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Self – Assessment in the supply chain

Self – Assessment in the supply chain A key factor in setting up an organizational strategy is development of the ability to do a str... thumbnail 1 summary

Self – Assessment in the supply chain

A key factor in setting up an organizational strategy is development of the ability to do a strategic self assessment--internally and also with key customers and suppliers. Self-assessments need to point up where the members of the supply chain are strong, where they fall in the middle, and where they are poor. Self-assessment is especially important for the driving company in the supply chain. One of the key elements about self assessment is that it should be focused on strategy and practice, as well as on objective performance indicators. The point to remember is - it is the strategies and practices that need to change-- you can't change end results without strategy and process changes. The self-assessment clearly has to be strategy practice focused combined with performance measurements and an understanding of which strategies and practices are world class. Generally, the following areas should be assessed:

  • Organizational Structure
  • Core Competencies versus Outsourcing
  • Performance Measurement
  • Cost Management
  • Human Resources
  • Information Technology
  • Communications, Trust Building, Management
  • New Product Creation
  • Pull System Capabilities
  • Logistics Ability

The following questions should be reviewed during the Logistics Assessment.

1. Given today’s operating environment, are optimal results being achieved in logistics across the
2. How will changes in other functional activities (purchasing, inventory management, distribution 
    operations, and network) affect logistics cost?
3. Are overall logistics costs optimal?
4. What is the appropriate cost allocation method for logistics in an integrated Supply Chain?
5. Are existing support systems and controls appropriate to meet the future logistics goals?
6. What is the appropriate role of logistics management?
7. Does outsourcing logistics activities offer an opportunity for improvement?

Logistics Assessment Approach
Create a Performance Baseline
Review/Assess the following areas:
Transportation Operations
Logistics Customer Requirements Definition
Inventory Management
Demand Planning
Manufacturing Scheduling
Materials Control
Physical inventory movement
Review each area for improvement possibilities.

After your assessment, consider these steps:

  • Determine and finalize priorities among opportunities
  • Define change management needs
  • Define short-term and long-term systems gaps
–Available, not used
–Available, not integrated
–Not available
  • Develop process to address organization structure issues
  • Establish transition plan
–Performance Measures
  • Integrate and modify overall program.

The following project plan should be considered for the assessment.

1. Organize Project
2. Communicate Project
3. Establish performance baseline
4. Define customer logistics requirements
5. Conduct diagnostic reviews
6. Identify Opportunities
7. Develop improvement program
8. Develop action plans
(Total elapsed time depends upon the size of the initiative.)
Challenge sessions for each area

Opportunities should be broken down into 3 categories.

1. Quick hits – benefits begin to be realized within 6 months.
2. Short-term – benefits begin to be realized within 12 months.
3. Long-term – benefits realized in greater than 12 months.

Define areas of opportunities according to:

Opportunity – definition area – purchasing etc.
Estimated value
Level of effort
Resource status
Additional needs
Key impact area
Customer service
Strategy fit
Finance performance.

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