Top Supply Chain Management Strategies and Tactics [How to Optimize Supply Chains in the 2020s]
Summary
TLDREric Kimberling, CEO of Third Stage Consulting, discusses the evolving challenges in supply chain management, particularly post-pandemic. He highlights the importance of cost efficiency, visibility, and diversification of suppliers, emphasizing risk management. Kimberling also explores the need for proactive criteria, such as assessing suppliers' financial health and sustainability efforts. Additionally, he stresses the increasing relevance of supply chain management in enhancing customer experience and aligning with organizational goals. By integrating technology and strategic planning, businesses can build more resilient and adaptable supply chains for the future.
Takeaways
- 🔄 Supply chain management is undergoing a major shift, and managing it the same way as 5-10 years ago is outdated.
- 💡 Digital transformation is crucial for modern supply chains, emphasizing new strategies beyond cost and efficiency.
- 🌍 Globalization has expanded supply chains, increasing the risks of disruptions like raw material shortages, higher fuel prices, and cyber attacks.
- 📈 Supplier diversification is essential in the 2020s to mitigate risks from geopolitical and economic factors.
- 🔍 Visibility and cost efficiency remain key, but newer technologies like ERP and supply chain management systems help with process improvements.
- ⚠️ Anticipating risks is more proactive, with factors like financial health and employee satisfaction being used to evaluate suppliers.
- 🌱 Sustainability in supply chains is a growing concern, and many organizations are evaluating suppliers based on their environmental impact.
- 🤝 Supply chains now directly impact the customer experience, with expectations shaped by companies like Amazon and Alibaba.
- 👥 Human capital management is critical for effective supply chain operations, making talent acquisition a priority.
- 🔗 Supply chain decisions influence other organizational areas, including finance and customer service, making it a more interconnected aspect of business strategy.
Q & A
What has made supply chain management more important in the 2020s?
-Supply chain management has become more important in the 2020s due to several challenges such as higher raw material prices, material shortages, higher fuel prices, port disruptions, and cyber attacks. These factors have expanded the scope of supply chain management, requiring more focus on resilience and adaptability.
How have the objectives of supply chain management changed from the past?
-Previously, the main focus of supply chain management was on driving down costs and increasing efficiency. However, in the 2020s, there is a broader focus on resilience, risk management, and the ability to navigate unexpected disruptions, in addition to cost efficiency.
Why is supplier diversification more critical now than in the past?
-Supplier diversification has become more critical due to the increased risks posed by geopolitical impacts, macroeconomic shifts, and supply chain disruptions. Relying on a single supplier creates vulnerability, so diversifying helps hedge against these risks.
What are some leading indicators that organizations can use to anticipate supply chain risks?
-Organizations can use financial metrics, such as the financial health of suppliers, and employee satisfaction within the supplier's company as leading indicators. These help anticipate potential issues, such as a supplier going out of business or facing internal challenges, which might affect their performance.
How can technology help with managing and improving supply chains?
-Technology like supply chain management systems, enterprise resource planning (ERP) systems, procurement systems, and warehouse management tools can drive cost efficiency, increase visibility into supply chains, and help organizations manage and anticipate risks more effectively.
How does supply chain management contribute to a better customer experience?
-Supply chain management impacts customer experience by improving delivery speed, flexibility, and service quality. Efficient supply chains can lead to faster delivery times and more responsive customer service, which are crucial in meeting modern customer expectations, often referred to as the 'Amazon effect.'
What role does sustainability play in modern supply chain management?
-Sustainability has become an important consideration, with companies evaluating their supply chain’s environmental impact, such as emissions and climate footprint. Suppliers are now assessed based on their alignment with sustainability goals, and this may involve scoring them on environmental impact metrics.
How is supply chain management connected to other areas of an organization?
-Supply chain management is interconnected with areas such as human capital management, as effective supply chain operations require skilled talent. It also affects financial performance, as well-designed supply chains can help meet financial goals related to inventory and return on assets.
What are the traditional criteria used to assess suppliers, and why are they insufficient in today's context?
-Traditionally, suppliers have been assessed based on cost and quality. However, these criteria are reactive and insufficient for managing modern risks. Today, organizations need to look at more proactive criteria, such as a supplier's financial stability and employee satisfaction, to better anticipate risks.
