An agenda for executives

An agenda for executives

The following is a "Top 10" list of agenda items for logistics executives to use in generating measurable financial value from supply chain related initiatives. These include squeezing return on investment from technology, improving the flow of funds across the supply chain, and addressing ongoing areas such as collaboration, speed and security.

1. Start meaningful collaboration programs.

2. Identify and pursue ways to accelerate supply chain activity. Today's supply chains put a premium on speed. Companies that can respond faster to changing customer needs, can more flexibly adjust manufacturing and delivery cycles and can get new products and promotions to market faster than competitors achieve significant competitive advantage.

3. Improve financial supply chain operations. Supply chain management includes the flow of funds as well as products and information. How and when we pay and get paid is a critical factor in delivering shareholder value - and is often an overlooked area for supply chain improvement.

4. Collect and analyze supplier spend data on purchases from external suppliers. Purchased goods and services is the No. 1 expense category for most companies. Having a good handle on what is spent, by whom, for what purpose, from what suppliers, when, and how is basic procurement blocking and tackling - but is frequently missing today. A soon-to-be released CCMI survey is finding that obtaining visibility into spending details across multiple locations is the most frequently mentioned action to help move a company "up the curve" in procurement and supply management effectiveness.

5. Develop a supply chain security plan. The global supply chain environment has changed dramatically since Sept. 11, 2001, including an increased risk of future supply interruptions and a slew of new regulations and procedures for international shipping. Contingency planning is critical.

6. Align incentives and metrics for improved performance across the full supply chain. Traditional measurements and rewards are based entirely on internal activities and frequently focus only on individual "silos." To achieve true breakthrough performance, however, companies need to take a broader view, including aligning with key suppliers and customers on mutually agreed upon measures and establishing incentives and programs to pursue improvements and share in gains that are achieved.

7. Fix the "shelfware" problem in supply chain software. Billions have been invested in new supply chain software over the past several years. Yet only 20 percent of companies indicate that they can document a solid return on investment, according to a recent CCMI survey. Many other recent studies confirm that lack of full implementation and use of supply chain information technology systems is a widespread problem that is hampering further improvements in costs, inventory, customer service and other metrics.

8. Take a fresh look at the outsourcing performance of supply chain service providers. Nearly everyone uses third party logistics (3PL) providers in some part of the supply chain. Carriers, warehouses, forwarders, customs brokers, and a range of others are the grease that smoothes the flow of the supply chain. How well they perform has a direct effect on customer satisfaction and supply chain effectiveness, and provider performance can vary widely. For example, a recent CCMI-cosponsored study of international logistics operations found substantial variations among providers in service quality, and a range of emerging issues that need to be addressed.

9. Apply data mining and advanced analytical tools to better use available information. A tremendous amount of data is now available on point-of-sale purchases and shopping baskets, industrial production patterns, levels and locations of work-in-process and finished goods inventory, and a range of other supply chain operations. Considerable attention is being given to Customer Relationship Management (CRM) programs in many companies. Yet forecasting accuracy remains low for most companies, and expediting, production schedule changes, inventory write-downs, and other activities continue to represent major areas of frustration and inefficiency.

10. Investigate how wireless technologies such as RFID can add supply chain value. New "smart" technologies have been on the horizon for a number of years, but have not been widely adopted by industry. Recently, however, the cost of Radio Frequency Identification (RFID), smart tags and related technologies have decreased, and the capabilities for capturing and transmitting data have increased, opening up new avenues of supply chain applicability. Wal-Mart in particular has recently expressed substantial interest in these technologies - a sure sign that the rest of us need to pay attention.

Scott Elliff is president of Capital Consulting & Management Inc., a logistics consulting firm in Arlington, Va. He can be reached at (703) 370-2607 or at Supply Chain Beat will appear monthly, starting in February.