Supply Chain Costs

What is Supply Chain Management?

Supply Chain Management gives you the opportunity to become better. The reason: Work within a firm is organized into functional processes- that is to say, department-oriented, whose goals can conflict with the fulfillment of customer orders. This means that friction losses are inevitable. Supply Chain Management bridges this gap. It refers to the holistic process-oriented method for the fulfillment of a customer order, from receipt to delivery, all necessary activities and intermediate steps included. That saves you time and money. You're committed to implementing supply chain management that identifies and eliminates potential weaknesses. And we're happy to help with that.

Which areas are a part of the Supply Chain?

When you make Supply Chain Management a focus, you are switching from a function-oriented to a process-oriented order fulfillment process.  For our customers, we build an order fulfillment process with the highest possible degree of standardization, geared towards adding value to your company. The key to success is to make sure all affected areas are involved when defining the fulfillment process. From our point of view, these include:

With a common focus on a cross-functional process, you avoid conflicting goals between these areas. Only when all areas align their activities with the cross-functional process can you leverage room for improvement and achieve sustainable competitive advantages. 

The integration of all areas into the supply chain also allows:

• the construction of an effective organization that the company, product, and market needs. 
• the potential consideration of throughput times, product and material availability, product development costs, inventories, and the flow of goods and information.
• the evaluation of existing performance indicators in relation to the overall order fulfillment process.
• benchmarking, i.e. the use of external know-how in the implementation of identified potentials.
• the initiation of change management processes and the improvement of strategic and tactical business planning.
• the audit of management processes' strengths and weaknesses.
• the promotion of a willingness for internal innovation and innovation speed.

How are unnecessary costs incurred in supply chain organizations?

In global markets, tough competition and crowding out principles are the rule. Effective and efficient supply chain management helps you assert yourself. We help you identify or eliminate possible deficits or cost drivers in your supply chain. Here are some examples:

1. A lack of competence to assess organization and process statuses objectively, independently, and with regard to supply chain effectiveness and efficiency. Even in modern organizations, departments are often competing with one another. Solving this requires education and persuasion, so that the focus is on a common and holistic value.
   
   
2. Insufficient coupling and networking of relevant information logistics, departmental, and administrative processes. It's not enough for the separate departments in a supply chain to work together on key functions. Departments in which real information and knowledge bearers sit must be identified. Only when these information and knowledge bearers collaborate can a company benefit from coupled competence.
   
   
3. A desire for everything at once instead of implementing recognized potentials step-by-step according to their priority. We help you develop clear recommendations for action, along with short, medium, and long-term goals. This way, your organization can gradually develop into a successful supply chain organization.
   
   
4. Improper forecasts for the implementation of integrated supply chain structures. In the lead-up to the implementation, you'll need a cost estimate that includes target values, such as a ROI or the amortization period. We calculate your business cases against a realistic background.
   
   
5. Inconsistent, missing, or lacking metrics on the performance of the supply chain organization. In order to be able to continuously monitor supply chain effectiveness and efficiency, it's essential to develop a comprehensive KPI system alongside a cost estimate. If the parameters move outside of the define limits, there's a need for action.
   
   
6. Immature outsourced services. When it comes to your supply chain, you should look on both sides of your business- your suppliers and your sales. Suppliers in particular can make things much easier. This is where enormous potential lies.
   
   
7. Deficits are tolerated and ignored. It's always better to eliminate these. 

What should you look for when starting a supply chain project?

If you want to introduce supply chain management in your company, it's time to take a closer look. First and foremost, it's necessary to consider your previous Order Fulfillment Process (OFP) and its subprocesses. Basically, these include:

• Process Mapping and Benchmarking your current Order Fulfillment Process and visualization of the optimization potentials
  
  
• Distribution Processes (distribution channels, routes, warehouse structure, lead times, commissioning processes, freight management, handling processes)
  
  
• Sales Planning (sales forecasts, order entry process, customer order checks, goods availability checks, scheduling processes)
  
  
• Production Control Processes (production planning process, capacity management, production structures, variant and customer connection points, product production processes, set-up processes, replenishment processes)
  
  
• Supply Processes (material supply, material planning, intralogistics, material flow analysis, demand planning processes, sourcing processes, freight management, inventory control)
  
  
• Inventory Management  (raw, semi-finished, and finished goods, variant and model maintenance, obsolescence management, dynamic range modeling)
  
  
• Communications Processes (information flows, responsibilities, IT systems, escalation management, KPI systems)

For each of our clients, we focus on every area in detail to make individual analysis areas supplemented by consequences of optimization for each.

For clarification purposes, here is an example for the area of Process Mapping. We have listed six individual analysis areas and the benefits of optimization for each, with respect to a willingness for change by employees and an estimation of effort for implementation.

You can find out how to update your supply chain by downloading our white paper on this page.

If you'd like to find out more about the stages of a supply chain project and methodical approaches, we'd love to share our knowledge with you. Please reach out to using our Contact page.