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In Search of Best Practices

By Clifford F. Lynch

DC Velocity, April 2008

Recently, I was asked by a client to provide a list of "best practices." "A ‘no-brainer,’" I said to myself. So many supply chain practitioners talk about best practices, finding a list would be a simple matter.

And I was correct. A quick search turned up an abundance of "best practice" lists – lists for everything from technology, clearing customs, and warehouse operations to operating in the automotive, chemical, and food industries. What I was unable to find, however, even after several calls to educators, consultants, and other experts, was one simple generic list of best practices for supply chain management.

I realize that one size does not fit all but thought it might be helpful to develop a brief, generic list that could be used as a guide to developing specific best practices. The following represents my attempt to do so:

1.

Develop a supply chain strategy. Excellent supply chain management doesn’t just happen. You need a plan. A good strategy will spell out the role of the company’s supply chain, its objectives, and the tools and processes required to achieve those objectives.

2.

Manage your transportation spend. Though other supply chain functions may seem more glamorous, transportation represents the major expense for virtually all companies. Manage it wisely.

3.

Develop expertise in global business. In today’s global economy, supply chain managers must familiarize themselves with customs rules, cultures, and currencies of countries around the world.

4.

Look for logistics service providers that add value. The outsourcing of logistics services continues to increase, and justifiably so: Contracting with a qualified logistics service provider (LSP) can be an extremely effective method of managing the supply chain. Just make sure you select your partners based on their ability to add value to the process, not just on cost.

Note: For an LSP, it is also critical to manage relationships effectively and ensure that you are adding value to the clients’ supply chain processes.

5.

Create visibility into all supply chain activities. Order status, inventory availability, shipments in transit, and other information should be visible on demand regardless of which partner is involved. The pipeline must be visible from beginning to end.

6.

Discourage manual information gathering and management processes. In providing visibility and managing other aspects of the supply chain, use the latest technology wherever possible, including the Internet where practical.

7.

Use inventory as a tool and manage it effectively. While global shipments may extend the supply chain, effective visibility into, and management of, inventory will help offset the longer transit times and facilitate the placement of inventory where it is needed at the time it is required.

8.

Establish key performance indicators (KPIs) and measure supply chain performance. Set goals and measure your operation’s performance against critical supply chain metrics. Keep the number of metrics to a reasonable level, measuring only those things that are important to the efficient management of the function.

9.

Maintain employee-friendly physical operations. A company’s distribution operations are only as good as its employees’ performance, customer service, and ability to move products in, out, and away from the facility efficiently and economically.

10.

Work Diligently to maintain good relationships with supply chain partners. Whether dealing with carriers, LSPs, or other partners, the importance of honest, open relationships cannot be overemphasized.

11.

Think green! I submit this to the readers of this column as an attempt that you might well improve on. If I missed anything that you would include, I would appreciate hearing from you.

 

 

 

 

 

 

 

 

 

 

 

 

 

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