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Key Components for an effective supply chain strategy

Key Components for an effective supply chain strategy  A new perspective As companies start to move toward integrated procurement ... thumbnail 1 summary

Key Components for an effective supply chain strategy

 A new perspective
As companies start to move toward integrated procurement and supply chain management, it is apparent that major changes are needed in traditional ways of looking at and solving supply problems. Supply chain integration and management, by its nature, is meant to look at the supply chain from a CEO's point of view. For instance, opportunities start to be seen in terms of shortening product development time, reducing cost, taking time out of the system, responding more flexibly and quickly to customer wants. But while the phrases tend to roll off the tongue, recognizing and developing such opportunities are complex. Most organizations need to get their arms around the entire supply chain. “Entire" usually means going out two or three levels into the end customer base or back two to four levels into the supply base. In most cases effective
integration and management of the supply chain involves linking all the internal processes from new product development to customer order performance. But there are some formidable obstacles to understanding supply chain integration. An important one is the philosophy tends to build on the principles of partnering and alliances, but is considerably more complex and comprehensive. Customer, company, and supplier participation is typically continuous throughout a product life cycle. As integrated supply chains are viewed by their champions, firms in the future will compete as integrated supply chains that seek to achieve competitive advantage. Integration will follow processes rather than tasks, and in many cases the integration will exist across multiple firms. Considering how few firms have even integrated within their own four walls, this could be a very difficult goal to achieve.

We find the following characteristics in a Stage III inventory organization.

  • Generic inventory control procedures maintained.
  • Formal training program on inventory control conducted.
  • Regular cycle counting program in place.
  • Access to inventory records limited to several individuals.
  • Standard inventory system used across all facilities.
  • Current on-hand inventory available by SKU in dollars and units for each facility.
  • Inventory information available on-line and real time.
  • Inventory turns greater than industry average for category and product.
  • Write-offs and obsolescence tracked and managed closely. 
  • Shrinkage and loss rates actively managed at all facilities.

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