A decade ago, supply chain management was identified as a top risk and opportunity for businesses. Today, the same challenges persist, with comprehensive category management, supply chain risk monitoring, and big data remaining key areas of focus.
The Unchanging Nature of Supply Chain Challenges
A decade ago, supply chain management was identified as a significant risk and opportunity for businesses. Fast forward to today, and the same issues persist. If businesses were managing their supply chains effectively, they wouldn’t be in such disarray.
Comprehensive Category Management: A Persistent Challenge
The concept of comprehensive category management remains as relevant today as it was a decade ago. Many businesses continue to struggle with this aspect of supply chain management. Spot buying individual categories at market lows or running reverse auctions at opportune times does not constitute category management.
True category management involves grouping items with related characteristics that can be sourced effectively under the same strategy. This could even involve early renegotiation with an incumbent who might offer a great deal to prevent you from going back to the market. It’s a holistic strategic approach, not just mapping to a taxonomy and running with it. Failure to do so results in stock-outs and cost overruns.
Supply Chain Risk Monitoring: An Unresolved Issue
Despite advancements in technology, supply chain risk monitoring remains a challenge for many multinational companies. Natural and man-made disasters can devastate supply chains, resulting in raw material or product unavailability for weeks or months.
Most leading companies in the Risk Management arena now track and monitor their tier 1 supply base for missed deliveries and late shipment dates. However, by the time a shipment is late, it’s often too late to go to another source if the reason for the lateness is the lack of an important raw material. Multi-tier monitoring is key, but most Procurement departments are only now exploring supplier risk management in their supplier management module/application.
Big Data: A Valuable Asset if Used Correctly
Big Data, once the biggest buzzword, is still desirable, but only to the extent that you have valid, verified data. Unverified non-demand, cost, price data (for the wrong product) is not going to be of any help. Businesses need to invest in a real data analysis tool, validate the data at their disposal, and use it to their advantage.
While the challenges in supply chain management have remained consistent over the past decade, the solutions have evolved. Businesses need to adapt and implement these solutions to manage their supply chains effectively.
