Performance, the accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed. Fulfilling an obligation. Accomplishing desired results!
Supply Chain performance focuses on customer and consumer satisfaction index while accomplishing the organization’s desired results. Many in-house and external pressures on reliability of supply, variability of personnel and consumer purchase patterns presently represent some of the challenges Supply Chain Organizations are working through.
Supply interruptions either short term or long term caused by suppliers or contract packers can cause consumer and customer dissatisfaction. Having staff that are experienced, trained and have the aptitude to build flexibility into the Supply Chain is crucial to an organization attaining their desired results.
In times of uncertainty your supplier and provider base needs to be expanded. Think of an accordion. Yes, an accordion. Those that do not know what an accordion is there are pictures on line. In terms of certainty, when supply is not an issue you have few suppliers where you leverage volumes and reduce variability. In times of uncertainty supply interruptions, rising cost….. you open up your supplier base to be certain you receive an uninterrupted supply and have flexibility moving from supplier to supplier. Much like opening up an accordion. As you open up the supplier base these new suppliers need to be vetted.
Even in times of “certainty" a practice of 3 suppliers approved is a good idea for a specific item. One supplier in a primary position and two others in a secondary role. As uncertainty occurs moving percentages between suppliers or providers is less of a challenge since your organization is familiar with the supplier / provider. This approach has other merits if you would like to learn more contact me.
Be sure those in your purchasing, procurement and sourcing roles understand the total cost of what they purchase and they must possess the aptitude to build relationships. Provide any necessary training to fill in the gaps.
Sales and Operations Planning performance is another critical aspect in times of uncertainty. As consumer behaviors change you must have a fluid and documented process to best manage sku profitability. Resources, ingredients, packaging, labor, transportation…..all can be in short supply depending upon circumstances and geography. Having a sales plan that is fluid and accurate drives acquisition, equipment utilization, employee schedules, inventory management and fulfillment. Items that are not profitable need to be removed from the portfolio so production of profitable items is not hindered. Planning and Sales people need to be working in concert. Sales must be aggressively forecasting and predicting accurately customer requirements. Finished goods inventory sitting in warehouses not moving does neither you nor your customer any good. Planning must be reviewing inventory levels, sales movement and challenging sales when they see numbers not matching. This process while cumbersome at times can no longer be monthly or quarterly. Weekly key individuals must work together to determine the following week’s actions as too much is changing week to week. Remember customer and consumer satisfaction is at the core of what you do to accomplish desired results.
In an earlier newsletter I have written about a disciplined process that allows you to adapt. Your Sales and Operations Planning process must be that disciplined and adaptable.
Distribution planning performance utilizing the Sales and Operations Plan must be certain to maintain inventories in the correct locations. Review weekly inventory levels at the macro and micro level, by sku and by distribution location. Having adequate inventory levels at the macro level but at the wrong locations does not help meet the customer and consumer satisfaction index.
Pricing performance, does your pricing of your finished goods support the present situation? In order to gain value for superior execution versus competitors, are you rewarding yourself with the correct pricing model? Pricing depends upon market conditions and your competitor's ability to service customers. Demanding improved shelf presence in the case of food at retail should be on your mind if you are outperforming others.
While this Newsletter has focused on manufacturing performance, service providers’ performance too can utilize much the same process. Determine what services are the most critical to those you serve. Figure out how to provide those services with potential fewer resources. For example you, provide a series of services to your clients. Neither your employees nor your clients can come to your office nor can you travel to them. Certain services maybe time sensitive so they become the priority to get accomplished. Determine what is critical for you to provide to meet the needs of your clients and still meet your desired results. Focus on those critical few.
Remember the accordion in times of certainty the accordion is fully open offering all the services. In times of great uncertainty, it is slightly open performing the few critical services. As uncertainty wanes the accordion opens. As uncertainty returns the accordion closes.
Manage the degrees of certainty and uncertainty regardless if you produce a good or provide a service. A process needs to be in place to measure performance that is customer / consumer focused, disciplined, adaptable and able to accomplished the desired results of the organization.