Supply Chain management is a complex discipline that's also very exciting there's a lot to learn about it what exactly do we need to know about Supply Chain management that's what I want to cover in today's training my name is Eric Kimberling and I'm the CEO of third stage Consulting we're an independent consulting firm that helps clients throughout the world reach their third stage of digital Transformation success and one of the common disciplines that we work very closely with and in is Supply Chain management a lot of clients we work with come to us and ask
us to help them automate or improve their supply chains as part of a broader digital or business transformation there's a lot to learn about Supply Chain management I personally love Supply Chain management I studied it extensively and focused on it during my master's program when I was Getting my business degree and so it's something that I'm very fascinated by and passionate about so what I want to do today is share some training with you and really into Supply Chain management now this training is broken up into several different modules but I'll summarize the overall flow
and agenda for today first of all we're going to dive into what is Supply Chain management how Supply chains work and what some of the different nuances are The nomenclature the terms and definitions and things of that nature then we're going to talk about why Supply chains are broken and some strategies to improve Supply chains and then toward the end of this training we'll get into some case studies talking about lessons from some successful Supply chains as well as lessons from those that have struggled so that's the general layout you can find a complete breakdown
of the different modules in The description below and you can jump ahead or back however you want throughout the training but that's the general flow now before we dive in one thing I encourage you to read as sort of a supplement to this training is our guide to Supply Chain management it's an extensive paper that you can download for free on our website and it dives into a lot of what we're going to talk about today but there's a lot that we're not going to talk about today that Augments the lessons from today that I
think will help you understand Supply Chain management and help you through your Supply Chain management Journey you can read that guide by scanning the QR code right here in front of you or you can go to the links [Music] below first it helps to just do a 20,000 ft flyover of what is Supply Chain management really break it down to its basic simplest form so what we're going To do in this first module is dive into what is Supply Chain management the first characteristic of a digital supply chain is improved business processes and even though
the topic of this video is what is a digital supply chain in order to have a digital supply chain you need to start with your business processes and Define what you want those business processes to be and the cool thing about Supply chains but also the complex thing about Supply chains is that they're very Broad and cross functional and they're very complex so if you think about the scope and the span of a Supply Chain management end to-end process it starts with a customer order and it goes through procurement of materials production of materials the
storage of materials in a warehouse the shipment of materials to a customer or to a third party distributor and ultimately the collection of cash and ultimately the forecasting of what might happen in the Future as it relates to that entire cycle now I'm not going to go into a lot of detail of how a supply chain works but I do have another video on my YouTube channel that you should check out right here that talks about what is a supply chain and how does a supply chain work in general and that's where we get into
the business process aspect of a supply chain but for this video what I want to talk about is what are some of the ways that we can convert our Supply chain processes into a digital supply chain and the first way to do that is to focus on defining what you want your future State Supply Chain to look like in the future I'll give you an example of one process Improvement that's very common in Supply chains in the 2020s so when the pandemic happened in 2020 a lot of supply chain managers found that they were overly
dependent on certain vendors so they had certain vendors within the supply chain that They were solely dependent on and they didn't have a good backup for if something happened to that vendor or if that vendor wasn't able to fulfill demand so one of the reasons why Supply chains have broken down so much in the 2020s is not because there's been a massive breakdown in the overall supply chain but that little pieces within the supply chain broke down that caused a domino effect throughout the entire supply chain so one example of a process Improvement might be
to diversify your vendor base so if you notice the key raw materials are being sourced by the same vendor you might look at that and say let's change our business process to ensure that we have a way to diversify the risk of single vendors and that we have a better process for managing vendors and making sure that we have plan BS for when there's a problem with a vendor another potential process Improvement would be to measure and Track the vendor supplier scorecards so how well are suppliers performing and who are the best in performance that
would be a process Improvement that you can instill within your supply chain but the key thing here is in order to become a digital supply chain you need to Define what you want those process improvements to be first then go out and find the technologies that are going to be able to best help you do that now once we have a high Lev vision of what We want our business processes to look like within our supply chain now we can start to go to the market and look at what are some of the potential options
for our supply chains so if we want to automate and improve our supply chains we have a lot of different options we have Supply Chain management specific software vendors such as Manhattan Associates and blue yonder will provide technologies that automate an entire endend supply chain and that's all they Do they focus on Supply Chain management you also have even within the domain of Supply Chain management you have even more Focus solutions that Focus specifically on specific functions within Supply Chain management so for example procurement software there's vendors such as arba which is owned by sap
that focuses only on procurement within the supply chain you have Logistics software you have transportation management software you Have freight management software a lot of different technologies that can focus on individual pieces of the supply chain or you can go find a broader more complete and integrated Supply Chain management solution or finally another option is a enterprise-wide Erp sort of a system that ties together your entire organization not just your supply chain but also all the other functions within your organization like Finance and Accounting and customer Service order management all that good stuff so the
message here is that there's a lot of different Technologies at your disposal when you're going to implement a digital supply chain for more research and best practices around the specific types of Technologies you might consider for your supply chain modernization efforts I encourage you to download our digital transformation report which highlights independent reviews and software rankings as well as Best practices for your Supply Chain management initiatives and in that report you'll find a number of our objective and independent reviews of some of the different supply chain Technologies out there and that should give you a
good starting point for resources and vendors you may want to start to consider as you look to move towards a digital supply chain now once we've looked at business processes and defined what we want our business Processes to look like we've identified potential technology improvements within our digital supply chain now we need to look at the human aspect of our supply chain how do we improve the performance of people that are involved in our supply chain management functions throughout the organization and this is arguably the most important part because if you do the operational stuff
you do the technological stuff without the human piece of it none of the first two Categories matter because people aren't executing and behaving the way you need them to to operate with the digital supply chain so this is where the discipline of organizational change management comes into play this is where we need to have a clear adoption and change strategy to ensure that our people are coming along for the ride they need to understand what new business processes are going to affect them how those processes are going to Affect them how they're going to use
Technologies to do their jobs going forward and ultimately what their new roles and responsibilties are going to be because often times what we see in supply chain modernization efforts is that people automate a lot of their jobs and a lot of their job functions go away and you need to figure out how you're going to replace those job functions with something higher value and something that's going to be of even More importance to the organization and without that not only are you not getting the benefit and the value of this new technology but you're also
causing people to panic because they don't understand what their new job roles and responsibilities are going to be so defining a chain strategy and a adoption strategy is very important as part of your digital supply chain efforts now if you're looking for a deeper dive into what change management Is and what some of the major work streams are that you should consider as you look to the human performance of your supply chain I encourage you to download our guide to organizational change management which covers a number of best practices and lessons for how to address
the human side of any sort of transformation whether it's a supply chain transformation or a digital transformation or a Erp initiative whatever the case may be I encourage you To download that you can find a link to that in the description field below now so far we've talked about the people process and Technology foundation for digital supply chain the next step is to make sure that we've identified the analytics and the metrics that we use to drive and manage our supply chains going forward this is where data and visibility into the data becomes so important
and so what we want to do here is make sure that we don't just Implement new technology just to automate processes even though it will help us automate processes but also to ensure that we have better visibility as a result of that technology and this requires us making sure that we clean up the data and have accurate data that we load into the new technologies but also making sure that we manage and preserve that data to make sure it doesn't become corrupt over time and this goes back to the previous point I made about Organizational
change management and the human adoption component of digital Supply chains you want to make sure that people aren't doing things that unintentionally corrupt the data or cause the data to be inaccurate which then leads to bad decision- making because you don't have accurate insights into your supply chain and into your overall business so another step and another important component of a digital supply chain is making sure that you Have good data good analytics good reporting and good visibility into the overall supply chain now these are just a few of the components of effective digital Supply
chains in order to be effective you ultimately wanted to find a digital supply chain strategy that makes the most sense for you and it should be something that's tailored to your organization and your overall goals and objectives as a organization and as a supply Chain now that we have this basic fundamental understanding of what Supply Chain management is now it helps to dive into a little bit more detail and talk about some of those key terms and definitions that are important to understand and know in Supply Chain management this is a way to ensure that
you're speaking the same language as other supply chain professionals and also to ensure that you understand supply chain management fully so let's Dive into the top terms and definitions within Supply Chain management procurement is one of the most important things to understand when you think about Supply chains and procurement in essence is the way that you purchase or acquire raw materials and other things that you need to run your organization so there's really two major types of procurement you have direct and indirect procurement direct procurement is the acquisition or the procurement of raw Materials that
are going to be used in producing your finished product it could also be the procurement of semi-finish goods or any sort of work in progress that you're going to finish the assembly on within your own operations or if you're a purely a Distribution Company or retailer it could be that you're procuring finished goods but whatever your product or service is or anything that's related directly to the Production of that product is going to be direct procurement indirect procurement is when you acquire things like office supplies something that's not going to be critical or directly related
to your end good or material but it is something that's critical to running your business so that indirect procurement is oftentimes run through similar processes and operational models as with direct procurement um but those are generally how you break down this General concept of procurement so another important concept with Supply Chain management is supplier management we just talked about procurement and procurement is related to what you buy from suppliers or vendors so this whole concept of managing your supplier base understanding who your suppliers are who your vendors are is very important and especially for more