Why is visibility into the supply chain more important today than it was 5-10 years ago?
-Visibility into the supply chain has become more important due to the increasing complexity and global nature of supply chains, which are more prone to disruptions from geopolitical events, material shortages, and other risks. Technology plays a crucial role in improving this visibility, enabling companies to better manage disruptions.
Outlines
🌐 Evolving Supply Chain Management in the 2020s
Eric Kimberling, CEO of Third Stage Consulting, emphasizes the importance of modernizing supply chain management in the face of contemporary challenges such as increased material costs, shortages, fuel price hikes, port disruptions, and cyber attacks. He highlights that supply chain management is now more critical than ever, with a broader scope than just cost reduction and efficiency. Kimberling discusses the necessity of cost efficiency, visibility, and the use of technology to build resilient supply chains. He also stresses the growing importance of supplier diversification to mitigate risks from macroeconomic and geopolitical impacts. The paragraph concludes with the suggestion to consider proactive criteria beyond cost and quality to anticipate and manage potential supply chain disruptions.
🛠️ Enhancing Supply Chain with Technology and Sustainability
The second paragraph delves into how technology can be leveraged to anticipate risks in the supply chain by analyzing financial metrics and employee satisfaction, serving as leading indicators for potential issues. It also addresses the growing focus on sustainability within supply chains, urging organizations to align with environmental goals and assess suppliers accordingly. The impact of supply chain management on customer experience is highlighted, with a reference to the 'Amazon effect' and the raised customer expectations for delivery and service. The paragraph concludes by emphasizing the interconnectivity of supply chain management with other organizational aspects, such as human capital management and financial goals.
📈 Resources for Future-Proofing Your Supply Chain
In the final paragraph, Kimberling encourages viewers to access the 2021 Digital Transformation Report for insights on supply chain management transformation. The report is said to rank top supply chain providers and offer best practices for supply chain evolution. The paragraph serves as a call to action for organizations to utilize the provided resources to enhance their supply chain strategies, ensuring they are future-proof and capable of adapting to the evolving business landscape.
Mindmap
Keywords
💡Supply Chain Management
💡Cost Efficiency
💡Supplier Diversification
💡Risk Management
💡Technology
💡Sustainability
💡Customer Experience
💡Global Supply Chains
💡Supplier Scorecards
💡Leading Indicators
Highlights
Supply chain management is more critical than ever, especially post-pandemic, as it faces challenges like higher raw material prices, shortages, fuel price increases, and cyberattacks.
Supply chain management strategies of the 2020s need to focus not just on cost efficiency but also on resilience, adaptability, and risk management.
Visibility into the entire supply chain, alongside cost efficiency, remains a key factor, but the complexity of global supply chains requires new technologies to improve this.
Supplier diversification is now crucial to minimize risk, ensuring businesses don’t rely too heavily on a single supplier in case of geopolitical or economic disruptions.
Technologies like ERP, procurement, and warehouse management systems are essential for reducing costs, increasing efficiency, and providing visibility into the supply chain.
Companies should look for leading indicators, like financial health and employee satisfaction of suppliers, to predict and prevent potential risks.
Sustainability is becoming a top priority for organizations, with supply chain strategies now considering their environmental impact, emissions, and alignment with long-term sustainability goals.
Supply chain management is directly linked to customer experience, impacting delivery times, flexibility, and service levels, beyond just cost and efficiency.
The 'Amazon effect' has reset customer expectations worldwide, making fast, efficient, and flexible supply chains a competitive advantage even for non-direct-to-consumer businesses.
Supply chain management now affects and is affected by other organizational areas like human capital management and financial goals, requiring a more integrated approach.
Risk management is more critical than ever, and proactive measures must be taken to anticipate supply chain disruptions before they occur.
Technology can support the diversification of suppliers by evaluating financial health and operational efficiency, helping companies mitigate risks.
Supply chain scorecards can be expanded to include factors like sustainability, environmental impact, and alignment with a company’s goals beyond financial performance.
Improving supply chains isn’t just about internal processes—it’s about how those processes impact the external customer experience and satisfaction.
As organizations look forward, they need to focus on creating supply chains that are not just efficient but also agile, resilient, and aligned with both sustainability and customer satisfaction goals.
