Debottlenecking the Supply Chain
(This is a chapter in – The Supply Chain Revolution – book)
“You kind of want to manage it (inventory) like you’re in the dairy business. If it gets past its freshness date, you have a problem.” Tim Cook, Apple CEO.
In this book, Suman Sarkar of Three S Consulting tells how you can make sure your inventory is fresh and your supply chain is without the bottlenecks that can impede success. After years of adding new products, customers, and suppliers, a company’s supply chain eventually becomes unmanageable. It becomes a bottleneck–a garden hose so leaky that only a trickle of water emerges from its nozzle. As you fix one leak, water pours from another. The whole organization spends so much time applying patches that it doesn’t have time to think about the future. The way to fix the problem permanently is to simplify customer engagement, the planning processes, and communication with suppliers. In this book, Suman discusses how to fix supply chain bottlenecks with examples from leading companies.
The ideal supply chain primer for the time-pressed CEO or Government Executive.
— Richard Connelly, Hall of Fame, Former Budget leader, Energy Director, Defense Logistics Agency (Department of Defense, USA)
Brilliant, Clear and Simple Explanation of Supply Chain Transformation
— Atul Tripathi, Senior Director – Global Beverages Innovation & Development at Pepsico, USA
Demystifying and Simplifying Supply Chain….Suman’s Way…..,
— Yogesh Gupta, Vice President (Global Operations), Cargill Business Services, India
Thought Provoking Book
— Venkatram, APAC Planning & Logistics Head, LEGO, Singapore
Solid advice for busy leaders
— Isabelle Konstantinov, SABA consulting, past Product Supply Associate Director, Procter & Gamble, USA
Smart Outsourcing – Strategies for Effective Facilities Outsourcing
(This is a chapter in – The Supply Chain Revolution – book)
Companies have outsourced business functions with the hope of reducing headcount and associated costs. The outsource providers were assumed to h
ave lower wage rates, better processes, and other efficiencies. Over time, the logic morphed into the more you outsource together (bundle), the better value you get from suppliers.
Have you wondered if outsourcing delivered cost reduction and service improvements?
Cost reduction, which is perceived to be the primary benefit from outsourcing, has not been realized. Our team recently interviewed 40 large companies across different industries that have outsourced facilities management. They found that 80% of the firms continue to emphasize the need for cost reduction.
Many of the fundamental assumptions behind the outsourcing were wrong. The increase in scale did not reduce costs and processes that worked for one company did not work for others.
This book provides information about evolving nature of the Facilities Outsourcing industry and how sourcing organization can help companies make smart choices. To reduce cost and improve service, it may make sense to bring some of the work back in-house, use technology to manage suppliers instead of using an outside provider for oversight, and create value by collaborating with other companies, where possible.
Sarkar., S. (2017) “Less Cost And More Control Limits Supply Chain Success” Outsourced Pharma
Pharma industry would benefit from the sourcing function focusing less on narrow cost reductions, and more on broader corporate objectives; and from drug owners who allow external partners more control of their own environments. These would add up to a better functioning supply chain, and improved overall business outcomes.
Sarkar., S. (2017) “How to Solve Inventory Pileup?” Supply Chain Managment Review
Inventory pileup has been in the news lately, in industries including automotive, pharmaceuticals, retail, high-tech, military and others. In 2016, retail inventory pileup led to drops in rail, truck and sea shipments, and a significant increase in warehouses across America. Hanjin and a few other shipping companies went bankrupt. Production gluts in crude oil led to floating oil on tankers across the world.
Given that most companies have invested heavily in supply chain technology, and inventory continues to be part of leadership focus, you have to wonder why this is still an issue. We think there are two primary reasons. The first is channel stuffing by management to meet quarterly revenue and profit targets, and the second is planning based on a forecast.
Sarkar., S. (2017) “MRM Talking With: Suman Sarkar, Author of “The Supply Chain Revolution” Modern Restaurant Management
In “The Supply Chain Revolution …” Sarkar says a service model driven by smart supply chain management is the secret weapon for businesses that want to succeed in a continually evolving restaurant industry. Using Starbucks and other food service businesses as case studies for success, Sarkar lays out practical solutions to common challenges faced by companies large and small.
