In my last entry I suggested that the critical success factors for the Lean Supply Chain should be; improving capabilities, reducing delays in the extended supply chain and maintaining costs. You remember that I stayed away from reduction of costs as a success factor. The reason I did that is because I think its more important to focus on improving throughput than to focus only on reducing costs. I also suggested that one method to achieve these objectives and even prepare for future expansion is to partner with a third party logistics service provider. In this discussion I will cover some of what I feel are key objectives, or opportunities, to achieving your lean supply chain objectives.
This is where it gets interesting because you must understand your current state and then you must investigate the marketplace for generally accepted practices and then I would suggest that you also investigate other marketplace practices to try to identify potential ‘cross over’ practices that would support your needs. Now here is where I think it gets interesting; this must be an iterative process because the opportunities change as your mix and match your capabilities. Remember, though, this is a business exercise and not a thesis of potentials, so you must be careful not to fall into a spiral of analysis paralysis. This is where it is important that you identify your baseline and then quickly implement the baseline so you can use your results to determine the next cycle of improvements and capabilities to implement. Don’t try to boil the ocean, the critical aspect is to create the baseline so you can begin to measure actual results. In order to ensure you achieve your objectives in this phase it may be a good idea to engage a consult to help keep you out of the weeds and I would also suggest a ‘time box’ approach and limit this duration.
You will find in your analysis that there are a vast amount of opportunities to select from a vast amount of partners. I think there are two key objectives to this analysis;
- Define your baseline objectives, this will be your starting point and your future results will be measured from this baseline.
- Define a communications and integrate architecture, this will provide your linkage between your extended supply chain partners and software solutions with your internal business systems.
Of the two above objectives, I place the greatest importance on the second, without a stable and flexible communications and integration architecture you will never be able to take full advantage of the collaborative opportunities that your extended supply chain can provide.
There is also an important decision you must make; is your supply chain a key differentiating factor of your business? Then once you answer that question you can refine your analysis and your search for opportunities. Another bit of advice related to the response to this question - there are many aspects and pieces to your extended supply chain and you may decide that one or more of these pieces are a differentiating factor while others are not. The reason why I am advising you to first decide your differentiating factors is that you have an opportunity to outsource your non-differentiating activities to a third party solution provider.
And now for the audience participation portion of the show...
Have you contemplated a relationship with a third party logistics provider? What is your strategy for supporting increased capacity needs as the economy improves?