(4) No Supply Chain Strategy: Do you really have a supply chain strategy? Dittmann says “It is surprising that few firms have a documented supply chain strategy.”
OK, how do we do that? As the smart ones usually say, start with the current and future needs of customers. Determine the capabilities needed to meet those needs. The strategy development process then determines the new supply chain capabilities the company will need in the future to meet its customers' needs. Plans (people, process, technology) need to be developed to meet those needs, at a cost the company can manage.
“Unfortunately, most supply chain organizations are so consumed with the daily battles of cutting cost, managing inventory, and delivering good customer service that that they don't plan properly for the future, sometimes with disastrous results,” Dittmann adds.
See SCDigest’s Pulling Your Supply Chain.
(5) Ineffective Matching of Supply with Demand: This typically results from functional silos within the corporation. Metrics are also an issue – at the most basic level, sales is driven by revenue, and manufacturing by cost management – goals which often conflict. While Sales and Operations Planning (S&OP) processes can substantially reduce this functional thinking and generate better alignment, the fact that “most would acknowledge that they still have a long way to go” in S&OP means the problem is likely to remain timeless for awhile.
See SCDigest’s Time to Integrate Supply Chain Planning and Execution.
(6) Physical Network Problems: The good news for supply chain professionals – the physical supply chain network will never be exactly right. Do we build networks that anticipate sky high fuel costs, or moderate ones, just as one example. “Logisticians are confused to say the least; and the old answers don't work anymore,” Dittmann says, adding “One thing is certain however. All firms should question their physical network configuration under a wide range of future fuel prices.” But fuel, of course, is just one of many elements effecting network design.
See SCDigest’s Supply Chain Network Optimization and Competitive Advantage.
(7) Global Issues and Outsourcing Problems: Globalization holds many promises – but also many challenges. “Many firms are re-thinking the mad rush to outsource outside the United States,” Dittmann says. “The long supply lines, incredibly volatile fuel costs, exchange rates, the geopolitical risks have all come home to roost.” He says that few firms consider the total cost of an outsourcing decision, and even fewer incorporate the additional risk of a global source in their formal analysis process.
See SCDigest’s Getting to Accurate Total Landed Costs.
The practice of supply chain management makes continuous improvement, but maybe it will be awhile before we have solved all the problems.
What would you add to these “timeless” challenges? Are we closer to solving some of them than others? Let us know your thoughts at the Feedback button below.
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