In this edition of MRM Talking With, Sarkar discusses restaurant industry disruption and supply chain complexities for restaurants.
Sarkar., S. (2017) “Tailoring the Internal-Versus-External Staffing Model to the Organization” IAMC
Many organizations have adopted outsourcing as a means of reducing costs. Unfortunately, research has found that many outsourcing activities actually increase costs. The best way to reduce costs is by focusing on suppliers and their utilization. Companies must recognize that improving utilization is difficult.
Sarkar., S. (2017) “The Present and Future of Integrated Supply Chains” www.smartsheet.com
Historically, companies have preferred horizontal over vertical integration since vertical integration takes them away from core competency. However, the last couple of years has been unique as we saw both vertical and horizontal integrations. Irrespective of the type of integration, the failure rate is quite high because companies fail to get post-integration supply chain aligned with their new corporate objectives.
Sarkar., S. (2017) “Are Supply Chains And Sourcing Boring? Not When They Provide A Competitive Edge” AMA
For decades after WWII, the military approach to supply chain management and sourcing served private industry perfectly well. Now, however, it does not. Across a wide spectrum of industries, once-potent companies are in trouble: Walmart, IBM, Procter & Gamble, Pfizer, HP. The business model of these companies is static, relying primarily on product differentiation and global expansion. As product differentiation and market expansion opportunities continue to be reduced, they are finding themselves at a competitive disadvantage.
This problem cannot be addressed by spending more money on advertising or buying other businesses. It is in operational areas such as supply chain and sourcing that a competitive edge can be found.
Sarkar., S. (2017). “SUPPLY CHAIN AND OTHER HIDDEN TOOLS FOR OUTPERFORMING THE COMPETITION” Automation Alley
Like in a car, what’s under the hood makes you win the race. The same is true in business. If you peel the onion, you will find thriving companies have excellent operations management, that includes supply chain and sourcing.
Sarkar., S. (2017). “Successful Revolutions Need Suppliers” ISE Magazine
When CEOs think about the supply chain, it’s with a view toward cutting costs. But the smartest leaders see supply chain and sourcing for what they can be: hidden tools for outperforming the competition.
Sarkar., S. (2017). “THE EVOLVING NATURE OF OUTSOURCING” TrainingMag.com
Outsourcing has been trending in the business world for the last 20 years. Investors, shareholders, and CEOs consider outsourcing as a means for cost reduction. However, outsourcing has not delivered cost reduction. Many assumptions made to justify outsourcing were wrong. The larger scale of outsourcing providers did not lead to lower costs, bundling more and more areas did not decrease cost, and processes that worked for one company did not work for another.
Garber., R, & Sarkar., S. (2007). “Want a More Flexible Supply Chain?” Supply Chain Management Review
As complexity and demand for new products grow, companies are realizing that their supply chains need to be more flexible. Yet while they realize the importance of flexibility, they struggle with how to accomplish this difficult task. The key elements, according to an A.T. Kearney study, are reducing cycle time and implementing a pull-based replenishment process.
Watson., R, & Sarkar., S. (2008). “From Potential to Actual: Capturing Sourcing Savings”. Purchasing Magazine
The power of strategic sourcing cannot be denied. Many of its anticipated benefits don’t reach the bottom-line because employees and suppliers fail to comply with pricing and terms laid out in corporate contracts. Companies that want to capture all their sourcing savings can do so by making it easier for employees to buy and procurement teams to track supplier’s adherence to contract.
Sarkar., S, Klassen., B, & Fabel., M. (2006). “Selling Wireless Services on the Internet: Turning Clickers into Buyers”. A.T. Kearney
Wireless operators are in a constant race to provide consumers with the latest technological gadgets and services. But while they make every effort to provide increasingly powerful phones, many have yet to extend their high-tech proficiency to their sales approach. Leading U.S. operators sell about 3 percent of their products online, compared to U.S. retailers that sell about 12 percent of their goods online.