Exploration & Production - Supply Chain Compression
Compressing the “order to cash” cycle time.
Four core supply issues that need to be addressed:
- Formulating the supply chain strategy
- Developing collaborative relationships within your own walls
- Forging partnerships with supply chain partners
- Improving processes and systems all along the supply chain
In today’s global economy, cost and quality are no longer “King.” It seems that everyone is on a level playing field. Today’s battles are being won by those companies that can effectively add the third dimension: rapid response to customer needs. The winners in all of this are those companies that have control of all three elements: cost, quality, and service.
Traditionally, management of the supply chain has been segmented organizationally, resulting in inevitable functional conflicts that are rarely resolved. These conflicts often lead to distortion and delay at the organizational interface points and, in the end, negatively impact customer response and supplier image.
Success in today’s environment requires a highly integrated effort by the business—cutting across traditional functional silos and through the traditional mindsets of the organization. There are five main elements to the MTG approach to Supply Chain compression:
- Designing supply chains for strategic advantage
- Implementing meaningful and collaborative relationships
- Removing cost from the supply chain
- Forging supply chain partnerships
- Managing supply chain information
Designing for strategic advantage centers around identifying ways to incorporate strategic choices and customer requirements into supply chain design. It includes the notion of an “extended product” that includes the supply chain. This concept maintains that, in the longer term, physical product features will be insufficient for competitiveness. Additional “amenities” associated with the supply chain will determine competitiveness.
Implementing meaningful and collaborative relationships refers to collaboration outside the organization. Any change in the supply chain must be accomplished through people. People in the organization must live with the consequences of any changes. Our experience is that change fails to be effective when people within the organization reject the changes.
MTG’s approach involves working closely with the functions that must support different facets of the supply chain. This includes the institution of a supply chain management function in the organization, if one doesn’t already exist, and the implementation of effective performance measures.
Removing cost from the supply chain is always a focus of supply chain improvement efforts, regardless of whether they are for strategic or tactical advantage. The major thrust of this element is identifying and addressing the root cause of unnecessary cost in the supply chain, such as:
- Shortcomings in product design
- Weak links between partners in the supply chain
- Inadequate information for decision making
- Variability in operations—both internally and externally
- Lack of clarity regarding what is happening in the supply chain
- Unintended circumstances arising from traditional mindsets
Forging supply chain partnerships revolves around the supply chain paradigm that demands effective partnering outside the enterprise. A major aspect of this element is the identification of core competencies—both internal and external to the organization. A second major aspect is identifying and leveraging whatever it is that motivates the partners.
Managing supply chain information specifically addresses the role information systems play in altering supply chains. MTG is very familiar with the major MRP and ERP systems and understands how they must interact with supply chain business processes. In addition, we introduce some new technologies that serve to strengthen supply chain relationships and processes with external elements of the supply chain.
As with all MTG implementation efforts, we typically start with a comprehensive assessment of supply chain processes and practices as they occur in the business. The assessment is customized to our client’s industry and structures the results to establish a baseline for understanding the gaps that must be closed before the benefits of any new technique can be fully realized.
Outputs from the assessment include a business case that describes and quantifies specific improvement opportunities, along with an implementation plan to achieve the identified benefits, timelines, required resources, and anticipated activities.
Although up-front planning is critical to the success of the effort, execution is where the real results are achieved. It is during this time that MTG’s powerful implementation support is the most evident. We will be there every step of the way to assist in achieving the identified benefits of the optimization effort.
