The Bolts and Nuts About Logistics And Supply Chain Management
“Supply Chain cannot tolerate even 24 hours of disruption. So if you lose your place in supply chain because of wild behavior you could lose a lot. It would be like pouring cement down one of your oil wells” –Thomas Friedman
At first glance, you may wonder what has Thomas Friedman’s quote to do with 21st century business operations, the answer is: it’s the supply chain management.
Starting with raw material such as iron ore in the ground that makes a fastener, through to the latest air cooled heat exchanges rolling off the production line; this is a huge supply chain, and describing it would be a colossal task. But consider a condensed version of this and look at a humble nut and bolt.
Take the supplier of fasteners and fixings to the manufacturer of air-cooled heat exchanges for the oil and gas industry, which would clearly show that it is not supplying the old fashioned fasteners, but it is supplying high quality nuts, bolts, springs and associated components; small yet vitally important elements which play a key part in the construction of the air-cooled heat exchanges.
But how does this manufacturer of these highly technical products ensure the smooth running of its supply chain with all the complexities and challenges of purchasing, warehousing, transportation, customer service, supply and demand planning?
Managing supply chain involves dealing with lots of variables: people, activities, information and resources, and a strict checking and processing system which help ensure a supply of consistently high-quality product, that’s competitively priced, delivered on-time and with effective and efficient customer service.
Are we Performance Oriented?
What is also critical is the continuous improvement in meeting industry standards, requiring downstream and upstream companies to develop and implement a ‘Continuous Sustainable Improvement Plan’ and sustain consistently high standards on the delivery and quality performance.
One way to avoid any supply chain issues, is by monitoring the performance of key suppliers in terms of quality, delivery and progressing response time. Critical to this process is to carry out supplier risk assessments and development plans annually.
Information Technology systems play a key role in the 21st century supply chain. A fully integrated contract management and enquiry system tracks the supply of product direct to the point of use on the client’s premises, and the OCR Scanning system provides document storage and instant retrieval, be it a part number, purchase order or product drawing.
Are you resilient in the perils of a Crisis?
Another important element is contingency planning on how you would resolve issue in a “Black Swan” situation. Supply Chain Risk and resilience are fundamentals and are there alternatives for disaster recovery ensuring continuous supply of materials?
The very existence of attention to details, commitment to clients and ability to forward think and plan for any eventuality – a crucial skill when managing the complexities and challenges of today’s supply chain, would justify Thomas Friedman’s quotation.
And as what Napoleon Bonaparte said “The amateurs discuss tactics: the professionals discuss logistics”
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