complex Supply chains for producers of products that have hundreds or thousands of different Parts or raw materials that go into a finished good you can imagine how many different vendors and suppliers you have to deal with within an organization and that's why this function is so important so when you think about supplier management there's a few different dimensions one is understanding who the suppliers are for all the different raw materials and components you might be using for your end product and each raw material or each type of product that You acquire or cure in your
processes might have multiple vendors which leads me to another important dimension of supplier management which is measuring the quality of what suppliers are best who's giving you the best price who's giving you the best quality product and what happens if you're a supplier your number one preferred supplier for any given material or product what happens if that vendor can't Supply what you need when you need it who's your backup Do you have a number two do you have a number three supplier and so those are some of the things you have to think about and
you also have to be thinking too about about how you can proactively hedge risk of having any sort of disruption within your supply chain in case one vendor isn't able to deliver you want to make sure you've mitigated that risk by having backups but this whole supplier management concept is really focused on ensuring you know who Your vendors are for all your different raw materials and components and also what their quality and cost ratings are now procuring raw materials and products from vendors and suppliers is just one part of the process but once you have
procured the products then you have to figure out what you're going to do to manage that inventory so whether it's raw material finished goods indirect procurement whatever the case may be you want to make sure that you have a way to Track and manage your inventory and that's what this whole concept of inventory management is it's understanding what materials you have understanding where they are and ultimately understanding when you might need to order more of that particular material Inventory management also has to do with your warehouse and how you manage your warehouse and where you
place materials and store materials within your Warehouse I'm going to talk About warehouse management in a moment so I won't get into too much detail here but in general Inventory management is focused on what products do you have what's your inventory level where's the material at when you need it and ultimately how are you going to get it to your end customer now in order to communicate with vendors and suppliers and even customers organizations will typically use something called EDI or electronic data interface and Essentially this is an electronic way to communicate with your vendors
and suppliers and also your customers so if your customer places a order with you they may place that order through EDI when you place your order with your suppliers you may be placing that order via EDI as well and most organizations have moved to this EDI model or they use EDI tools e either as part of their core Enterprise technology or whatever other electronic means or digital means they Have but this whole concept of EDI is a really important way to manage and communicate with different players throughout your supply chain moving your products whether it's
your raw materials or your products throughout the entire supply chain is a very important part of your Supply Chain management function and when you think about where you order your raw materials from it's a matter of understanding how your raw materials are going to get from the manufacturer the Producer of that raw material to your facilities often times that involves a ship you're going to put the raw materials in a container on a ship it's going to go on the water it'll be on the water for however however many weeks until it gets to your
Port it gets from the port onto a truck which then gets delivered to your warehouse and so that whole concept of freight and transportation is important to understand because you have to have his Ability too and understand what exactly is happening from the time a raw material order is placed and that raw material actually goes out for shipment from the vendor supplier ultimately how it gets to your warehouse and ultimately when your customer places an order for that finished good how are you going to get the finished good to your customer whether it be through
trucks or maybe you're going to ship it out through another port to to a different customer However that may be you want to make sure you understand how things are moving throughout your supply chain so this whole concept of freight and transportation is a critical part an essential component of any Supply Chain management function just as it is important to understand your Freight and transportation it's also important to understand how you manage that Freight and transportation and the overall Logistics and that is oftentimes Referred to as Logistics management how do I move things around throughout
my supply chain and how do I have visibility to it and how do I manage that ultimately and so it's really a good way to tie all this together things we've been talking about so far so often times organizations will have specific departments or functions focused on Logistics management they're the ones that ensure that they are managing the whole process of shipment that's going On a container onto a ship that's going to be shipped overseas to your location manage that entire process from the time it leaves your supplier's Warehouse until it gets on a container
until it gets on a ship and ultimately goes through a port and through customs at the Port that whole process has to be managed via Logistics management it's a very complex function especially if you're dealing with multiple countries multiple ports you have tariffs you have Customs you have to deal with all those different International Trade sorts of Dynamics are an important part of logistics management and oftentimes organizations will use Technologies like enterprise resource management or Erp systems or Supply Chain management systems to help manage some of this Logistics management type of function once you get
your raw materials into your Warehouse you then have to figure out how you're going to produce the Product which means you've got to pull those materials back out of your Warehouse go manufacture or do whatever you're going to do with those raw materials and then typically you're going to put it back in your Warehouse as a finished good and it's going to sit in your Warehouse if you're a make to stock sort of environment and that whole process that whole concept of producing the product using materials in your Warehouse putting the finished product Back in
your warehouse and then ultimately shipping from the warehouse to your end customer that's a very complex undertaking that requires a lot of good information data and good systems and processes to manage it and I'm actually going to have a future video that will focus more specifically on key terms and Concepts and definitions within warehouse management but for today's video I'll summarize by saying warehouse management is the whole Function of managing that entire Warehouse how you track inventory where inventory is how you track inventory levels when you trigger reorder quantities for any sort of raw material
or finished good that might be dropping below a certain minimum threshold you may have defined the whole pick pack and ship process from the time you get a customer order you've got to then go find the product in the warehouse pack it ship it and get it out the door to Your customer those are just some of the things that happen within warehouse management are important to understand as part of your overall Supply Chain management function in today's age of high customer expectations and the whole effect that Amazon has had on global organizations expecting that
they can get products shipped to their door very quickly organizations are under a tremendous amount of pressure to get products produced and shipped as quickly As possible and ultimately get it to their customers as quickly as possible often times this requires that you bypass the traditional warehouse management function that I just described so in other words it may be that instead of storing things in your Warehouse or acquiring a product from a vendor storing at your warehouse and then shipping to your customer you might bypass that warehouse management function and just have it go straight
From your supplier straight to your customer so that's called the drop shipment when you just ship directly from your vendor supplier straight to the End customer one of the simplest examples or ways to understand this on a basic consumer level is when you think about either Amazon or Alibaba if you shop with either of those types of uh retailers or any other sort of large internet retailer often times when you go buy a product on the app they're Going to ship from their warehouse but often times you're buying from third parties or other people that
are outside the Amazon ecosystem of warehouses and they're going to ship directly from their own Warehouse they're going to produce the product or acquire the product however they do it and they're going to ship it directly to you rather than going through Amazon's Warehouse before it gets to you so that's a real simple consumer example but Organizations even in B2B situations will do that same thing they'll get the product from the vendor they won't store it in the warehouse and they'll ship it directly to their customers now of course this only works with finished products
if you're talking about raw materials or semi-finished Goods it's going to have to come to your location most likely to then be produced or finished before it can be shipped out to your customers but often times drop Shipments are a way to speed up the whole supply chain now often times when you're trying to get raw materials or components or even finish Goods within your supply chain you find that the vendor supplier or suppliers you're dealing with can't get it to you right when you need it and that trigger is what is known as a
back order that means that you have back order or a backlog of orders that the vendor needs to catch up on Now One note about back orders is That when you run into situations where a certain vendor is getting backlogs or delays and getting product to you that's where supplier management becomes so important the topic we talked about earlier in this video where ideally you would have a backup vendor or someone you know you could go to when one vendor can't deliver you've got someone else that you can fall back on and presumably deliver faster
cheaper than what the other one might be able to at that Moment in time so supplier management can be a good way to mitigate against the risk of back orders when you're looking at the cost of your overall supply chain and ultimately the cost of your individual products that you're producing for your customers you want to understand what the total landed costs are so if for example you're Outsourcing manufacturing and you're acquiring a product from let's just say China and let's just say it's a it's an iPhone You're going to produce a thousand iPhones from
China it may be that each individual iPhone costs $100 let's say for you to buy each each iPhone from that vendor that supplier but when you add on things like freight costs and customs and other costs that go along with international trade and shipments it may be that instead of $100 it's actually $130 when you add in things like Freight and other costs so this concept is known known as landed cost What is your total landed cost from the time you order a product until it gets to your Warehouse what is that cost per unit
so that you know how to ultimately price the product and ultimately know what your margins are going to be and it also helps you understand where you might be able to optimize costs if your freight costs are really high because you're relying on air freight for example it may be that you look at shipping via water which is typically Less expensive on a pre-unit basis so that's just one example of how you can use this whole concept of landed cost to fully understand your total cost of your supply chain at it individual product levels so
that you can optimize those costs and ultimately it should affect your pricing as [Music] well now that we understand what Supply Chain management is and some of the key terms and definitions let's talk about How Supply chains work let's walk through the supply chain and unpack some of those fundamental concepts we've already covered and unpack those in more detail more of an example in a more holistic view of an entire supply chain so to understand how a supply chain works it helps to start with where the supply chain actually starts and so if you look
at the top left of this graphic in front of you you see that it all starts with the customer and it's not Just what the customer actually buys it's actually a forecast of anticipating what customers might buy so that's really where everything starts is with this customer demand forecast and the way organizations typically will forecast demand is based on historical Trends looking at what different customers have done over time it could be looking at macroeconomic Trends or potentially even other external factors that could Influence people's willingness to buy and the overall Trends in demand but
in general you're starting with the customer and the overall demand so this demand forecast drives everything throughout the supply chain so that's why it's so critical to have an accurate demand forecaster at least as close to Accurate as possible because that's going to influence the way the entire supply chain works so what I want to do from here is work our way backwards from Starting with the end consumer and work clockwise on this graphic to get to how that influences the rest of the supply chain once we know what overall customer demand is now we've
