Top Supply Chain Management Strategies and Tactics [How to Optimize Supply Chains in the 2020s]

Summary

Eric 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• 🔄 Supply chain management is undergoing a major shift, and managing it the same way as 5-10 years ago is outdated.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.