Supply Chain Management: More talking points given in PRTM survey

"Just-in-time" inventory management does not have to be sacrificed in a more volatile marketplace

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Brad Householder, director of PRTM’s supply chain practice, said that a recent study suggests that the supply chain “risk/reward” component should not change in an era of heightened volatility.

“Our recent survey indicates that just-in-time strategies are not going to give way to just-in-case any time soon,” he said.

As part of the survey, PRTM found five “operational flexibility” levers that boost revenues and reduce supply chain costs:

*Supply Assurance/Proactive Capacity Management: More than 70 percent of respondents said that supply assurance management—ensuring that the necessary resources to satisfy customer orders are available—is the most important lever to boost operational flexibility. Yet nearly half of respondents have not fully implemented partnerships with key suppliers and one-third said they haven’t focused on it at all.

*Collaborative End-to-End Demand and Supply Planning: Supply chain leaders have established end-to-end, real-time and supply and demand planning with both key customers and suppliers. Collaborative forecasting, executive sales and operations planning and real-time demand planning are being implemented, on average, by more than 50 percent of the companies surveyed. However, more than 20 percent said their companies have not even started to execute these key end-to-end planning initiatives.

*Tighter Integration/Partner Supply Chain Architectures: All players in the global supply network must work together to execute agreed upon performance standards. In the last two years, more than 70 percent of respondents began establishing flexible production facilities, but more than one-third reported issues with key supplier architectures and nearly the same percentage found major gaps in their customers’ architecture.

*Tearing Down the Wall: Eliminating the divide between supply chain management and product development/engineering is essential for accelerating ramp-up and ramp-down of products into diverse customer markets. Half of those surveyed understand this and consequently have invested in higher development responsiveness. A “win-win” collaborative set-up includes joint consideration of product development, sales and supply chain requirements.

*Superior Collaboration and Flexibility: In today’s volatile environment, collaboration and flexibility are critical for success. Only 10 percent of respondents reported that they have developed these capabilities to the point where they can adapt their business models faster than the competition.

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About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

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