Smart processes are crucial for a well-functioning supply chain. It is important that processes are aligned and that departments work well together. In practice, this is often recalcitrant. Klaas Brandse, process specialist within BLMC's Supply Chain Specialists team, provides insight into the art called process optimisation.
The supply chain is all about running business processes as well as possible. Business processes that are necessary to make a final product from raw material with the aim of realising as much value as possible for the customer. This involves various processes as the overview below shows, ranging from customer relationship management to order fulfilment and manufacturing flow management.
Cross-functional processes
All these business processes require the support of different departments. Take, for example, the order fulfilment process, which involves more than just 'filling' orders. This process involves all the activities needed to identify customer requirements and create a network that allows the company to best fulfil customer needs while minimising overall costs. So this is not just a logistics process, but a cross-functional one that also requires coordination with suppliers and customers. The better customers can specify what they want, the more likely suppliers are to deliver their goods on time.
Another example is manufacturing flow management, which covers all activities required to move products through factories and achieve sufficient flexibility in production processes. Flexibility in this case means the ability to make a wide variety of products within certain time limits at the lowest possible cost. Again, this requires planning and execution of production processes considering activities that take place outside the four factory walls. How quickly can production switch when customers change their orders?
Figure 1: The Supply Chain Business Process Model
Hiccups in processes
Successful supply chain management requires that all these processes are aligned around each other. For this, the various functions within the company need to work together. This is far from a given. Time and again, functions such as sales, logistics, production and purchasing hardly talk to each other, if at all. Each function mainly deals with its own sub-processes and does not look beyond the walls of the department, resulting in hiccups in the supply chain processes.
How do we solve this? By going back to basics. Map out how processes should ideally run. Investigate which functions should be involved and indicate at what times information should be exchanged between the different departments. The trick is to then organise that and adjust operations accordingly. This approach forms one of the nine building blocks of BLMC's Supply Chain Optimisation Model (SCOMB).
Lean or agile
So for supply chain control to work well, supply chain managers need to know how to set up and improve integrated, cross-functional processes. For this, various techniques such as Lean (Six Sigma) and Agile techniques are available to them. Among other things, Lean helps to reduce waste, allowing smarter production at lower costs. Agile is a technique to speed up development processes, for example, so that products can be brought to market earlier.
Which approach is preferable depends in part on supply chain analysis and strategy, two other building blocks of the SCOMB model. Is the strategy focused on product leadership or rather on customer intimacy or operational excellence? Only those who know what supply chain is needed and what emphases should be placed in it can work towards an efficient and effective alignment of processes and their associated functions.
