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With many SMEs not paying attention to supply chain until something goes wrong 

……optimisation can make a crucial difference to your business

By Calum Lewis is Founder and Principal Consultant at OP2MA 

 Supply chain has undergone a tremendous change in the last few decades. What was once a purely operational logistics function that reported to sales or manufacturing and focused on ensuring supply of production lines and delivery to customers has become an independent supply-chain management function. 

 Companies, and particularly the C-suite either don’t notice or pay attention to supply chain until something goes wrong. This is the wrong around– paying attention to, and optimising your supply chain before something goes wrong can make a huge difference to your business especially in times of crisis. 

 Why keeping customers satisfied is key to success 

Keeping the customer satisfied is crucial to the success of all businesses, large and small. But many small to medium-sized enterprises (SMEs) simply don’t know how to meet today’s pressurised customer service challenges. It all comes down to effective supply chain management. 

COVID-19 continues to disrupt world economies, even in countries that have the pandemic under control. Additionally, despite pressure to get the economy back up and running, ongoing uncertainties, lack of consumer confidence and supply chain challenges continue. Systemic supply chain weaknesses were laid bare, and while all suffered, SMEs that had not kept up with critical supply chain trends were hardest hit. 

Small to medium-sized enterprises, found their customer base is declining. In many cases, the problem is due to customer service issues arising from poor supply chain understanding and management (SCM). Having the right inventory in place at the right time has one of the biggest challenges facing SMEs.  An inability to fulfil customer orders due to inventory shortage can cost an enterprise dearly – especially when it comes to its public image.  

 Inventory problems can arise from a lack of warehouse space, too much of the wrong inventory, not enough profitable stock and conflicting objectives among the various business functions of the enterprise. Access to data is also crucial for effective decision-making. Unfortunately, many organisations have a mishmash of manual and digital systems that effectively trap information within functional silos, meaning that decision-making is hampered by an incomplete picture. 

Another common theme facing business leadership, and supply chain management in particular, is that there is often a lack of sufficient information at hand to make informed decisions. Added to that, supply chain complexity makes it difficult to evaluate multiple alternatives, trade-offs and scenarios in order to arrive at the best or right decision.  

While traditional transactional-based ERP excels in handling huge volumes of data, the way information is captured, handled and stored means it’s hard to use it for identifying forward-looking trends. The same applies to most business analytics that are great for reporting what happened in the past, buts provide limited insight into future supply chain challenges. 

 How can SMEs fix their supply chains and scale up? 

 Companies need to look at independent providers who can help them to establish clear demand segments to configure supply chain designs, applying advanced analytics to focus risk mitigation. Defining critical dependencies and key opportunities across the supply network is key as well as identifying step changes in ways of working through the supply chain. 

 Gauging core process development guides streamlining for effectiveness and efficiency. Independent providers can help companies to assess the drivers of complexity for the value added. Evaluating a companies’ structure and organisational capabilities is at the heart of supply chain excellence and by managing the chain effectively ensures sustainability and growth.  

 Businesses need to look at providers who can help them to implement a three-stage process which includes a Health Check, Diagnostics and Transformation. The Health Check aligns operational performance to ROI to systematically qualify opportunities and define improvement priorities. Diagnostics identify the necessary changes to process, organisation, technology, and infrastructure to reset capabilities. 

 Transformation combines data-driven analytics with extensive experience and knowhow to develop a targeted change programme. A systematic approach that aligns financial outcomes to operational drivers; fact-based insight to the scale of the opportunity for a business. 

Benchmarking using innovative analysis that sets current performance against a definable competitive set (client can input to or select benchmark companies) – forms a strategically aligned ‘call to action’ for a business. Combining the key dimensions of how supply chains work and function and the context in which they operate to ensure coherence of improvement actions; applies a ‘joined up approach’ to a ‘joined up’ problem or situation. 

 Scaling-up to complete with the big players 

Scalability refers to a company’s ability to grow without being hindered by its structure or resources availability when faced with increased production. It applies to a business’s capability to perform under an increased workload or an expanded scope. Small businesses have low operating costs compared to larger companies. Scaling a businessmeans enabling and supporting growth in your company and having the ability to grow without being hampered.  

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2020