leaders have gifted skills, while others need to train themselves and require practice.

If you apply the cost-to-serve concept to your company’s supply chain activity, then you will be able to build a profitable relationship with customers and the production team. That’s why ease with the cost-to-serve is a good skill that helps you to stand out as a competent supply chain professional.

5. Data Is Everything

Data is crucial in business to formulate strategies, streamline operations, introduce new services, and ensure customer satisfaction. But data is nothing unless it is analyzed. I have seen that most of the decisions in supply chain activities are instinct-based, neglecting data analysis.

Always keep a keen eye on cost and never assume something is great because everyone loves new deals. Look at the facts and data and do not rely on emotions and instinct when making decisions. While concluding a literature review, Bob Tucker describes supply chain analytics as the ability to use data in order to improve all activities across the supply chain.

Since data analysis has been utilized for years, the introduction of new technologies like machine learning or artificial intelligence has led to contribution in today’s supply chain forecasting.

Benefits Of Following Supply Chain Essentials

The supply chain plays a vital role in boosting several business processes, including your relationships. Supply chain management isn’t a simple experiment, but effective supply chain management offers several benefits that improve the bottom line. Let’s look at some of the benefits of effective supply chain management.

a) Better Collaboration

In order to resolve any problem, the supply chain team should be able to share information with stakeholders and communicate with the right people at the right time. Consistent communication improves the relationship, which results in better collaboration and boosted business.

b) Improved Risk Mitigation

Having knowledge of risk help companies in achieving their goals. For instance, 87% of companies believe they could reduce inventory by 22% if they have a better risk management system. This all can be achieved by following the supply chain essentials.

c) Better Quality Control

The quality control process improves once a manager starts following supply chain essentials. Since, data analysis is used for decision making, it helps in producing quality products.

Quality control in the supply chain helps to maintain the company’s reputation. In this modern age, the main goal is to gain a unique place in customers’ minds. For this, the quality control subcontractor gives suggestions to companies to increase their benefits.

Conclusion

The supply chain manager focuses on a better relationship with all the members of the supply chain, including the customers. Today, the supply chain industry is growing rapidly. Hence, making a data driven-approach to supply chain management is a must.

Data is not only driven by effective supply chain management but there are also factors such as good vendor and supplier relationships, effective cost control, securing the right logistics partners and adoption of effective supply chain technologies. An efficient manager takes into consideration all these factors, which result in an improved supply chain process.

*This article is written by Claudia Jeffrey. Claudia is currently working as an Auditor at crowdwriter. She has previously looked after operations and customer service departments in the same firm. Claudia is keen to manage an effective supply chain process and believes in company growth with the customers. She loves to travel and explore the world.

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We’ve all heard the term “silo” used to describe insular work groups. Organizational silos may be high functioning within themselves, but they don’t communicate very well with the outside world… or even with the team on the other side of the building. Silos occur within organizations and they can bedevil your supply chain and overall business performance.

Some people say the term arose out of the Lean movement, which may be true, but we think an even older phrase describes the typical silo perfectly: The left hand doesn’t know what the right hand is doing.

Why organizational silos are so bad

There are several types of silos that can strain organizations. Some, frankly, stem from leadership. If the top brass isn’t encouraging the flow of information, collaboration and teamwork, or if shift leaders don’t talk to each other as shifts change — leaving the second shift to reinvent the wheel — you’re going to have trouble. Without strong leadership, departments can set goals that may conflict with each other.

Similarly, organizational culture can cause teams to insulate. If, for example, the workplace is hyper competitive, silos won’t just develop, they will be deliberately built as people choose not to share information and best practices.

Data silos aren’t so much about people, but information. This happens when information is collected and stored by departments, but not shared. One very easy way to think of a data silo is to think about law enforcement. Until rather recently, criminal records and other vital information was stored in individual precincts’ computer systems, with departments in other states, or even across town, not having access to it. Any time your organization has data that isn’t accessible to other teams, it leads to inconsistent decision-making.

Some common problems caused by siloed teams

Silos thwart efficiency, productivity and in some cases, even safety. But the problems they cause can burrow even deeper than that, eroding your trust between teams both inside and outside of your organization.

Decreased supply transparency. Managing a supply chain requires accurate, real-time data. Your supply chain team needs to know the who, when, what, where and why. When you’re in a silo, that information may not be conveyed. It can lead to increased risk and inaccurate forecasting.

Groupthink. Insulated teams tend to be very well aligned. There’s a lot of agreement without much pushback. This is a risky situation called “groupthink,” and it occurs when a group values harmony and conformity, striving for consensus at the expense of their own opinions. Silos are ripe playing fields for this phenomenon.

Less innovation. When everyone is thinking the same way, it doesn’t leave much room for big ideas… or any new ideas. Innovation in the supply chain needs to involve every part of the process.

Tepid collaboration. Insular teams don’t collaborate with other teams, which weighs down the quality of the whole organization.

Duplicated work or job redundancies. This is one of the biggest enemies to efficiency. You may have two teams working on the same thing at the same time, perhaps even getting different results. Or people on different teams with the same roles. It adds bloat to your bottom line. And this goes for data, too. You’ll increase your IT costs by storing duplicate data platforms and information.