got to figure out what is it that we need to produce and what are the raw materials we need to produce Whatever It Is the End consumers are going to buy so for example if you're selling iPhones or we're manufacturing iPhones there's a hundreds or maybe even thousands of different Components of raw materials we're going to have to buy to create an iPhone everything from chips to Glass screens to software applications to other components wires and things that nature that go into an iPhone and whatever your product is you're going to have different raw materials
and a different sort of recipe for how that product is made so you really have to back your demand forecast which is sort of the end result finished product you have to back That into what does that translate to in terms of our purchasing needs our procurement needs for raw materials and once we've done that we can then figure out at what point do we need those raw materials so we're sure to have them in time for the manufacturing runs that will support that demand forecast that we've developed now one thing that's important to note
here when we talk about raw materials and the sourcing that you're doing here it could be raw Materials which are just individual components that go into a finished good it could also relate to subassemblies so subassemblies are things that are partially produced already or components that are going to go into a broader finished good so for example a lot of times Aerospace and defense companies aren't just buying raw materials they're buying pieces that have already been partially constructed that then get put together into other finished products Like a rocket ship or airplane or whatever the
case may be so whether it's raw materials or subassemblies the whole concept is the same of tracing it back to your demand forecast to figure out what you need to buy and then finally some organizations like retailers or distribution companies don't actually manufacture anything they don't assemble anything but they just distribute finished goods so their procurement is going to focus more on the finished Goods and buying finished goods from other producers now the next major step in the process is your production or manufacturing so you've acquired or procured your raw materials or your semi-finished goods
your sub assemblies whatever it is you're you're buying and now you need to get it to your factory so you can actually produce what you need to produce now before I talk about the manufacturing or production part it's important to note that an important Part of the supply chain is figuring out how you're going to get raw materials to your factory so in some cases it could be Logistics processes that relate to trucking or shipping so you're shipping things via land to get to the factory it could be that you're ordering raw materials or subassemblies
from overseas in which case you're dealing with ships or boats so it's going to be on the water for a certain amount of time and you're going to have those come through Ports in whatever country you're located and from the port it'll then be transported via ground shipping to your manufacturing facility so in order to get everything to your manufacturing facility you have to work out the logistics of how you're going to get the raw materials to your manufacturing facility and once you have the raw materials then it becomes a matter of how are we
going to produce what we need when we need it so this is where you Really have to take a Clos look at your inventory management your inventory levels make sure that you have the right level of inventory at the right time you want to make sure that you don't have too much inventory in stock but you also want to make sure you don't have too little to where you have outages or shortages and so a lot of organizations right now in today's day and age in the 2020s are finding that it's worthwhile for them to
stockpile inventory more Than they might have in earlier years and the reason for that is because there are so many supply chain disruptions that organizations are experiencing a lot of raw material disruption so they stock compiling as much inventory as they can so however you manage that which is done primarily through technology often times whether it's Enterprise Technologies Erp systems Supply Chain management Technologies there's a whole host of technologies That can manage that process and I've included video links below that cover those things that's how you're going to manage that entire process to get to
your manufacturing now once you've produced your finished goods now you've got to figure out how to get it to your Warehouse so it's leaving the manufacturing assembly line and it's going somewhere and typically that somewhere is going to a warehouse where it's going to sit until you ship it to Your customer in some cases you may ship directly to your customer if it's a urgent order if it's a late order or if you're a make to order manufacturer which means that you're not producing anything until you get the actual customer orders in other words you're
basing it on actual customer demand not forecasted demand you might ship your product directly from your manufacturing facility to your customer's Warehouse may maybe not your own Warehouse so Regardless you're going to have the same process of making sure that you have Logistics to get the product from your manufacturing facility to either your own Warehouse or your customer's warehouse and again as I mentioned before that whole Logistics process of managing the transport of those finished goods to whichever Warehouse it's going to is a key part of the supply chain the next step in the process
for some organizations not all but for some is a Distributor getting the product from your Warehouse to the distributor that's ultimately going to get it to the end consumer distribution centers are more common for retailers and directed consumer types of organizations if you're a B2B organization that's selling to primarily to businesses chances are you don't have a distributor or a middleman wholesaler but you could there are a lot of B2B organizations as well that have a distributor they work with But either way you're going from a warehouse to a distributor and then the distributor figures
out how to get it to your customer now the final step in the process is actually getting the product to your end consumer and that could either come through a retailer if you're a BTC organization that's selling to Consumers you might sell to to a retailer who then keeps your inventory in their retail shop and then sells to consumers or you might be selling Directly to the consumer either way you need to figure out how to take those customer orders get it out of your Warehouse or the Distribution Center wherever the end products are and
get it to your customers so this sort of completes the entire cycle of a supply chain throughout the entire customer demand all the way through raw materials production distribution and ultimately to your end customer now as you can imagine this entire undertaking that I Just described is a complex undertaking there's a lot of data a lot of touch points a lot of suppliers Distributors Trucking providers Logistics providers shipping providers ports that you've got to deal with you've got warehouses and then ultimately you have the end consumers that you're ultimately trying to get the product too
so there's a lot of moving Parts a lot of pieces that can break in that process and so that's where technology comes in a lot of Supply Chain management Technologies can automate that process provide the data and the visibility to understand what your needs are and make sure you get it right and there's also Erp systems or enterprise resource planning systems that tie together not only your supply chain but it ties your supply chain back to your financials and back to your sales organization back to your human capital and other parts of the organization so
regardless of the type Of Technology you might use it's important to recognize opportunities to use technology to make your supply chain more efficient and quite frankly that's why supply chain Technologies are so popular today is because so many organizations are struggling with their supply chain chain so technology can be a good way to help fix some of those problems key question on a lot of people's minds is why are Supply chains broken what's the problem why are we Experiencing outages and shortages and constraints in our overall purchasing behavior that we're so used to and the
reason for that is for the reasons I've described before this is a very complex process and you can imagine how individual components in the supply chain breaking down can have a domino effect and a trickle effect throughout the entire supply chain for example if you're a raw material supplier has a labor shortage let's just say they're Operating in a country that just has labor shortages or perhaps they have lockdowns or quarantines as a result of the pandemic that's going to slow them down from producing as much raw material as they might have in the past
that's going to create delays getting the raw materials to the manufacturing plant the manufacturing plant is now going to be delayed getting it to the warehouse which is then going to be delayed getting it to the customer so that's Just one example you also think about every step along the way there's for example a lot of issues with finding enough drivers truck drivers throughout the world and so when there's a shortage of truck drivers you may have all the raw materials ready you may have everything you need finish sitting on a manufacturing shop floor or
in a warehouse but you don't have a way to get it from point A to point B if you can't get it from point A to point B You're going to have a disruption you're going to have a shortage so you think of all the hundreds or thousands or even hundreds of thousands of touch points and moving pieces within a supply chain any one of those things breaks down that Cascade throughout the entire supply chain [Music] now that we've unpacked a supply chain and how it works in general now let's dive a little deeper into
Supply chains And their major components so in other words what are those major pieces of a supply chain now we've talked about bits and pieces of this in the previous example of how Supply chains work but now we want to give a little more structure to really unpack some of these different key components of Supply Chain management the first major component of a supply chain is procurement and one way to think about procurement is it's essentially buying stuff you need to Manage your supply chain and there's two different types of procurement there's indirect procurement and
direct procurement direct procurement is the acquisition or the procurement of raw materials and other things you need to build your product that you're selling to the marketplace so if you're a manufacturer of widgets you might go out there and procure the raw materials to manufacture those widgets the second type of procurement is indirect Procurement an indirect procurement is important but it's not directly related to the production of a certain product in other words it's meant to support the overall back office functions and things that are unrelated to the direct product itself so examples would be
if I'm going to acquire some laptops for my employees that would be indirect procurement if I'm going to acquire copy machines or paper or any other sort of material that is important to running the business but It's not directly related to building the product we build then that is going to be be indirect procurement but regardless of which type of procurement you're talking about it's a very important function because it really determines how much you pay for raw materials and other types of things that you need to run your business so procurement groups are oftentimes
measured on how they drive down cost and how they can optimize the cost of raw Materials and other indirect types of things that are bought for the organization this is why often times large manufacturing organizations and large organizations in general will have a separate procurement group that focuses specifically on acquiring the best price for the best quality from the best vendor available in the marketplace a second important function within Supply chains is Inventory management I talked a moment ago about procurement And how important it is for direct and indirect procurement of raw materials and indirect
materials but once you have those materials in house and you've procured those materials you now need to figure out how you're going to manage those materials how do you keep track of them how do you know where they are how do you know when they're going to be used or when you might need more of the certain type of material and inventory management is the function of managing The physical location of different materials as well as when it might be time to order more of those materials so Inventory management includes processes such as physical inventories
which is the act of physically going and counting all the inventory you have in stock you also have cycle counts which is similar to physical inventories which is counting the high value Andor the high volume types of things within your inventory management So Physical Inventories as well as cycle counts are two ways that you can manage inventory and of course you also have systems that manage inventory levels as well as inventory locations as well and that's why Inventory management has become such a big function is because a lot of big manufacturing organizations invest a lot
of time and money and have a lot of money sitting in their inventory and it's an asset that's on their books that needs to be managed as such so Inventory Management is a very important function within supply chain and Supply Chain management now warehouse management is a lot like Inventory management but it's more focused on the physical Warehouse itself and where physical goods are stored and how they're moved in and out of the warehouse so Inventory management is more of a general function that looks at what our general inventory levels are and making sure we
