A Better Path to Supply Chain Excellence

Abe Lincoln once told a story about a frontiersman who had lost his way in an uninhabited region on a dark and stormy night. The rain was torrential and was accompanied by terrible thunder and lightning that encased the evening sky like an electric spider web. To increase his trouble his horse halted, being exhausted with fatigue and fright. Just then a bolt of lightning struck a neighboring tree, and the ensuing crash finally brought the man to his knees. He was not an expert in prayer, but his appeal was short and to the point: “Oh, good Lord, if it is all the same to you… give us a little more light, and a little less noise.”

Small to mid-size manufacturing companies sense they are in trouble. Customers want more—more variety, more convenience, more flexibility and more service. Yet satisfying them adds even more cost and complexity at a time when pressures are felt from tight labor and increasing raw material prices. Big players have steadily acquired new skills needed to identify and capture the difficult improvements. But with fewer resources, smaller companies aren’t always able to run the business and keep up with the competition at the same time.

To make matters worse, the manufacturing industry is awash with wonky jargon that serves to complicate and intimidate as much as it does educate. Businesses without legions of in-house resources must worry about how to adopt “circular economy” business models, migrate to “smart” manufacturing, leverage Industry 4.0 technologies, and harness the Internet of Things. Whitepapers by consulting firms swirl about in a never-ending vortex looking for a desk to land on.

In short, there is a lot of noise out there, but not so much light.

The companies that continue to achieve competitive distance do so because they drive only those supply chain improvements that truly matter to the customer and the bottom line. Those that are falling behind don’t necessarily need to “digitize” their supply chains as much as they need to stop making tradeoffs between functional competencies. For example, heads of manufacturing try to rationalize overcapacity issues in their plants, procurement officers consolidate their purchasing to leverage scale, and logistics managers seek to cut costs and improve delivery rates at their scattered warehouses. Such piecemeal efforts, however, won’t make much difference unless they’re part of a broader operational-improvement…

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