Transcripts
if you're still managing your supply
chain the same way you were 5 10 or 20
years ago
chances are you're probably doing it
wrong i'm going to talk about that here
today
my name is eric kimberling i'm the ceo
of third stage consulting we're an
independent consulting firm that helps
clients through their digital
transformation journeys
and supply chain management is suddenly
cool again
if you ever lost faith in the fact that
it was ever cool it is back and it's
something that's more important than
ever
and if you look at where supply chain
management is now in the 2020s post
pandemic
there's a lot of challenges that supply
chain managers are facing
you have higher raw material prices you
have raw material shortages you have
higher fuel prices
ports are getting disrupted you even
have cyber attacks that are affecting
supply chains
so the days of focusing supply chain
management on driving down cost
and just increasing efficiency those
days are gone that still is a dimension
of supply chain management
but the purview of what we need to be
evaluating and considering as we define
our supply chain management strategy for
the 2020s
is completely different is completely
expanded than where it was
even just five or ten years ago so what
i want to talk about today are what are
those strategies and tactics you should
be thinking about
to make your supply chain more resilient
in the 2020s and beyond
the first component of supply chain
management that's important that is more
of a continuation of what's always been
important
is to make sure that you have cost
efficiency and visibility into your
supply chain
so you want to make sure that you're
cost effective you're efficient
and then you have visibility into what's
happening throughout the supply chain
and this is the one part of the video
that we'll talk about here today that
isn't really new but it's continuing to
evolve
in advance over time so finding
technologies whether it's a supply chain
management type of technology
or erp enterprise resource planning
types of systems or
procurement or warehouse management
types of technologies all those types of
technologies are meant to drive down
costs to increase efficiency and give
you visibility into your supply chain
and this is even more important today
than it was 5 10 20 years ago
because first of all supply chains have
proliferated across the globe so now
we're not dealing with
myopic smaller supply chains we're
dealing with global supply chains
and secondly there's more opportunity
for disruption as we've seen in the last
year
whenever there's a pandemic or a port
shuts down or fuel prices increase or
there's a raw material shortage in some
part of the world
or there's a geopolitical disruption
there's all these different things that
can disrupt our supply chain
in a way that wasn't as prevalent a few
years ago
so making sure that you build a supply
chain that takes these factors into
account
and uses technology and process
improvements and organizational
improvements
to get there is going to serve you well
now and in the future
one of the biggest trends we're seeing
now that wasn't nearly as important even
just a year or a year and a half ago
is that now more than ever organizations
and supply chains need to focus on how
to diversify their base of suppliers
so not depending too much on one
supplier
to where if there is a macroeconomic or
geopolitical impact to that part of the
world or
if there's some sort of negative
economic impact on any particular
supplier
you have backup you're not putting all
of your eggs in one basket for any
particular raw material or finished good
that you might be sourcing
so supplier diversification is more
important than ever and this is an area
where technology can help
but more importantly process
improvements and organizational mindset
shifts
can help improve supply chains to ensure
that they're thinking about how to
diversify
suppliers and how to evaluate how these
different suppliers compare to one
another i'm going to talk more about
that here in just a second as well
but in general be looking for ways to
diversify your supplier base
and really hedge your risk all of this
is about risk management
and being able to navigate the
unexpected which again as we've seen in
2020 to 2021
there is a lot of unexpected especially
as it relates to supply chain management
now historically supply chain managers
have assessed
suppliers in a couple of different
dimensions one is cost
how much is the supplier charging you
for their their good or service
and secondly the quality rating how does
that supplier
rate in terms of quality compared to
other suppliers out there and those are
still two very relevant criteria that
you want to continue to use
but those are in some ways very reactive
criteria those are after the fact you
understand what your costs are although
you can predict the cost based on
whatever arrangement you have
but when it comes to quality that's
something that's reactive that's after
the fact you can assess
how much quality the supplier did or
didn't deliver
but the key here is to look at some more
proactive criteria as well and to
anticipate potential risks and to
anticipate problems before they become a
problem so in other words instead of
running into a quality issue wouldn't it
be great if you could anticipate that
they might have a quality issue
using some other criteria so for example
we're finding that there's technologies
out there now that
our non-traditional supply chain
management or enterprise resource
planning systems
they can help you aggregate data to
gather information about financial
metrics for example
how well is the company doing how