have the right reorder levels and we're ordering the Materials we need but warehouse management is more focused on making sure we have a place to put the materials when they come in stock and when it is time for them to go to the manufacturing floor if it's a raw material it's the act of actually moving the materials from the warehouse to the manufacturing shop floor and then once the manufacturing is completed it's a matter of moving the finished products back to the warehouse assuming you're in A make to stock environment now one of the most
common and most important business processes within warehouse management is the pick pack and ship process and this is really the process process of taking an incoming order from a customer and picking the product from the shelves packing it up and ultimately shipping it to the customers so warehouse management is actually a very complex process that requires focus on a lot of different moving Parts literally And figuratively because you're Tracking not only raw materials coming in and out finished products coming in and out and customer orders coming in and out so there's a lot there that
needs to be managed and this is why technology is so important to managing these business processes now a fourth important component of Supply Chain management is manufacturing and Manufacturing is often considered its own Beast its own animal and its own set of business processes But it's impossible to manage a supply chain without also considering your manufacturing operations if you're a manufacturer so manufacturing operations is essentially everything on the shop floor where the manufacturing actually happens and it ties to all the other components that I talk about throughout this video so when it comes to procurement
and warehouse management for example that's where two functions will support manufacturing operations in that Raw materials are procured by a procurement function they're typically stored in the warehouse by the warehouse management function and then moved from the warehouse to the manufacturing shop floor so manufacturing operations also includes not just getting raw materials to the shop floor but it also entails tracking inventory throughout the work in progress or the whip process this is the process that tracks every step on every machine and every step in the Manufacturing process and the whole discipline of manufacturing operations is
meant to manage and automate as much as possible those manufacturing operations and this is where technology is so important because technology will help humans track where the work in progress is where the quality defects might be what the volume and throughput might be and ultimately what finished product comes out the other end of the manufacturing Operations and of course once the manufacturing has completed its operations and we have finished products then the warehouse management function would then take over to figure out where those finished products are going to be stored in the warehouse or in
some cases if it's a make to order type of situation the finished product might get shipped directly to customers so all that stuff I just talked about is everything related to manufacturing Operations and it's an important part of the Supply Chain management function now finally Logistics is a major component in function within Supply Chain management and Logistics is essentially figuring out how you're going to get your finished materials and your finished products to your end customers and there's a few different ways that Logistics can be managed there's shipping cargo via ships on the water so
if you're building a product in a Different country and it needs to be shipped on the water to its final destination just the whole process of managing the cargo getting from the manufacturing facility onto the ship into the and customer or to the warehouse in the other country that is all part of the logistics process you also have Logistics that can be executed by air so you might ship your product via air if it's a smaller product or if there's a rush delivery you might do it Via airplane and then finally one of the most
common types of logistics is via truck so when you're driving down a highway and you see those big commercial semis those are more often than not carrying products that are finished products and they're trying to get those products to either the End customer or the warehouse of the End customer so when you think about logistics you're dealing with different countries different modes of transportation a lot Of finished goods and raw materials and different types of inventory that's trying to be managed and so you can see how there's a lot of benefit to being effective at
Logistics management which is why Supply Chain management Technologies can be so effective in helping manage those Logistics functions now so far we've been talking about how Supply chains work in general whether you're talking about a completely manual supply chain or a Highly automated supply chain a lot of these things we've talked about so far are fundamental it's going to exist whether you're automated or not or if you're somewhere in between but what about Supply chains that are going digital what does a digital supply chain look like that's what I want to talk about next and
really start to move into some of the technologies that can improve Supply Chain management the first characteristic of a digital supply Chain is improved business processes and even though the topic of this video is what is a digital supply chain in order to have a digital supply chain you need to start with your business processes and Define what you want those business processes to be and the cool thing about Supply chains but also the complex thing about Supply chains is that they're very Broad and cross functional and they're very complex so if you think about
the scope And the span of a Supply Chain management endtoend process it starts with a customer order and it goes through procurement of materials production of materials the storage of materials in a warehouse the shipment of materials to a customer or to a third party distributor and ultimately the collection of cash and ultimately the forecasting of what might happen in the future as it relates to that entire cycle now I'm not going to go into a lot Of detail of how a supply chain works but I do have another video on my YouTube channel that
you should check out right here that talks about what is a supply chain and how does a supply chain work in general and that's where we get into the business process aspect of a supply chain but for this video what I want to talk about is what are some of the ways that we can convert our supply chain processes into a digital supply chain and the first way to do That is to focus on defining what you want your future State Supply Chain to look like in the future I'll give you an example of one
process Improvement that's very common in Supply chains in the 2020s so when the pandemic happened in 2020 a lot of supply chain managers found that they were overly dependent on certain vendors so they had certain vendors within the supply chain that they were solely dependent on and they didn't have a good backup for if Something happened to that vendor if that vendor wasn't able to fulfill demand so one of the reasons why Supply chains have broken down so much in the 2020s is not because there's there's been a massive breakdown in the overall supply chain
but that little pieces within the supply chain broke down that caused a domino effect throughout the entire supply chain so one example of a process Improvement might be to diversify your vendor base so if you Notice that key raw materials are being sourced by the same vendor you might look at that and say let's change our business process to ensure that we have a way to diversify the risk of single vendors and that we have a better process for managing vendors and making sure that we have plan B's for when there's a problem with a
vendor another potential process Improvement would be to measure and track the vendor supplier scorecards so how well are suppliers Performing and who are the best in performance that would be a process Improvement that you can instill within your supply chain but the key thing here is in order to become a digital supply chain you need to Define what you want those processing permits to be first then go out and find the technologies that are going to be able to best help you do that now once we have a high Lev vision of what we want
our business processes to look like within our supply Chain now we can start to go to the market and look at what are some of the potential options for our supply chains so if we want to automate and improve our supply chains we have a lot of different options we have Supply Chain management specific software vendors such as Manhattan Associates and blue yonder will provide technologies that automate an entire endend supply chain and that's all they do they focus on Supply Chain management you also have Even within the domain of Supply Chain management you have
even more Focus solutions that Focus specifically on specific functions within Supply Chain management so for example procurement software there's vendors such as arba which is owned by sap that focuses only on procurement within the supply chain you have logistic software you have transportation management software you have freight management software a lot of different technologies that can focus On individual pieces of the supply chain or you can go find a broader more complete and integrated Supply Chain management solution or or finally another option is a enterprise-wide Erp sort of a system that ties together your entire
organization not just your supply chain but also all the other functions within your organization like Finance and Accounting and customer service order management all that good stuff so the message here is that There's a lot of different Technologies at your disposal when you're going to implement a digital supply chain for more research and best practices around the specific types of Technologies you might consider for your supply chain Moder ization efforts I encourage you to download our digital transformation report which highlights independent reviews and software rankings as well as best practices for your Supply Chain management
initiatives and in that Report you'll find a number of our objective and independent reviews of some of the different supply chain Technologies out there and that should give you a good starting point for resources and vendors you may want to start to consider as you look to move towards a digital supply chain now once we've looked at business processes and defined what we want our business processes to look like we've identified potential technology improvements within Our digital supply chain now we need to look at the human aspect of our supply chain how do we improve
the performance of people that are involved in our supply chain management functions throughout the organization and this is arguably the most important part because if you do the operational stuff you do the technological stuff without the human piece of it none of the first two categories matter because people aren't executing and behaving the way you need Them to to operate with the digital supply chain so this is where the discipline of organizational change management comes into play this is where we need to have a clear adoption and change strategy to ensure that our people are
coming along for the ride they need to understand what new business processes are going to affect them how those processes are going to affect them how they're going to use Technologies to do their jobs going Forward and ultimately what their new roles and responsibilities are going to be because oftentimes what we see in supply chain monitorization efforts is that people automate a lot of their jobs and a lot of their job functions go way and you need to figure out how you're going to replace those job functions with something higher value and something that's going
to be of even more importance to the organization and without that not only are you not Getting the benefit and the value of this new technology but you're also causing people to panic because they don't understand what their new job roles and responsibilities are going to be so defining a change strategy and a adoption strategy is very important as part of your digital supply chain efforts now if you're looking for a deeper dive into to what change management is and what some of the major work streams are that you should Consider as you look to
the human performance of your supply chain I encourage you to download our guide to organizational change management which covers a number of best practices and lessons for how to address the human side of any sort of transformation whether it's a supply chain transformation or a digital transformation or a Erp initiative whatever the case may be I encourage you to download that you can find a link to That in the description field below now so far we've talked about the people process and techn technology foundation for digital supply chain the next step is to make sure
that we've identified the analytics and the metrics that we use to drive and manage our supply chains going forward this is where data and visibility into the data becomes so important and so what we want to do here is make sure that we don't just Implement new technology just to Automate processes even though it will help us automate processes but also to ensure that we have better visibility as a result of that technology and this requires us making sure that we clean up the data and have accurate data that we load into the new technologies
but also making sure that we manage and preserve that data to make sure it doesn't become corrupt over time and this goes back to the previous point I made about organizational change management and the Human adoption component of digital Supply chains you want to make sure that people aren't doing things that unintentionally corrupt the data or cause the data to be inaccurate which then leads to bad decision- making because you don't have accurate insights into your supply chain and into your overall business so another step and another important component of a digital supply chain is
