#HowTo #28. 3 steps to shift from cost-based to value-driven supply chain ??

Is your supply chain cost-based or value-driven? If you go with the first option, I have bad news: it will likely not help you to save money.

An ideal world where a supply chain would procure exactly the proper amount of raw material, convey it to an organization's processing facilities in the most efficient way possible, and dispatch the final goods to appropriate distribution hubs for fast delivery to customers does not exist. Therefore, it is better to shift to a value-oriented supply chain, where partners and customers gain from a more collaborative, agile, and responsive supply chain.

And here are the 3 steps on how to do that:

1. Prepare your talent and supply chain teams to comprehend their roles in the larger picture.

PricewaterhouseCoopers report suggests that cost supply chain executives often are unaware of the total value they can contribute to an organization; most are primarily focused on day-to-day operations. They are often busy and have little time to promote the value of the supply chain to their superiors or their team members. 

Suppose team members don’t see their work as collaborative in the large picture. In that case, executives might set unrealistic goals and expectations for various areas, from inventory to sales and marketing. Additionally, talent teams must search for people who understand the value of their roles and responsibilities in the supply chain.

2. Implement and use technology to ensure that quality standards are followed and maintained.

By implementing innovative technologies, supply chains will become faster. It enables better-informed decisions and rapid-fire adaptations to accommodate changing conditions. The use of technology is essential in such areas as supply chain management systems and business intelligence.

A supply chain management (SCM) facilitates collaboration between a middle-market company and its trading partners, so revise the current system’s capabilities and shortcomings and be careful not to pay for features beyond what will be used in the upcoming 18-36 months. After that time, you will most likely need an upgrade anyway. And, of course, pay attention to the business intelligence tools, as they help identify and correct issues before they become problems. 

3. Utilize Process Modifications to Improve Consistency and Time Management

To do process change management successfully, you need to know the reason why a specific process needs to change and what should be the goals or objectives of the change. Then, the process modification starts by accepting inputs from various sources and providing stakeholders with the information they need.

Then, of course, planning and forecasting come.

So, to answer the question, is your supply chain cost-based or value-driven? And what are you doing to improve it? Share your experience in the comments, please.

Also, remember that the BITECC.de can provide you with the best digital assistance if you need help in accomplishing your goals! DM or send me an email at [email protected]

Picture: All Things Supply Chain