What is an End-to-End Supply Chain Analysis?
In past articles on TitaniumConsultingLLC.com, we have discussed the concept of a supply chain, what safety stock is and why you need it, what ABC/XYZ stratification is, and a number of other topics related to solving the supply chain problems in your small to mid-sized manufacturing or distribution operation, improving processes, and ultimately, increasing your cash flow.
Another topic that we have discussed a number of times is the idea of an end-to-end supply chain analysis. You may operate a very competitive and profitable business, but if you have not had a professional conduct a full analysis of your supply chain, then you could be leaving money on the table.
What is an End-to-End Supply Chain Analysis?
The purpose of an end-to-end supply chain analysis is to consider the entire world of your supply chain and to identify problems to be solved, inefficiencies to be resolved, and processes to be developed or improved.
Creating a visual tool that allows all of your operation's leaders to see how long it takes for inventory to flow through your entire supply chain is also a benefit of our supply chain analysis. We can use this tool to identify the inventory velocity and to establish metrics in that category.
The effect of one decision on the rest of the operation should be considered, and an end-to-end supply chain analysis can identify when the effects were detrimental.
How is an End-to-End Supply Chain Analysis Conducted?
The first step would be to hold an initial on-site meeting to review the operation and the key process partners and to agree on an overall plan for the analysis, including the expected time frame.
The way that an analysis is conducted depends on the size and nature of the operation, and the initial meeting helps to identify these details. If you have a manufacturing operation, then the production planning processes will be a focus of attention. If you have a distribution operation, then the inventory planning processes will be a focus.
Other areas of the operation that would be a focus include sales and operations planning and forecasting; raw material planning; shipping and receiving; warehousing; yard management; purchasing, procurement, and contract management; and transportation.
One of the most important steps in conducting a supply chain analysis is mapping your supply chain. Having a visual tool available to you so that you can actually see the flow of information and material and the timeline of the entire process has proven to be invaluable to many business leaders.
A small operation up to $10M in annual sales can have a full analysis in about two days, depending on the nature of the operation and complexity of existing processes. A mid-sized operation up to $25M in annual sales may require closer to three or four days.
Some of the primary areas on which we focus include:
Transparency - Visibility of your inventory and your operation
Inventory - Ensuring the proper levels are established, to save money and improve performance
Sales & Operations Planning - Improving communication between departments and forecast accuracy
Technology - Available technology that can help the business to obtain an acceptable ROI
Once the analysis is complete, a report is created and then presented to the business leaders. This report includes problems that were identified, missing processes or those in need of improvement, and other opportunities to increase efficiency and improve cash flow. Armed with this report, the business leaders can then make the decision on how to proceed from there.
Why might you need an End-to-End Supply Chain Analysis?
There are times when business leaders need the objective feedback from a third party that will use facts and data to support their reporting. There are countless possible process gaps that a supply chain consultant can identify in your operation, and any one of these can have a direct effect on your bottom line and on your cash flow.
The full truck-load rate that you received from your transportation provider might sound like a great deal compared to your current LTL rate until you realize that your increased warehousing cost, slower cash flow, and increased risk of obsolescence might negate any savings.
Do you plan your production in long runs and find yourself always left with inventory that your customer won’t take? Do you find yourself constantly out of stock and asking your customer for another day or two? Does it always seem like your customer changes the order on you at the last minute? A safety stock program could optimize your inventory levels and improve your delivery timing to your customers.
Do you find your team continually looking for raw material that you thought you had in stock? A cycle counting process can improve your inventory accuracy and minimize the problem of never having in stock what you thought you had.
Do you spend a large amount of time spinning your wheels over parts or products that seem to be low volume or low importance? An ABC/XYZ stratification system can help you to focus your efforts on the parts or products that have the greatest impact to your bottom line.
Is there a disconnect between the sales team and the inventory planning team? Implementing a Sales & Operations Planning process can help to remove silos in your organization, foster a collaborative culture, improve forecast accuracy, and match up the supply with the demand.
Regardless of the size of your operation; whether you manufacture, distribute, or both; and how efficient your operation is, a full-scale, end-to-end supply chain analysis can help to uncover inefficiencies, improve processes, and free up cash flow. Contact us to learn about what options are available to have an end-to-end supply chain analysis conducted of your operation.
Brad Couvillon, CPIM, CSCP
Lean Six Sigma Black Belt
Founder, Titanium Consulting, LLC