making sure that you have good data good analytics good Reporting and good visibility into the overall supply chain now since the pandemic of 2020 many of you may have heard about Supply chains and why Supply chains are broken it was in mainstream media the average lay person was talking about the supply chain in fact today even in 2024 and Beyond we're still hearing about how the supply chain issues that date back to the pandemic so the question becomes why are Supply chains broken now and in General how do Supply chains become broken and that's what
we're going to talk about here in this module one of the root causes of why the supply chains are broken today is because of Labor shortages labor markets throughout the world are very uneven at Best in some countries there's labor shortages in terms of not enough labor to fill key roles and positions within supplier and other aspects of the supply chain in other case is there's not the right Skill set or the right education levels for resources and in some cases there's government incentives to keep people from working unintentionally so for example some countries such
as the United States the governments are offering incentives or paychecks basically to people to not to work as part of the pandemic recovery so that has an unintended consequence of disincentivizing people from working and that's certainly affecting Supply chains Throughout the world so one of the key things that Supply chains need need to do in order to get back on track is to make sure that we have the right Staffing levels throughout the entire supply chain and as you can imagine one Domino Falls in one part of the supply chain via a labor shortage that
affects the rest of the supply chain that has a domino effect that can create a lot of challenges so human Capital Management is something that is going to be very Important to supply chains in the 2020s in order to get the supply chains back on track one of the underlying key challenges of Supply chains is that they are focused on the wrong objectives Supply chains were built prior to 2020 when the pandemic hit and when the supply chains realized a major disruption to the way they operated and so in the past Supply Chain management and
the whole discipline of Supply Chain management tended to focus on how do we Optimize cost how do we reduce cost how do we increase efficiency how do we create a just in time inventory system to support the supply chain and it was really focused on efficiency and throughput but now in the 2020s with the way things have changed customer demands have changed regulations have changed a number of disruptions to the world has changed the way Supply chains need to operate now cost suddenly isn't quite as important as it used to be now we've got To
think about other objectives in addition to cost we have to balance out the need to optimize cost with the need for flexibility for example how can we respond quickly to macroeconomic or pandemic related issues or or just general issues that might disrupt the supply chain we need to build that sort of flexibility into Supply chains in a way that hasn't been done or hasn't needed to be done in the past another consideration is the fact that a lot of Organizations now are thinking about sustainability and the impact that Supply chains have on the climate so
now it's not enough just to say we found a lowcost supplier to fulfill our supply chain needs now it's a matter of looking at costs but also looking at things like the ability to support flexibility as I mentioned before and to support sustainability or climate change types of objectives and initiatives so a lot of organizations that play a premium on The focus on climate change or in some cases government regulations are imposing those needs to focus on climate change that affects the types of suppliers we work with so that's another consideration in terms of making
sure that we have the right objectives as a Supply Chain management function and in the past that historically has not been a consideration and then finally now Supply chains need to make sure that we have the right products to the right Customers at the right time in the past that may have sounded like a no-brainer or sort of been a given but that's exactly what Supply chains are struggling to do right now is to get the products to the customers at the right time and to manufacture the products in time to get those products to
the customers at the right time so that's some of the objectives that now need to be incorporated into your overall Supply Chain management strategy and these Objectives were certainly not nearly as important in the past as they are now in a post-pandemic world if we learned one thing in the 2020 so far it's that Supply chains have a very concentrated level of risk and what I mean by that is we've depended on the same suppliers or the sole suppliers to provide key resources or raw material inputs or sub assemblies into our products or we've relied
on single 3pl providers to provide logistics for our organization Or perhaps we've relied on a single port for overseas products coming into your given country and in the past that may have worked perfectly fine in a very predictable stable world but now we're living in an unpredictable less stable world that requires a lot more flexibility and a decentralization of risk so rather than being overly dependent on one raw material provider or one 3pl provider or one port for all of your products coming in and out we Now need to look at what are our backup
plans how do we diversify our risk how do we hedge our risk to make sure that any one disruption in the supply chain isn't going to completely throw off the rest of the supply chain so for example in the United States where third stage is based some of the ports in California have realized extreme bottlenecks and a lot of organizations have always depended on those ports in California for the products to come through but now In order to get products in a timely manner organizations need to be thinking outside of the California ports even if
they're a West Coast organization they might need to look at the east coast and looking at some of the ports that are available to them there and shipping the product via land to get them where they need to be the the end products so that's just one example of how that concentration of risk has created a lot of problems and caught a lot of Supply Chains flat-footed and unable to cope with the current environment so going forward organizations need to focus on how do we ensure that we're flexible and that we neutralize some of those
risks that we see in certain dependencies on sole suppliers another challenge with Supply chains is a lot of supply chain managers don't have good visibility into what's happening throughout the supply chain and that begins with the raw materials that go into the production of Your product that also continues into the subassemblies or the major components that you might be procuring for your product it goes into your manufacturing operations your Warehouse operations your shipping your Logistics all the procurement processes that support those processes and ultimately distribution to your end customer and so that visibility is very
important and that sounds very simple sounds very basic but a lot of organizations don't Have that visibility an insight into what's happening throughout the supply chain and now even if we look at just our own supply chain we also have to look outside of our supply chain as well look at our end customers and understand what that demand forecast is and what their purchasing patterns are and what our anticipated demand is from those customers we have to have good visibility into that to be able to plan our supply chain accordingly and then on The supplier
side we aren't just looking at the immediate suppliers in some cases we need to look beyond our immediate supplier and look to the supplier supplier ERS if there's raw materials that are being provided to a vendor or supplier of ours that's providing a component that's uh semi-finished we need to understand what availability do we have on the raw material side which might be two tiers removed in the supply chain so it not only pertains to Understanding and having visibility into our immediate supply chain but even layers outside of that supply chain as well and the
better visibility we can get into that the more effective we're going to be in planning and executing our supply chain management strategies for the 2020s four limitations and problems with Supply chains and those four things all tie back to an fifth one which is technology limitations a lot of organizations don't have the right Technologies the right software the right applications the right automation the right Predictive Analytics the right tools to be able to have all the things that I just mentioned so for example a lot of organizations now are finding that by deploying Supply Chain
management automation by supplying artificial intelligence Technologies by providing better business intelligent Predictive Analytics providing better visibility overall via automated Technology tool sets is one of the best ways to mitigate the other four risks that I've already talked about so now is a great time to really look at your Technologies and understand what's working well what are those strengths that you have right now what's working well with your supply chain and where are those risks and vulnerabilities and pain points that you have right now and how could technology potentially enable some improvements along those lines so
This pertains to not only Supply Chain management Technologies but also to enterprise resource planning Erp systems it also pertains to CRM systems and ensuring that your Salesforce has automated processes and that we're centralizing that capturing of data so that it can feed into our supply chain planning processes on the CRM side similarly we talked about Labor shortages is the first thing we talked about in this video human Capital Management Technologies can be a great way to ensure that we mitigate some of those labor shortages that we attract and retain the right talent to ensure that
we don't continue to experience those labor shortages so these are just a few examples of how technology can help mitigate some of the challenges that we've talked about so far here today now I hope this has provided you a good overview of how Supply Chain management Supply chains in general are Struggling in the 2020s and I hope it's also provided some insights as to how you can improve those Supply chains in the future [Music] now as we shift gears from how Supply chains work and how Technologies within Supply chains work let's now talk about strategies
to improve your supply chain so in other words if you're going to go through a supply chain transformation or optimize your existing supply chain what Are some strategies to improve your supply chain in 2024 and Beyond now the first component of Supply Chain management that's important that is more of a continuation of what's always been important is to make sure that you have cost efficiency and visibility into your supply chain so you want to make sure that you're cost effective you're efficient and then you have visibility into what's happening throughout the supply chain and this
is the one part of The video that we'll talk about here today that isn't really new but it's continuing to evolve and Advance over time so finding Technologies whether it's a Supply Chain management type of technology or Erp enterprise resource planning types of systems or procurement or warehouse management types of Technologies all those types of Technologies are meant to drive down cost to increase efficiency and to give you visibility into your supply chain And this is even more important today than it was 5 10 20 years ago because first of all Supply chains have proliferated
across the globe so now we're not dealing with myopic smaller Supply chains we're dealing with Global Supply chains and secondly there's more opportunity for disruption as we've seen in the last year whenever there's a pandemic or a port shuts down or fuel prices increase or there's a raw material shortage in some part of the World or There's A geopolitical disruption there's all these different things that can disrupt our supply chain in a way that wasn't as prevalent a few years ago so making sure that you build a supply chain that takes these factors into account
and uses technology and process improvements and organizational improvements to get there is going to serve you well now and in the future one of the biggest Trends we're seeing now that wasn't nearly as important even Just a year or a year and a half ago is that now more than ever organizations and Supply chains need to focus on how to diversify their base of suppliers so not depending too much on one supplier to where if there is a macroeconomic or geopolitical impact to that part of the world or if there's some sort of negative economic
impact on any particular supplier you have backup you're not putting all of your eggs in one basket for any particular raw Material or finished good that you might be sourcing so supplier diversification is more important than ever and this is an area where technology can help but more importantly process improvements and organizational mindset shifts can help impr improve Supply chains to ensure that they're thinking about how to diversify suppliers and how to evaluate how these different suppliers compare to one another I'm going to talk more about that here in just a second as Well but
in general be looking for ways to diversify your supplier base and really hedge your risk all of this is about risk management in being able to navigate the unexpected which again as we've seen in 2020 to 2021 there is a lot of unexpected especially they relates to Supply Chain management now historically supply chain managers have assessed suppliers in a couple of different dimensions one is cost how much is the supplier charging You for their their good or service and secondly the quality rating how does that supplier rate in terms of quality compared to other suppliers
