Supply chain planning is not merely about product manufacturing.
There are three complex phases in supply chains:
- Executing operations according to the flow of materials, finances, and information
- Developing new products and planning their transitions
- Executing after-sales processes like warranties and repairs
Statistics indicate about 50-70% of supply chain costs are incurred during the development stage in industrial enterprises. Developing a new product requires procurements that are strategically aligned with company objectives and goals. The lack of organizational integration creates huge obstacles in decisions about new product introduction (NPI).
When new products are launched to comply with changing customer requirements and market parameters, phasing out some current products becomes necessary. To plan a product’s end of life, costs related to the entire lifecycle matter. Moreover, the transition phase should ensure high service levels to customers for products near end of life. Businesses need to align and coordinate closely to manage product transitions, service management, and NPI.
Clearly, there are numerous complexities in the SCM process, right from supplier networks to product delivery to end-user, especially in global industries. In case of improper management, supply chains can end up getting slow and long. Different factors that create the complexities are:
- Metrics improperly aligned
- Global business activities, different time zones and cultures, variable demand characteristics, and a huge demands and supplies
- Structural isolations that put strategies in conflict with each other
- Multiple functional units and businesses running on interconnected and interdependent planning operations
- Diverse systems, technologies, and tools used in managing supply chain planning
- Spread of the supply base, its parts, and stock keeping units (SKU)
When organizations fail to manage the complex process of supply chain, inefficiencies in materials cause slow production, compromised quality, higher cost of transportation, higher inventory, and delivery lapses.
Moving to supply chain management models
Most leading businesses understand the need for an intelligent supply chain model. The model should have an end-to-end process that works on networking. The system needs to synchronize information and signal flow between production functions and suppliers.
Four significant initiatives have been identified to enable business transition to a new age of intelligent and healthy supply chain planning:
- Making the insights and analytics transparent and visible throughout the supply chain
- Installing highly sophisticated analytics to use the information and data for shaping enterprise decisions
- Aligning operations using new KPIs, advanced technologies, tools, organizational arrangements, and processes
- Providing an institutional structure to holistic risk management so that supply risks can be proactively managed with consistency in the supply chain
There is continuous change happening in the economic environment, where businesses have to evolve according to market needs to strive and thrive. Internet industrialization comes with increased complexity and a huge amount of content designed in different formats like video, audio, and data. Businesses need information with high effectiveness to make profitable business decisions. Industrial enterprises increasingly realize the need for transformation to experience huge benefits.
Significant profits do exist, but only when businesses can anticipate different challenges and work on them efficiently. Successful enterprises are finding streamlined SCM processes enabled by functional cloud modules and analytics. That is producing a long-lasting impact. They are generating higher revenues and easing the flow in the entire product lifecycle.