If you ask 5 different people about what is Supply Chain Management (SCM) you will very likely get more than 5 different answers.
Why is that? Because every company defines SCM in a different way.
It starts with Supply Chain Engineering: every component within SCM needs a defined model: how it will be packed, how it will be transported, when it needs to arrive, what is the inbound material flow and how it will be controlled. This is valid as well for the material flow from a supplier to the own manufacturing unit or finished products to the customer.
Another important material flow is in a manufacturing plant or trading hub – from goods reception to the warehouse and then to the manufacturing line. A finished product also could be stored before it leaves to the customer. Which partners help to move the material in-plant or outside the plants or warehouses? How do their rate card models look like? How does the global warehouse and manufacturing footprint look like to achieve the lowest Total Cost of Ownership to serve the customers on time? Where to procure parts and how many? Which Sourcing strategy is the best for a company?
A relatively new but important part of Supply Chain Engineering is sustainability. How to reduce carbon footprint? Where to use alternative technologies? What can SCM do for a better planet?
Every step in SCM needs also the correct system environment. They have to be well connected with each other and also to other corresponding systems.
Some of the needed systems can be found in an Enterprise Resource Planning (ERP) System. An ERP System is the heart of the operations in company. It includes besides other departments systems normally some production planning and material planning capabilities, including inventory management. Important is that every business process needs specialties where some parts of ERP are strong or do not fit to the company needs.
Complex processes need the deployment of an Sales and Operations Planning System (S&OP) where all restrictions of Manufacturing, Procurement and Logistics are captured and the strategic / tactical production plan will be generated.
Even small warehouses need a Warehouse Management System (WMS /eWM) where all material movements in and from the warehouse are captured and usually manufacturing companies need a Manufacturing Execution System (MES).
The result of a Material Requirement Planning (MRP) in the ERP system has to be sent to external parties. Available are in- or external portals, where ERP systems are connected, or the data exchange happens with Electronic data interchange (EDI).
For strategic, tactical and operative transports a Transport Management system (TMS) captures, manages and controls the inbound and outbound material flows with the carriers. Very related to TMS and the finance system there is the customs systems where international trade and value adding activities are a part of. When the trucks are heading to the plant very often they need to connect with a Yard Management System (YMS).
This list is not complete. The market for Systems is almost infinite - there are many more systems available on the market which could be beneficial for a company and a business case. Let’s talk about your systems and we find out where possibly could be a gap.
The Operative Supply Chain Management is where the goods are moved from one place to another – some people say, where it actually “rocks” and you literally smell the operations.
It starts with inbound transports which is usually executed by a carrier. In times like today some companies think about re-integration of transport capacities which makes really sense in every regular round-trio or milk-run. Automatization in transports where soon level 4 autonomous driven vehicles will be available and change the world of transportation quite fast.
The in-plant supply chain is similar, just the vehicles are usually smaller and the delivery frequencies are higher. Still material needs to be transported, like from goods receipt to warehouse, directly to the manufacturing place or from warehouse to a supermarket – in manufacturing companies there will be of course the production supply. AGV’s connected with a Warehouse Management or Manufacturing Execution System will take care about on-time delivery in a plant.
Then finished goods will be delivered to customers within in- or external distribution networks.
A plan is as long valid until it has changed – a good planning avoids changing plans because they are adaptable and flexible. That is part of Supply Chain Planning – the planning flow is from the customer to the supplier, just opposite to the material flow.
Firstly, the Integrated Business Planning starts where all functions of a company, like Commercial, Manufacturing, Finance, Supply Chain etc. make a plan in a Monthly S&OP cycle how much needs to be delivered and produced considering all external demand, forecast and restriction. This plan will be detailed to a production plan – which is a daily, hourly or even sequenced plan. The production plan (amongst other parameters) is then input for forecast and orders to the in- and external suppliers. Here the material planning takes care about managing suppliers providing the supply material on time. Once the suppliers are almost ready to ship, the tactical and operative Transport Planning starts.
For all of this, risks in the Supply Chain have to be considered. No matter if supplier risks, material risks, transportation risks or even onsite risks have to be evaluated with a valid mitigation plan. There is always a trade-off between calculated risks which you are ready to take versus an inventory you need to invest to cover these risks. This is why also an inventory policy is needed.
MWI interim managers are experienced and competent with a special focus on people, processes and pragmatism. They are among the top managers in their field and have an appealing personality. As independent partners, they have international management experience at the first and second management level, are experienced project managers or proven experts. We are looking for such personalities for our network. We stand for a cooperative partnership. Send us your profile to be part of the MWI candidate pool. After submitting your application, we will contact you for a potential accreditation.