out there and those are still two very relevant criteria that you want to continue to use but those are in some ways very reactive criteria those are after the fact you understand what your costs are although you can predict the cost based on whatever Arrangement you have but when it comes to Quality that's Something that's reactive that's after the fact you can assess how much quality the supplier did or didn't deliver but the key here is to look at some more proactive criteria as well and to anticipate potential risk and to anticipate problems before they
become a problem so in other words instead of running into a quality issue would it be great if you could anticipate that they might have a quality issue using some other criteria so for example we are Finding that there's Technologies out there now that are non-traditional Supply Chain management or enterprise resource planning systems that can help you aggregate data to to gather information about financial metrics for example how well is the company doing how healthy is the supplier if the supplier is not healthy then obviously that's a risk that you can start to anticipate you
can start to hedge your risk and maybe look for even more Alternative suppliers in the event that you might need it that's just one example another example is looking at employee satisfaction if you know that employees are unhappy at a certain supplier and that there's a lot of turnover and other issues internally and organizationally that's a risk that you can anticipate and maybe start to diversify and head your BS so these are just two very small examples of many that you can be using as leading Indicators that allow you to anticipate where the risks are
so that you're not caught flat-footed if when there is some sort of disruption throughout one of these pieces of your supply chain many organizations we work with nowadays are focused on sustainability what is the impact to the climate of our efforts in our supply chain what level of emissions in climate impact are we producing as a result of our supply chain if that's an important topic for you then you want to Be able to evaluate and assess your supplier's alignment with that sustainability goal so when you're looking at your potential suppliers it's not only important
to look at the financial indicators and the quality indicators and the leading indicators that I mentioned before but you also want to make sure that they're aligned with your goals for sustainability to the extent that you have those so this is another area where technology can Help uh supplier scorecard can be expanded to include things like sustain ability and impact to the climate or impact to the environment or whatever criteria might be important to you as it relates to sustainability and then another dimension of sustainability is just the long-term viability of that particular supplier as
I mentioned before if they're on solid Financial footing that's different than a supplier that is weak is maybe shrinking in size Or losing market share in the industry so really understand what sustainability goals you have and make sure that you're assessing your suppliers throughout your supply chain against those goals one of the things that organizations are finally starting to see in recent years is that Supply Chain management isn't just about back office distribution Logistics warehouse management procurement all that stuff it's really about the customer experience how does The supply chain affect your customers how quickly
can you deliver to customers how flexible can you be what type of service are you able to provide to your customers those are all things that Supply Chain management directly impacts and so you want to look at your overall customer experience and think of your supply chain not just just as a cost efficiency opportunity or to make sure that you have the right relationships with the right suppliers you're not Doing that in isolation you're doing those things in the context of how do we provide a better customer experience and how do the decisions we make
in our supply chains affect that customer experience part of the reason for this is because of the Amazon effect Amazon has really honed in on and mastered the whole concept of Supply Chain management as has Alibaba and other e-commerce providers throughout the world so even if you're not a directed consumer type Of Provider you still want to understand that most people in the world right now have this reset expectation of how Supply chains should service their needs and their requirements so when you're analyzing your supply chain it's important to look at it not just from
an internal cost efficiency and supplier based perspective but to look at it from your customer perspective as well just as Supply Chain management is more important than ever to your customer Experience Supply Chain management now affects other parts of your organization in a way that hasn't been true or as true in the past for example human Capital Management to run a effective supply chain you need good talent so to find good talent you need good human Capital Management processes so it's important to not just look at Supply Chain management in its own one-dimensional Focus but
to look at what other parts of your organization Can affect and improve your supply chain and vice versa on the flip side how does your supply chain affect other parts of your organization so for example if you have certain financial goals as an organization whether it be inventory related or return on assets whatever the case may be how can you design your supply chain and build a supply chain that supports those financial metrics so again it gets back to this whole concept of looking at your supply chain not just As it is as a supply
chain but how that supply chain affects other parts of your organization and ultimately even outside the organization as it relates to your customers as well now to better understand Supply Chain management it always helps to give a real life example and actually go visit a supply chain so not too long ago I took my two sons to a local Target retailer to explain to them how Supply chains work and also how systems work Within Supply chains so this is sort of a case study to explain to young kids or at least at the time they
were young they're older now but at the time they were young kids I wanted to explain to them how Supply chains work so this is meant to be a way to connect the dots between some of the concepts we' talked about so far and the reality that affects our everyday lives so the reason we're here today at a big box retailer is to explain why or to explain what we Do at my company and with me I have my two new interns yes Cooper and Colton but more importantly these are my sons do you want
to say hi to the to the hello hi now there are probably dozens of people watching this video right now so you may want to say something about yourself how old are you 13 and I'm 10 okay so Cooper and Colton 13 and 10 brand new interns and my sons and so before we start walking around I already agreed with you Guys that I would buy you something in exchange for your help with this video yes and we're so we're going to go on a journey to go find something to buy and during that time
I'll explain how Erp systems work and I'll explain what we do but before we do that do you know what I do every day yes kind of sort of so what do you think I do every day like our company what does our company do well we try like St you try and help other businesses do better and swap yeah That's that is part of what we do is to help businesses be better and be more efficient what do you think we do you're also a consultant yeah we are yeah and what do we consult
on other companies to yeah that is you guys are both right so that's what's interesting is you didn't say anything about technology or computers or anything like that that is part of what we do but what you guys Said is actually simpler and more direct and more accurate because of what we really do is help companies be more effective and make more money but we just happen to help them use computers to do that so my goal is to explain to you guys a little bit more what we do because I can explain to other
people that are in the industry but if I can't explain to you guys then we've got ourselves a problem that I shouldn't be doing what I'm doing if I can't explain It to you guys okay so we're going to walk and go find I'm going to let you spend up to not one but $2 for each of you okay do you think you can find something for two bucks in here uh all right we might go a little bit above that cuz inflation and stuff since I was a kid it's a little bit different now
so let's go up to we'll up to 20 how about that so 20 20 each W yeah well I mean dozens of people will see this video so just Kidding okay so do you know guys know where you want to go yeah okay let's go [Music] before you guys pick something out I know you're already thinking about what you're going to get but when you look around the store and all the stuff they have on the shelves How do you think they track all the stuff that's here yeah tracked by computers and every time something
get checked out they know and it's like you get the last one Uh they'll like restock in like a week or a couple days yeah good job they usually have schedule yeah but if you guys bought like if you bought all of one of these things here and you cleared out the Shelf the computer would probably tell someone to order cuz they know how much is yeah and then they would order more and then put them back on yep good job and computers now too they can predict how much they think you're going to buy
So like there might some be some already on the way because they've assumed or projected that like on average per day yeah they might have assumed that two kids were going to come in today and buy some football and basketball cards and so it's already on the way cuz they know that on average two kids walk in every day and do that and that's all the computers that tell them how to do that yeah and so and then if you look around to you see all the employees here so They all computers help find the
employees so like if someone applies for a job here they go into a computer that helps track what qualifications they have and then that way the the store manager can look and see who the best person for the job is yep and then scheduling people at certain times like they they know like when the peak times of the store are so they know when to schedule people to come in and be here so open And yeah weekends or right after work or whatever they have data from the computers to tell them when the busiest times
are so they know when to have people computers can also tell you like where on the shelf stuff should be so they know that the highest moving or the most appealing stuff is going to be right at eye level where you guys are going to see it and the stuff that's not as appealing or doesn't sell as much or Doesn't make them as much money is going to be on the bottom which is why you're probably not going to be buying the squish ons you're be buying the uh the cards instead because they're right at
ey level and they know this stuff's going to move faster and the computers will tell them all that stuff so they know where to put it mhm all right so which ones are you going to get or you want to look for a minute I'm going to Look okay so who do you guys think is the biggest competitor of targets competitor of targets I would say Amazon yeah Amazon that's probably the biggest one why why do you think they're such a threat to a company Tet yeah I think is is because they have some of
the same stuff and they're competing with each other who gets the most profit by getting more money and they're Competing they also almost rest stock or have like a larger Supply at once cuz they don't have to instead of like here where you have to fit everything on sh like yeah yeah yeah they just ship it out of a warehouse straight to your house yeah so there's convenience so we didn't have to come and you don't even have to that's true and we didn't even have to come here we could have just gone online bought
it on Amazon but Target sells online too so they sell Through their through their e-commerce even through their website you could have bought these same these same things but part of why they do it too is because it costs so like so Amazon is low cost and that's how they compete is because I can have lower prices the target's pretty good too mhm but Target selling more and more stuff online now so we could have gone online same they just yep so some like less people come to Target so just like Target yeah but what
could have happened what or what they do sometimes is because they know you could buy the stuff online so they try to compete in different ways so they could try to compete on price or they could try to um give you impulse purchases do you know what impulse purchases are like things while you're here and this may remind you of someone in the family that's not here with us oh that just buy stuff randomly do you know what I'm Talking about yeah yeah Mom so sometimes she's at the store she'll see all the stuff that
she doesn't need but she just impulse buys so that's what they try to do here and that's something that if you go to a store like this that they can help do and computers can help them figure out what products they should put next to which products to make you want to buy something Bor what and then there's like an aisle where there's all this like say like there's a lot of soda And then there's just some random thing in it yeah like when you check out like right here there's uh that's why they put
all the candy here cuz they know that people are more likely to buy candy as like and Amazon can't do that Target can cuz we're here right now mhm so all that stuff we're talking about is because of computers and so that's what we help companies do is figure out how can they make their process better so that they Can sell more stuff help their customers more and make more money MH that's really what we that's what we consult companies on got it yeah okay should we go pay sure [Music] okay so now that we
paid this also goes in the computer so the computer just told the main computer that we just bought a bunch of stuff and it keeps track of how much money that we paid and so now they can see how much profit they Made off of us walking into because now so all that's happening on the computer and now it'll trigger some kind of reorder and the warehouse Target warehouse will send whatever is needs to be shipped now and then it'll get restocked and the next giid that comes in with the dad will find more yeah
