What is Supply Chain?
What is supply chain, and why is it so important to ensure that your business's supply chain is properly managed?
Let's find out.
What is Supply Chain?
The processes of procuring or acquiring physical materials or products, manufacturing or producing items to be sold, and all methods of inventory storage and transportation in between are all supply chain processes.
If you make, build, and/or sell a product, then you have a supply chain.
Let’s say you build homes. Your lumber is likely sourced from a wholesaler or distributor, who acquires it from a sawmill, who acquires it from a logger.
All of these suppliers are links in your supply chain. Your entire internal operation that works to procure your products, to stock them, and control the inventory is part of your supply chain.
Right place. Right quality. Right quantity. Right price. Right time. These are all important factors to consider in your supply chain, and they are all intertwined. You cannot modify one without affecting some or all of the others.
Considerations to Make
Many times, we consider only one or a few of the facets of our supply chain when making large business decisions or when identifying opportunities to improve efficiency and reduce cost. But tweaking one link in our supply chain can have a ripple effect on the rest of our supply chain.
For example, let’s say that you currently ship your raw material from your supplier via LTL — Less-Than-Truckload — transportation. This way, you only procure the quantity that you need and don’t have to invest a significant amount of money into inventory all at once.
You realize that shipping a full truckload at a time — FTL — could save you hundreds or thousands of dollars per truckload in transportation cost. But, there are other considerations to be made before making such a large decision as this.
If you only need a few pallets of inventory at a time, then what will you do with the rest of your inventory? Will you need to build or rent a larger warehouse? If building, there will be additional overhead associated with electricity, water, insurance, etc. not to mention potentially additional personnel needed to manage and operate the larger warehouse. Are your raw materials combustible or otherwise perishable? Fire retardant is not cheap. Neither is the cost of discarding obsolete or unserviceable materials that has outlived its shelf-life.
Who will you pay to count and manage your inventory? Who is responsible for ensuring that the oldest material is used before the newer material? What happens if your next shipment arrives early? Do you have warehouse space for it?
We haven’t even started much of the financial discussion. You now have additional capital tied up in inventory, meaning you have less cash on hand and also meaning you have increased your investment in your business with likely no additional revenue to show for it.
These are all considerations that must be taken when making decisions related to your supply chain. If you are not in the position to hire a full-time employee to manage the daily operation of your supply chain along with all of the additional employees that are needed to identity opportunities, plan improvement projects, monitor the projects, and bring the projects to completion, then considering a consultant to help with this may be the best choice.
You can hire a consultant at any time and can complete your business with them at any time. If you only need quick feedback on a few decisions, then you can hire a consultant for that. If you need someone to make a major change in your supply chain, then a consultant can help with that. If you need someone to step in and temporarily manage your supply chain while you are in the process of hiring and training the right person, then a consultant can help with that.
While business management consultants are excellent choices for managing your overall business processes, determining if you have the right headcount for your needs, and for helping to set your business up for a lucrative sale, a supply chain consultant can delve into the side of your business that directly relates to that realm, analyzing your end-to-end supply chain operation, identifying improvement opportunities, and executing projects to reap the benefits.
The Titanium Way
Titanium Consulting, LLC offers a variety of supply chain and logistics consulting services that are tailor-made for a business with varying needs.
Advisory Services: If you have occasional questions or need feedback on whether or not you are moving in the right direction, then our Advisory Services may be the right choice. Priced as a monthly retainer, we provide consulting services over the phone to bounce ideas off of each other, to answer questions, and to explain processes and next steps.
Daily Management: If you would like an assessment of your supply chain and would like someone to launch a fact-finding mission to identify opportunities for improvement, or if you need someone to temporarily manage a facet of or your entire supply chain, then our Daily Management option is an excellent choice. Priced as a daily rate, we perform the agreed-upon services on-site at your location.
Project Management: If we identify an improvement opportunity that can be implemented as a project, then the Project Management option, with a pre-determined scope and timeline, is the obvious choice. With pricing based on the value obtained, this is an excellent opportunity to reap the benefits of a continuous improvement mindset with minimal risk to your business.
Titanium Consulting, LLC is physically located in Greenville, South Carolina and is a proud investor in the Greenville Chamber of Commerce. We operate in not only all 50 states but also across the globe.
Regardless of your level of understanding of supply chain practices and concepts and regardless of the needs of your particular supply chain, Titanium Consulting, LLC has an option for you that can be molded to fit your operation. Contact us for more information or to schedule your free phone consultation today.
Brad Couvillon, CPIM, CSCP
Lean Six Sigma Black Belt
Founder, Titanium Consulting, LLC