The need for efficiencies in Supply Chain is constant…but in most companies the easy wins were implemented years ago.
So where do we go next?
As Practice Manager for EO Executives Procurement & Supply Chain division, I am having many conversations with leading Procurement and Supply Chain experts around what actions they are taking to alleviate unnecessary spend and overcome bottlenecks. For many businesses, a common trend and basic approach seems to be buy less, get lower prices and buy a lower spec model. But how do you get to the end goal of true operational improvements?
To explore this further and establish a solution for businesses wanting to reduce spend but still create a high-quality product, I wanted to share a few tips on how businesses can make effective, strategic and outcome focused decisions. Decisions that will cut back, save costs and implement processes that will lead to increased revenue and success of the business.
So, where can businesses make most efficiencies?
1. Simplification and Standardisation (of the equipment and processes)
Repeatability and clarity are key to efficient scalable operations thriving.
The concepts of simplification and standardisation are closely interrelated and both lead to interchangeability. For many organisations, both concepts have proven to be highly effective in cutting costs, reducing spend and minimising unnecessary activity.
In terms of controls and the final product, if implemented well, both concepts can simplify processes and improve the quality of products before they go to market. These factors can lead to higher efficiency in production.
Standardisation is an integral part of the process because it ensures consistency and quality of the product. It is also beneficial for ensuring the correct varieties and grades of products are retained throughout the manufacturing process.
Why implement a standardisation process? The purpose of standardisation is, on one hand, efficiency and economy in the use of human effort, but it is also important for economising cost when it comes to purchasing a variety of materials and increasing stock quantity, resulting in increased turnover but at a lower cost.
2. Apply new digital technologies i.e. analysis of big data, remote sensing etc.
Adopting new technologies is fundamental for moving a business forward and meeting customer demand, but this can come with a heavy price tag. The rise of digital also means that organisations can no longer ignore the need for technical advancement in the work place, and need to be prepared to face the consequences that come with the transition.
If you are not looking at digitalisation, you run the serious risk of being outperformed by the competition. So, be brave and take the leap!
It's a matter of knowing where to look, and how to embrace the changes. For those working in companies with inspired and forward-thinking management, there will be a lot of support on the journey. If your company's management is less than inspired or mired in calcified thinking, it may be time to start thinking more entrepreneurial.
Digital is remaking the workforce and in companies with enlightened and forward-thinking management, it presents new opportunities for career growth.
3. Getting back to basics and re-thinking your process.
It is all very well in trying to innovate and invest in new technologies, but before this can be done you need to get the basic processes and procedures in place. For supply chain and purchasing there is an enormous amount of value in getting the basics right. For example, you can generate:
- Well-developed category strategies that are executed accordingly and will help grow sales and profit by maximising synergies and minimising unproductive competition.
- Good demand management that will capture all work proposals in one place, guide them through a multistage governance process, help customers make decisions regarding proposals to approve and will track the progress on project execution until the work is completed.
- Excellent negotiation skills that are vital to ensure personal and organisational success. To achieve a desirable outcome, it may be useful to follow a structured approach to negotiation which should include preparation, discussion, clarification of goals, negotiate towards a win-win outcome, agreement and then implementation of a course of action.
- Capability building and career progression that are vitally important to keep your top talent engaged in the organisation. Employees are constantly being judged on their capabilities and bench marked against their peers and the goalposts in the workplace keep moving. This might be because of new technology, customer demand, legislation or simply because there is a new chief executive with a different vision.
Some organisations are good at providing learning opportunities when they can see a direct benefit to the organisation. Staff who undertake learning activities are more able to adapt to the changing landscapes of an organisation. Those who demonstrate that they are conscientious about their personal development, are more than likely to be highly motivated and engaged. This openness to learning suggests they are flexible, adaptable and will bring a continuous improvement ethos to the workplace.
If you’re looking to understand more around how your business can elevate spend or how to implement the right team to do so, please feel free to contact me at: firstname.lastname@example.org.
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