and then it'll happen again and again and again yep and then every time someone buys something it gets better trying to figure out what the patterns are and When should order stuff ahead of time so it can always be there uhhuh got it yeah okay cool grab [Music] yourself okay now that we went through that journey and you saw how the whole shopping process one how it ties back to computers and processes and all that stuff now tell me what you think I do or what our company does your company uh consults people by making
the company bigger and getting More profit in the company also trying to expand to not just like just want expand like websites yeah so anything to do with technology processes being better um people being better at their jobs and be able to sell more Help The Help the company make more money all that stuff is what we do and it just happens to be computers that help us do that a lot of time all right yeah got it well thanks for your help your Pug good job you guys might get hired here you congratulations you're
getting promoted now that we've talked about the target case study of Supply Chain management let's shift years in talk about some of the best Supply chains in the world some of the notoriously Famous Supply chains some of those organiz ganizations that are Infamous for making Supply Chain management not only cool but highly effective and these are some of the organizations that are most Effective in their supply chain initiatives so let's dive into the top Supply chains in the world Schneider Electric is a very large Global conglomerate that provides energy Management Solutions throughout the world the
reason Schneider is in our top 10 list is because they are in an industry that's very complex Energy Management typically entails a very complex Supply chain so that alone is a reason to celebrate the success of Schneider's supply chain but it's also the fact that they're a global organization they operate in over 100 countries and that requires a great amount of discipline as it relates to Supply Chain management another reason why Schneider is in our top 10 list is because they have a program that focuses on driving sustainability and innovation in the supply chain and
this extends all the way to their suppliers and basically everyone that touches their supply chain Is focused on sustainability and also Innovation so for all these reasons that's enough to land Schneider at number 10 on our list of top 10 Supply chains coming in at number nine is Intel and Intel is a chip manufacturer as you may know and they produce a very high volume of computer chips every year and the reason why they're in the top 10 is if you go back 10 years or so back to 2012 intel was experiencing a ship shortage
and they were actually able to Beef up production by building two manufacturing plants in the United States to help increase through put in productivity and production at a time when there was pretty severe chip shortages and during that time they demonstrated that they could respond with their supply chain management and respond to changing macroeconomic and overall supplier Trends to ensure that they had a supply chain that could survive into the future not only that But they also have a very forward-thinking supply chain that focuses on decreasing their carbon footprint decreasing their impact to the environment
and the sustainability of their supply chain is another reason why they're in our top 10 and then finally another neat thing about Intel supply chain is that they have a corporate code of conduct that applies to all of their suppliers they have over 9,000 tier one suppliers who are Required to abide by this code of conduct to ensure corporate responsibility impact to The Climate as well as overall diversity goals so for these reasons Intel is number nine on our list of top 10 Supply chains coming at number eight on our list is Alibaba and Alibaba
is the global e-commerce retailer similar to Amazon that manages a very complex supply chain a lot of different suppliers a lot of different customers throughout the world and a lot Of supply chain demands that go along with that and the fact that they've been able to scale the way they have and grow to become the PowerHouse that they have internationally is a reflection of their effective Supply Chain management in addition to being a retailer and distributor Alibaba has also increased its manufacturing capabilities as well which further complicat their supply chain but it's a transition they've
managed well and they've also offered a Supply chain as a service sort of offering to customers to allow them to track everything from procurement to transportation and being able to track the status of the supply chain along the way and so for all these reasons that's why Alibaba is number eight on our list coming into number seven is Walmart and Walmart is the global retailer that really transformed the supply chain back in the 80s and 90s by really changing the way people think about Supply Chain Management in fact it was Walmart that made Supply Chain
management fairly well known at the time and they did that by driving down supplier costs by integrating their supply chain and providing a lot of innovation that organizations hadn't seen up until that point more recently in more recent years Walmart has navigated the pandemic and the shift to Omni Channel retail by enabling competencies that allow for curbside pickup for example to really Rethink the way people shop and the way people get their goods and they've also had a pretty strong Focus on sustainability and corporate responsibility as well so for all these reasons that's why Walmart
is number seven on our list coming in at number six is Johnson and Johnson the large consumer product organization and the reason they're in our top 10 list is because they've really pioneered this whole concept of datadriven Supply Chains and they're almost obsessed with data analytics and Gathering data throughout the supply chain and they use these various data points throughout the supply chain to create more accurate forecasts of consumer demand as well as production needs and distribution needs and really identifying potential challenges and bottlenecks within the supply chain so this is a very Innovative way
of thinking that we hadn't seen up until Johnson and Johnson And that's why they're number six on our list coming to number five on our list is Colgate pom Olive another consumer product Powerhouse and the reason they're in our top 10 list is because first of all they manage a very complex supply chain effectively throughout the world but secondly they're also very Innovative in terms of some of the digital Technologies they use to manage their supply chain for example the company is pioneered Factory automation As well as advanced Network modeling which are two technologies that
hadn't been used previously or at least not commonly used by Supply chains in addition the company has deployed predictive maintenance models using that same data as well as Wireless sensors and artificial intelligence so they're really on the Leading Edge of using some emerging Technologies to enhance and optimize our supply chain which is why it's number five on our list of top 10 Supply chains coming into number four on our list of top 10 Supply chains is McDonald's McDonald's of course is the large fast food retailer internationally and the reason they're in our top 10 list
is because they've used technology in a way that a lot of organizations haven't done well and not only that but they've integrated a supply chain that begins with farmers and the actual production of raw materials and ingredients into their food all the way Through the final product that's delivered to their customers in the restaurants and of course everything in between so that alone is a very complex supply chain it's a very large and Global supply chain and for that reason McDonald's is number four in our top 10 list of Supply chains coming into number three
is Unilever and Unilever is interesting because they view Supply Chain management as a core competency and a competitive differentiator for Their organization and Unilever supply chain begins at the manufacturing process and continues all the way through the end consumers it's heavily dependent on data artificial intelligence and other ways of anticipating consumer demand and producing and delivering to that consumer demand and if you just look at the sheer volume and complexity and magnitude of their supply chain it's very impressive the company manufactures And distributes 77,000 stock keeping units or skus in over 190 countries and they
Serv as 2.5 billion customers every day which is about a third of the world's population which is very impressive so for all these reasons Unilever is number three on our list of top 10 Supply chains coming in number two on our list is Apple which is one of the largest companies in the world they produce very complex products and distribute their Products to Consumers all over the world and their products when you look at iPhones or their laptops and other devices that they produce are very complex there's thousands of materials that go into any given
end product which that in in and of itself is a lot of complexity to manage but in addition to that they've also provided a sort of supply chain that's very Nimble and adaptable and they've done this by creating strong relationships with Suppliers so that they can respond quickly to changing customer demands and taste and if you look at the way they've been able to ramp up production when there have been demand surges they've been very good at that not to say that it's always possible to find the latest and greatest iPhone in the marketplace but
in general they do a pretty good job of satisfying consumer demand and quickly ramping up production and ramping up their supply chain as they Need to so for all these reasons that's why apple is number two on our list coming in at number one is Amazon which is not only one of the largest companies in the world but it may be the most complex supply chain in the world they work with thousands of different suppliers and sellers through their e-commerce platform they produce many of their own products they even are opening their own bricks and
mortar retail stores and by the way they also manage Their entire supply chain of distribution beginning from the source of the supplier all the way through their distribution centers and distribution to Consumers and part of the reason why Amazon is number one is because they've really forced the industry to rethink Supply chains they've gotten us accustomed to the idea that I could order a product today and maybe even have that product delivered to my house by the end of the same day Depending on where I live and that's something that was unheard of just a
few years ago so the fact that Amazon is totally revolutionizing the supply chain is to be noticed so for these reasons that's why Amazon is number one on our list of top 10 Supply chains so a lot of what we've talked about so far is Supply Chain management as it exists today we've talked about some emerging Technologies we've talked about case studies of organizations that Have done really well with their supply chains we've talked about some strategies to improve Supply Chain management but I want to shift gears now and talk about the future of Supply
Chain management what will it look like in the future and that's what we'll cover next one thing that the pandemic of 2020 and some of the geopolitical uncertainties of the 2020s have taught us is that supplier strategies of the past are no longer going to work now or In the future and if you look at what happened during the pandemic for example we saw that we had an over-dependency on certain parts of the world that were no longer reliable as they had been in the past because of shutdowns and other pandemic related issues and geopolitical
issues so what that has done is it's forced organizations to rethink their supplier strategies and really focus on diversifying the concentration of risk within their supply chain networks and Their supplier networks in particular so for example many organizations found that they were procuring raw materials and parts and products from China or in Asia Pacific and when the pandemic hit China and Asia Pacific had a lot more stringent lockdowns than other parts of the world and what that did is it disrupted the supply chain so in other words we were so dependent on a small handful
of countries that now suddenly weren't Dependable due to factors Outside of our control and so what that's doing is it's forcing organizations to think about how they can diversify supplier risk not just geographically but also looking at other diversity of suppliers and making sure that they don't have have too much concentrated risk on any one or more suppliers and this is not only for where you procure materials from but it's also looking at Transportation on logistics for example do we have too much risk Riding on One Transportation or Logistics provider or one 3pl provider do
we need to rethink our strategies for how we leverage some of these providers those are all questions that we didn't really have to ask prior to 2020 because Supply chains were a lot more predictable and a lot more stable than they are now so in order to navigate the 2020s and Beyond organizations now are being forced to rethink their supplier network and to rep prioritize and Diversify their supplier networks as well given the fact that the world seems to be changing at an accelerated Pace here in the 2020s is the fact that now we've got
to also look at all the data that we have throughout our supply chain both internally and externally and we have to figure out how we can use that data to make better decisions and to better anticipate future Trends and things that might disrupt Supply chains so when you think about a supply chain And all the complex business processes and different touch points that happen from the time a raw material is produced until the finished product is produced and it's ultimately distributed to your end customers there's a lot of stuff that can go wrong there there's