Contrasting processes and systems. It’s difficult enough to get your organization into “well-oiled machine” shape with all processes and procedures flowing as they should if you don’t have siloed teams.

Eroded trust between teams. When teams aren’t sharing information and working together, it’s very easy to slip into an “us” and “them” mentality.

What to do about it

Recognizing you’re dealing with organizational silos is the first step. Now what? Here are some simple actions you can take to start breaking down those silos.

Reward innovation. Encourage people to take a look at departmental processes and procedures and suggest changes. Is there a better way to get the job done?

Create interdepartmental collaboration. Create a team made up of people from several departments and seniority levels. Task them to work together and share information in order to solve a problem or create an initiative that affects the whole organization. You can start very small here. This doesn’t have to be revamping entire processes. It could be creating an interdepartmental team that is in charge of diversity and inclusion efforts. Or a team that takes an objective look at your company’s brand (the way suppliers, vendors, customers and even job seekers view you) and offers ways to boost it. Or creating a series of Lunch and Learn programs in which departments share best practices.

Rethink reward structure based on departmental performance. This might be a tough nut to crack if this is the way your operation has always done it. But few things encourage silos more than departmental competition. Instead, reward your managers and supervisors for the performance of the organization, and even for information sharing.

Organizational silos erode efficiency, which in turn can bog down your processes and ultimately your bottom line. Breaking down those silos is the first step toward greater collaboration, efficiency and profitability. Contact USC Consulting Group today for help improving communication across your divisions.

Looking to optimize your supply chain

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Remember the familiar line from an old TV cop show: “There are 8 million stories in the Naked City”? As USC Consulting Group’s Vice President and Senior Operations Manager Paul Harker likes to point out, the same could be said about your inventory.

Like most dramas, the story of your inventory management can take unexpected turns. It’s very easy to get lost in the din of safety stock levels vs. Lean principles, order quantities, reorder triggers and the lead time to replenish the stock. Supply chain disruptions and shortages haven’t helped matters over the past few years. The plot unravels when these stories don’t add up to a single coherent tale.

Major characters in this inventory management drama:

Operations, which sees inventory as a buffer against fluctuating demand. But how much is too much? They don’t want an excess of stock, which would fly in the face of the popular “just in time” or Lean operating method, which, admittedly took a bit of a hit during the pandemic when people panicked about shortages and bolstered their safety stock.

Sales wants product at the ready at a moment’s notice, not “just in time,” but “all the time.” They’re not overly concerned with storage space, inventory investment or production efficiency.

Finance looks at inventory as a double-edged sword. They want to reduce inventory in order to free up cash and minimize carrying costs. But inventory is also collateral. High levels of production, whether the goods are sold or not, can absorb overhead and drive better month-end results, which are Finance’s Holy Grail.

Executives are focused on achieving quarterly corporate objectives and view inventory in terms of dollars.

At a fundamental level, all of these decision-makers speak different languages, have different perspectives and conflicting messages. Of course, everyone has the same goals: efficiency and profitability. But they may be at cross purposes getting there.

The Hero: SIOP

You might be thinking: “Is that a typo? Don’t they mean S&OP?” Yes and no. No, it’s not a typo. And yes, S&OP, the business management process that involves sales forecast reports, planning for demand and supply, and other factors, is the foundation of all of this. We just think S&OP is missing something: Inventory.

When you’re focusing on inventory, it elevates the entire planning process up a notch. When your inventory is optimized, things tend to fall into place. But it is not an easy mark to hit in these days of supply chain disruption and the sometimes conflicting goals of key decision-makers. With SIOP, you can circumvent these challenges and make your inventory work for you.

“A key to SIOP is to emphasize inventory as a strategic tool to help offset variation in either demand or production issues,” explains David Shouldice, Senior Vice President and Managing Director at USC Consulting Group. “One lever of control in the SIOP process is to make inventory harder working as a strategic tool.”

As Shouldice notes, it’s about having the right conversations about the right topics at the right time.

This isn’t a one-and-done process. The SIOP planning horizon should be at least a rolling 14-month period. We recommend that our clients update their plans monthly. Some do it more often than that. The point is covering a sufficient span of time to make sure the necessary resources will be available when you need them. The plans take into account projections made by the sales and marketing departments and the resources available from manufacturing, engineering, purchasing and finance. All of that together works toward hitting the company’s goals and objectives.

Using SIOP for inventory management

Sales, Inventory and Operations Planning helps your company get departments in sync, ensures that everyone is on the same page and realistic about the process, helps you manage and roll with changes, and measures performance.

One powerful component of SIOP is that the process involves all of the key players in your inventory drama.

Here’s who we typically see take part in the SIOP process:

Different languages? You bet. But getting them all working together cuts down on the noise of those different languages. One reason SIOP is such a critical management tool is that key players from many departments are working from the same plan, and able to compare actual results to plan, evaluate their performance, and prepare updated plans going forward. SIOP: The universal translator, or C-3PO, for your business.

It is a powerful tool to help you wrangle your inventory management, achieve the optimal balance between not enough and too much, and settle back into Lean (or just in time) manufacturing principles that can eliminate waste and help ramp up your efficiency.

If you’d like to learn more about SIOP, download our (free) eBook, “Sales, Inventory & Operations Planning: It’s About Time.”

Sales Inventory and Operations Planning eBook

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