healthy is the supplier if the supplier
is not healthy then obviously that's a
risk that you can start to anticipate
you can start to hedge your risk and
maybe look for even more alternative
suppliers in the event that you might
need it
that's just one example another example
is looking at employee satisfaction
if you know that employees are unhappy
at a certain supplier
and that there's a lot of turnover and
other issues internally and
organizationally that's a risk that you
can
anticipate and maybe start to diversify
and head your bets
so these are just two very small
examples of many that you can be using
as leading indicators that allow you to
anticipate where the risks are
so that you're not caught flat-footed if
and when there is some sort of
disruption
throughout one of these pieces of your
supply chain
many organizations we work with nowadays
are focused on sustainability
what is the impact to the climate of our
efforts in our supply chain
what level of emissions and climate
impact are we producing as a result of
our supply chain
if that's an important topic for you
then you want to be able to
evaluate and assess your suppliers
alignment
with that sustainability goal so when
you're looking at
your potential suppliers it's not only
important to look at the financial
indicators and the
quality indicators and the leading
indicators they mentioned before
but you also want to make sure that
they're aligned with your goals for
sustainability to the extent that you
have those
so this is another area where technology
can help a supplier score card can be
expanded to include
things like sustainability and impact to
the climate or impact of the environment
or whatever
criteria might be important to you as it
relates to sustainability
and then another dimension of
sustainability is just the long-term
viability of that particular supplier
as i mentioned before if they're on
solid financial footing that's different
than
a supplier that is weak is maybe
shrinking in size or losing market share
in the industry so really understand
what sustainability goals you have and
make sure that you're assessing your
suppliers throughout your supply chain
against those goals
one of the things that organizations are
finally starting to see in recent years
is that supply chain management isn't
just about
back office distribution logistics
warehouse management procurement all
that stuff
it's really about the customer
experience how does the supply chain
affect
your customers how quickly can you
deliver to customers how flexible can
you be
what type of service are you able to
provide to your customers
those are all things that supply chain
management directly impacts and so you
want to look at your overall customer
experience and think of your supply
chain not just as a cost
efficiency opportunity or to make sure
that you have the right relationships
with the right suppliers
you're not doing that in isolation
you're doing those things in
the context of how do we provide a
better customer experience and how do
the decisions we make in our supply
chains affect
that customer experience part of the
reason for this is because
of the amazon effect amazon has really
honed in on and mastered
the whole concept of supply chain
management as has alibaba and other
e-commerce providers throughout the
world
so even if you're not a direct to
consumer type of provider
you still want to understand that most
people in the world right now
have this reset expectation of how
supply chains should service their needs
and their
requirements so when you're analyzing
your supply chain it's important to look
at it not just from an internal
cost efficiency and supplier based
perspective but to look at it from your
customer perspective as well
[Music]
just as supply chain management is more
important than ever to your customer
experience
supply chain management now affects
other parts of your organization in a
way that hasn't been true or as true
in the past for example human capital
management
to run a effective supply chain you need
good talent
so to find good talent you need good
human capital management processes
so it's important to not just look at
supply chain management in its own
one-dimensional focus but to look at
what other parts of your organization
can affect and improve your supply chain
and vice versa on the flip side how does
your supply chain affect other parts of
your organization so for example if you
have
certain financial goals as an
organization whether it be inventory
related or
return on assets whatever the case may
be how can you design your supply chain
and build a supply chain that supports
those financial metrics
so again it gets back to this whole
concept of looking at your supply chain
not just
as it is as a supply chain but how that
supply chain affects other parts of your
organization
and ultimately even outside the
organization as it relates to your
customers as well
[Music]
so these are some of the things to be
thinking about as you define or redefine
your supply chain
strategies for the future for more
information on this topic i encourage
you to download our 2021 digital
transformation report which
is a guide to any sort of transformation
whether
it's an erp implementation or in the
case here a supply chain
management sort of transformation so in
this report
we rank the top supply chain providers
in terms of technologies
we provide best practices on how to
transform your supply chain
so i encourage you to download that as
well as other resources we've included
below
so i hope you found this information
useful and hope you have a great day
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