Entrepreneurship Success: Supply Chain Management (II) – By: Musbahu El Yakub

ILast week we introduced what supply chain management is. We have discussed its benefits, elements as well as some factors to consider when developing a supply chain strategy. Today we are going to start discussions on the links between strategy, plan and procedures in supply chain management.

With good breeding management systems, a catfish keeper may need about four months for the fry to reach a weight of 2 kg each. The average monthly demand may be, say, 2,000 2 kg fish during ‘off-peak periods’. But demand increases during the Muslim fasting month of Ramadan as well as during the Christmas and New Year festivities. Additionally, wedding ceremonies peak in July and August as well as November and December, increasing the demand for catfish.

In addition to the “established” demand during off-peak periods, the contractor will need to estimate what the likely demand will be during the Ramadan, Christmas and New Year festivities as well as the two annual peak wedding periods. With this, the contractor will need to develop a plan for the supply of fry from the hatchery so that the fish reach the target weight of 2 kg in four months as well as an uninterrupted supply of food and medicine. To achieve this in the most transparent way possible, the entrepreneur will need a supply chain strategy, a supply chain plan and supply chain procedures.

Supply Chain Strategy: We have previously discussed planning as one of the elements of an effective supply chain management practice. However, planning cannot be done without first developing a strategy around which a plan should revolve.

The supply chain strategy is the roadmap you need to develop to help you source raw materials and other supplies, establish an efficient inbound and outbound delivery logistics system, and streamline the production of your goods and services. The overarching goal of a supply chain strategy is to maximize value at every node and stage of sourcing, sourcing, production, and delivery. A supply chain strategy should ensure that optimization, efficiency, effectiveness and resilience are built into the supply chain system. In addition to general business objectives, additional factors to consider in developing the supply chain strategy are:

• External industry realities such as technology, processes and practices: this should answer questions such as what technologies do we have or should we have that we can deploy or leverage? What are common practices and what can we do better?

•Internal company value proposition: This should answer questions such as what are our value propositions to our customers and how can we deepen and expand them? In other words, what other ways can we extract more value?

•Internal decision-making processes: Internal decision-making processes are the executive components of your strategy. A great strategy and plan with poor execution comes to nothing.

In the past, supply chains were designed to be lean to minimize waste while making minimal investment in working assets such as inventory. Dell Computers’ on-time delivery system in the 1990s allowed customers to “build” their computers and place their orders online. With orders placed, a set of triggers are triggered to ensure parts and components arrive in time to assemble the computer and fulfill the order. With COVID-19 experiences now, however, companies are opting for resilience over efficiency in their supply chain systems.

To reduce vulnerabilities in your supply chain, you should consider the following:

1.Ensure you have safety or buffer stock to absorb the impact of unforeseen delays and/or increases in product demand. A security buffer should be incorporated not only for inventory, but also for time and capacity.

2.Standardizing and streamlining your processes and operations will help you gain efficiencies through consistency and eliminating waste.

3. Diversifying your supply, production and logistics networks will help you absorb unforeseen disappointments from your partners.

4. If you can afford it, invest in building demand forecasting capability that will help you gauge demand for materials in advance. Forecasting tools are available to help you improve your lead times, reduce costs and improve customer satisfaction.

A resilient supply chain strategy will help you realize your value proposition, improve productivity, manage risk and reduce costs.

Supply chain planning: Once you have developed your supply chain strategy, the next critical responsibility is supply chain planning. Supply chain planning is the process of demand forecasting, supply planning and production planning to meet demand and achieve business goals. Supply chain planning has several benefits such as reducing operating costs, eliminating delivery delays and production interruptions, streamlining operations, etc. The components of supply chain planning are:

• Sales planning: This involves forecasting demand and planning all sales activities. The more accurately you can forecast the demand for your products, the better you can plan to meet it.

•Supply forecast: The objective of demand forecasting is to be able to plan your supplies to have optimal stock levels and at the best possible cost.

•Production planning: The goal of your production planning is to produce only what is needed, maintain optimal inventory levels, eliminate waste and reduce costs.

• Operations planning: Operations planning is concerned with the overall coordination of cross-functional activities. This is where sales and marketing, production and all other operational units meet to ensure a perfect fit of all activities in all departments and with the sole purpose of meeting customer demands and business objectives. ‘business.

Today we discussed developing a supply chain strategy and plan. Next week, we’ll cover supply chain procedures and supplier relationship management.

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