What must future supply chain management be capable of?

June 28, 2021 | Supply Chain Network Management

Innovative supply chains are characterized by strong customer orientation, excellent performance, and high flexibility and agility in the face of new market and environmental requirements. If the supply chain is developed from a cost factor to a success factor, it can become an integral part of the competitive strategy.

Mr. Spiess, how do you define supply chain network management?

The original notion of a supply chain was that of a chain where a company sits in the middle and looks backwards to suppliers and forwards to customers. Today, the world is much more complex. There are no linear chains. Rather, they are interconnections that are linked across multiple dimensions. This multidimensional network with its various manifestations has to be coordinated and managed. Global end-to-end starts from the end customer and goes back through all of the distribution stages to the raw material. And in simultaneously managed supply chains. All of this has to be overseen and orchestrated by supply chain network management.

What are the most important elements in supply chain network management?

Well, there are companies that have, for example, 40 plants in different divisions on different continents. Add to that thousands of suppliers and hundreds of sales channels and customers. To maintain an overview of this complexity, transparency and structure are essential. What does the single footprint look like? Is the plant a factory, a distribution center, a supplier plant, or a distribution plant? Understanding and structuring these footprints is an important element in the supply chain network. Another element is the network management itself. How do you lead the network? Who has which role at which location? How do you lead on site? How do you control globally? Keywords: sales & operations planning. Where do demand figures come from? How are they transferred to the plants and what happens to them there? These plans are often made only at the site, but not end-to-end across the entire value chain. Information management is therefore of central importance. How are the IT systems linked with each other? Which key figures are used, how are the flows of value and goods made visible? And how is the corresponding information collected and visualized?

To summarize: The four most important elements in SCM are the network, the management system, planning and information management.

What are the greatest challenges when it comes to managing an international value network?

You have to understand the overall construct and the interaction of the individual parts. Where are the critical points in your network, what do you need to keep an eye on? The challenge is understanding the entire network and making it transparent. The question of who does what, where and when also has a lot to do with good communication. That, too, is anything but a matter of course.

How do you create good supplier relationships? On the one hand, it is all about low prices, on the other hand, however, you want reliable and flexible delivery conditions.

For many companies, calculating the “total cost of ownership” is not part of their end-to-end consideration and thus does not offer much meaningful information. Demand planning often produces strange results because an overall view is lacking. Components are procured to fill a warehouse somewhere in the world instead of serving end consumers according to their needs. You have to establish efficient planning systems in order to optimize the entire value creation system across the board, instead of negotiating a few percentage points over and over again through big purchases.

Moderator

Dr. Thilo Greshake, Partner Automotive, STAUFEN.AG

With a doctorate in mechanical engineering and more than 15 years of international consulting experience in lean development, engineering excellence and quality management, Dr. Thilo Greshake has been responsible for the Automotive division at Staufen AG since 2017.