Your business and supply chains
Logistics and supply chains have been a part of business for centuries. It is the increased trade between developed and developing countries over the past forty years that has magnified the importance of understanding supply chains and their effects on the logistics flows of your business.
A supply chain is the linking of organisations and their relationships to enable the supply of an item. Business makes money by selling products and services to customers and consumers. To make money, the items you sell must be available. The essentials elements of availability are:
- The aim of your supply chains and logistics is for products and services (items) to be available for your customers and consumers (end users) when they need them
- Your supply chains are a network of independent, but inter-dependent organisations supplying materials from the farm and mine through all stages to the end user. This means that as parts of the network interact within a system, the performance of one element can affect achievement of your business aim.
- All parts of the supply network are available to support the aim, but few (if any) are dependent of your business. To ensure availability requires interaction with your supply network through people and technologies
- The performance of your supply network and logistics depends on the capability of your people across organisation and functional boundaries
The global nature of supply networks has increased their complexity. This is due to distance and time involved, plus the capability of the assets, or constraints, used at the links in the chain – the factories, trucks, trains, aircraft, port facilities and general infrastructure. The complexity of a supply chain; that is the variability of times and the effects of constraints, provides the level of uncertainty that we must overcome for the supply network to achieve its aim.
These pressures on the supply network are the risks. They are amplified by the current acceptance within business of the distance from suppliers and customers and the reduction in safety margins concerning time, inventory and working capital.
The supply networks and logistics of your business are therefore not the sole responsibility of specialists. To reduce the supply chain risks and improve performance of the business requires that all staff have an understanding of your supply chains and how they influence what your business is able to achieve.
Why is knowledge of supply chains and logistics required by all staff? It is because supply chains do not respect the functional barriers of your organisation. A sales order will typically require a delivery – ‘delivery in full, on time, with accuracy of all documents’ (known as DIFOTA). To achieve this objective requires that multiple parts of the organisation must work collaboratively. To do that requires staff to not only know the ‘how’ of their tasks but the ‘why’.
When your people know the ‘why’ of their jobs in relation to the supply chains, there is a higher likelihood of overcoming the two challenges to change. The first is that people are naturally reluctant to change, especially if they do not understand the why. Second is that people (and their managers) think that if they concentrate on improving the performance of their function, then performance of the business will improve – we behave how we are managed.
Unfortunately, supply chains do not work in isolated bits; the network is a system. If positive action is taken in one part it can have negative reactions elsewhere. For example, steps to improve the profitability of shipping lines, such as the size of ships, the sailing frequency and availability of containers, can negatively affect the availability of your products. Within a business, the decision to outsource accounts payable to a low cost country can affect payments to suppliers and therefore delivery of future materials or products. Or the decision to increase the product range increases inventory holding costs.
To have your people work together, they need help to understand how the supply chains of your business work; also those of customers and suppliers. The next step is easy – how their function contributes to the performance of the business and what is required to improve that performance. Via the supply network, you are able to put the aims of the business into the language of the functions.
How and what to learn
In today’s learning environment there is a move to more self-learning, by which a person is able to learn at their own pace. However there is considerable debate about how motivated the learner must be and whether or when group or individual learning should occur.
In addition, there is the advent of multimedia capabilities to assist learning. While a wonder to watch, the use of activities, scenarios, simulation and games in learning comes at a cost, through the time it takes to develop the learning material. When learning a topic will be done by many people, often while at school, the cost per view can be reasonable. Where the topics are in a niche area or at a professional level, the investment in development will be harder to justify.
For this reason, I believe that learning about the essentials of supply chains and logistics can be achieved by individual online learning. The learning can then be applied in groups that meet together to work through simulations and case study scenarios, providing interactions that builds on the prior learning. The classes can be augmented with teleconferencing to further debate and allow understanding of the concepts.
Web based learning, face-to-face classes and online discussions can therefore be blended to provide a curriculum that meets the needs of your business or university/college class in a time and cost effective way.