Supply chain management is crucial to the survival of any business. Sound management of activities in the supply chain can increase operational efficiency, improve processing speed, reduce costs, and increase customer satisfaction. Despite this, many businesses fail to manage their supply chain activities.

“There’s typically a lack of understanding around how or why a business’s existing supply chain network was designed”

Liam Stitt, Managing Director of Essential Supply Chain Optimisation Pty Ltd says most businesses are under prepared when it comes to managing the activities associated with moving goods from the raw-material stage through to the end user. “Many businesses work with assumptions only — assumptions around their supply chain structure, how it functions, how it operates.”

He says there’s typically a lack of understanding around how or why a business’s existing supply chain network was designed. “Has someone thought about the constituents in the supply chain, what real role they play, what range of services is provided at the operational level, and how those services are delivered? More often than not, the answer is no.”

Liam’s said he’s often asked by executives how to better manage their supply chain. He says there are five fundamental elements to understanding a supply chain, and for working out how best to respond to the potential disruptions:

1. Know how your supply chain is configured.

2. Understand the principles and theory of supply chain management.

3. Assess if your supply chain is structured in a way that enables the best possible outcomes, by identifying constraints, bottlenecks, and risk areas.

4. Identify where value is created and waste is generated, and then be able to introduce an integrative improvement plan to increase value creation and reduce or eliminate waste.

5. Be prepared for disruption, either by design through increasing value, by interruption from technology, or even global competition or external drivers of change.



“Ultimately, there needs to be a plan,” Liam says. “Think everything through. You can’t manage off the cuff, or assume everything is okay and expect efficiency. You need to be making informed and purposeful decisions on supply chain design and improvements.”

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