ANALYSIS
you make sure you have the right inventory in the right place?” Leading companies are moving to an anticipatory support model, managed by lead logistic service provider (LLP). In this model, the LLP provides flexible capability in maintaining inventory stock levels, has the visibility and data to anticipate what it will be moving, when and where, and has a robust logistics capacity to do so.
Figure 5
OLD AND NEW SUPPLY CHAIN VISIBILITY MODELS
Risk management and contingent capacity To improve their supply chain resiliency, leading FNM companies are adopting a risk management strategy for critical components of their supply chain-like transportation.“The key to managing risk is having a plan that’s automated, so when you do flip a switch, your backup plan goes into action,” explains Fromknecht of Emerson.“In our process, we have backup carriers identified for everything – at least three carriers for every lane. If one has an issue, we automatically go to carriers two, three and four.” In Thailand, when floods closed the major airport, Emerson re-routed its freight by ground and shifted its volume to Singapore. “The point is that these contingency plans were already set-up.” “You have to make supply chain risk management part of the daily operation. Having a disaster team alone doesn’t work. You have to have backup plans and already have those relationships with logistic service providers in place. Meanwhile, the supply chain optimisation team has to make sure everything is in the system, so we can flip it on when we need to. We have mode and supply chain optimisation teams in each region of the world.” Clearly, volatility in the global E&M sector has many faces, among them: Escalating competition from anywhere Fragmenting centres of demand Rapidly growing new markets Cost pressure Rising customer service expectations Changing business model As industry wrestles with the challenges and opportunities that these dynamics generate, E&M companies have the
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Source: Based on a presentation given by Richard Douglass, IBM, at the University of Maryland, 2013.
opportunity to adopt lessons learnt and best practices from other sectors-especially automotive. By collaborating with partners to implement other sectors key learnings, global E&M firms can, in effect, skip a generation of supply chain revolution and go directly to state-of-the-art. To do this, organisations must build capabilities, strategies and tactics that: Deliver agility, appropriate redundancy and contingent capacity that can be switched on at a moments notice Develop cost-effective solutions to
capitalise on market cooperating developments Improve visibility across the extended supply chain under control tower architecture Partner with suppliers, service providers and customers a continuous supply chain performance improvement Companies that make the most of their supply chains build resiliency, performance and profits. As Carol Burke from Unipart sums up,“Supply chain effectiveness is the invisible advantage.” -www.dhl.com