a lot of different data points that are being captured along the way and organizations that are prepared for the future have ways of tying together their systems and their data to track that information and To make better use of that information so that they can anticipate demand and be more proactive about fixing some of the challenges that organizations are facing with their supply chains today and it's not just our internal supply chain that we need to be focusing on Gathering data from it's also looking at economic and external factors so things like economic growth or
economic shrinkage or recessions in different parts of the world or geopolitical Dynamics or the insolvency of certain suppliers or Logistics providers those are all things that you need to have data points that can inform your supply chain managers to make better decisions and the only way to do that is to have the right technologies that integrate with other providers that can provide both that internal and external knowledge to help you make better decisions and help you manage your supply chain better now stay tuned to The end of this video because I'm going to talk more
about specific technology options that might help you better manage your supply chains in the future along with all this disruption and change comes opportunity and anytime there's disruption and change in the world that creates opportunities for new career Fields it increases popularity of certain career fields and that's the case with Supply Chain management Supply Chain management is a very hot area to Be in right now especially if you can combine a knowledge of Supply Chain management with a knowledge of technology and data if you can combine that business and technology skill set in background that's
a very powerful combination and people that understand how to manage Supply chains how to improve Supply chains how to do business process Improvement deploy new technologies to make their supply chains better those people are going to be in Really high demand for years to come and I think this is something that isn't just a temporary problem or opportunity I think this is something that's going to continue for decades into the future as organizations really try to continue this migration to the new post 2020 Supply Chain management world that we're in so despite all the turmoil
and all the problems that I've talked about as it relates to Supply Chain management that just leads to more opportunity and Potential growth when it comes to your career another Trend to be aware of is that in the not to just in future I think that governments throughout the world are going to start to regulate Supply chains more intensively when you think about Mission critical or essential items things like baby food or energy or food in general those are examples of really critical items that people need and when Supply chains are getting disrupted to the
point where People can't get food they can't get energy they can't get shelter whatever the case may be that's when government tends to step in and regulate now whether or not you think that's a good thing or a bad thing that's a topic or a discussion for a whole another time but the reality is is that I think governments throughout the world are going to start to clamp down on Supply chains and do their part or try to do their part on regulating and putting in Standards and service level agreements for what constitutes an acceptable
supply chain especially in critical areas like food beverage energy things of that nature so one of the things you can do to get ahead of potential government regulation is to fix your supply chain to improve business processes to provide better data to put better systems in place it's something that's going to help your business anyway and help you be more profitable But it's also getting ahead of potential regulation which may force you to make these changes in a shorter amount of time than if you were to start now now in the relatively short amount of
time we've had since the pandemic happened in 2020 we've seen that organizations have responded to these supply chain disruptions by stockpiling inventory they're kind of going back to an old model that worked decades ago but we moved away from in the 90s and early 2000s when we moved to more of a just in time inventory man agement approach and that's been a trend that had been developing for decades but now we're seeing that that just in time Inventory management approach isn't as effective in times of turbulence and unpredictability within Supply chains so organizations are responding
by letting the pendulum swing back the other way now to where we're stockpiling inventory making sure we have enough inventory on Hand now that's creating a few different problems one of which is the fact that now it's getting harder to match inventory to demand because we're stockpiling often times organizations are either overstocking inventory that they're not going to need or that's wasted inventory or they're underestimating customer demand and they're still not able to meet demand so that's one problem but one of the bigger challenges that organizations are having Is the fact that the stock pile
of inventory is causing organizations to have more cash and capital tied up in their supply chains so in the past they had a certain amount of cash tied up in the supply chain but now they're having to increase that because they've got a stockpile inventory they have to place orders earlier they might have to pay for products earlier before they receive those products and it's going to take longer for them to receive those Products so everything's getting elongated which means more cash is going into Supply chains so what's going to happen is eventually organizations and
CFOs of organizations are going to clamp down on that and they're going to try to tighten up the cash flow and the capital Investments that they've made within their supply chains and that's going to create a conflict or potential tension between cash flow management and adequately satisfying customer demand so Look for that Trend to be something that doesn't get settled anytime soon but back to my earlier points about having the right data and systems in place will allow you to navigate that better if you do that effectively so one of the best ways to navigate
some of the challenges I've talked about here in the Supply Chain management space is to deploy supply chain systems that can help you manage these realities more carefully so there's a lot of really good Supply Chain management Focus systems out there that help automate and integrate the entire supply chain from procurement all the way through manufacturing production warehouse management and ultimately distribution to your customers and these Supply Chain management systems can be very effective and very focused on solving the immediate problems of supply chain manager space you also have enterprise resource planning systems or Erp
systems software like sap Oracle Microsoft Dynamics these big Erp systems that do Supply Chain management but they also integrate with financials and customer service and sales and HR those sorts of things so Erp systems are another type of technology that can be deployed and then finally another useful technology in today's day and age and in the future of Supply Chain management is going to be business intelligence so having business intelligence and analytical tools that allow you to take All that data that I mentioned before and allows you to provide better insights and understanding into what's
happening in your supply chain and allows you to more proactively address and mitigate potential supply chain disruptions and [Music] bottlenecks now as a closing module here sort of a bonus module I want to share some of the top Supply Chain management systems to be aware of and this is Especially important if you're in Supply Chain management or if you're a consultant or if you're interested in just learning more about Supply Chain management these are the top technologies that organizations use to automate their supply chains and this is a top 10 list that we compiled at
my company third stage consulting which is meant to be a techn Tey agnostic and independent ranking of software systems out there we're not affiliated with any Of these software vendors so this is a good way to really understand who some of the leading players are in Supply Chain management although I will say this is not the entire list of Supply Chain management systems out there there's a lot of really good options out there in the market place but having said that let's dive into the top 10 Supply Chain management systems labor shortages throughout the world
are one of the key challenges that Supply chains Are facing it's something that's limiting the reliability and the flexibility of our supply chains and it's creating a lot of disruption it's undermining our customer experience and making our lives difficult in the meantime so one of the best ways that we can address this labor shortage is via human Capital Management and rethinking our human Capital Management strategies so in other words how can we better attract and retain talent in light of The fact that it's so hard to find and retain good talent how can we ensure
that we develop those resources to become better at supporting our supply chain and ultimately how can we ensure that we keep those resources as part of of our team and as one of our employees for the longer term now this can't all be fixed with technology but there is HR technology out there such as human Capital Management systems that can help automate some of the hire to retire Processes and create a certain amount of employee stickiness with our organizations and that can be a great way to start is to deploy human capital and HR Technologies
that help automate some of our HR our recruiting our development our learning and our training processes and all the functions that support the overall employee experience so Supply chains of the future the most successful ones are going to be better at human Capital Management than those that aren't given the unpredictable demand and the unpredictable impacts that suppliers are having on overall Supply chains it's more important than ever that we have visibility into the overall supply chain so we have to understand what's happening from the point of customer demand through the procurement of raw materials through
the procurement of semi-finished goods or components that go into our finished goods through the Manufacturing process Warehouse processes Logistics shipping 3pls getting the products to our end customers and ultimately repeating that cycle over again and a lot of organizations just weren't prepared for the unpredictability of today's day and age so they didn't have the Technologies and the processes to support those types of needs that we had within our supply chains so we need to have better processes and better Technologies to Provide that visibility within our supply chain and it's not just our immediate suppliers and
customers we need to think about in some cases depending on your business you may need to think about your second and third tier suppliers what is their reliability what is their quality what is their availability what is their lead time the further we can go down and into the supply chain the more effective we're going to be at planning our supply chain Same with our customers if our customers have customers they're selling to it's even better if we can anticipate the End customer demand even if we're not selling directly to the End customer customers so
that's another way that we can sort of extend that visibility via our processes and Technologies and data to ensure that we're looking at the entire supply chain and we also want to look at things like visibility into other players within our supply chains In addition to our direct suppliers you have 3pls or logistic providers you might have ports that you're relying on or shipping providers people that are critical to the execution of your supply chain you want to make sure you have visibility into their reliability their cost their predictability and all those things that are
important to a effective supply chain so one of the most important Trends and strategies for 2022 is to have this visibility when the Pandemic first hit in early 2020 and all the lockdowns ensued after that a lot of Supply chains learned very quickly the hard way that they had concentrated their risk with a small number of suppliers it may be that they relied on one key supplier for one key component or key raw material for their supply chain and that one provider was in a country that was completely locked down or couldn't produce for whatever
reason that core component so they found that They didn't have the diversity of suppliers and they hadn't Diversified their risk enough to sustain a supply chain to navigate some of these challenges and curveballs that we've experienced in the last couple of years so organizations going forward need to really think about how they diversify their supplier base Ure that you have your plan B your plan C your backup vendors in case one vendor can't perform or can't come through for you or it may Be that you just want to diversify and hedge your risk to begin
with and procure from multiple suppliers and that certainly might reduce your purchasing power with any one given supplier but you might be willing to give up some of that cost optimization in the name of having more flexibility and more dependency and reliability within your supply chain so that diversity of your supplier base is critical not just for where you're procuring raw materials and Components from but also the types of 3pl providers you might rely on the ports that you're receiving product from do we need to have other ports that we can rely on in case
one port experiences a bottleneck as many are throughout the world so that diversification of our supplier base and diversification of the different points of our supply chain is critical to success in the 2020s another thing that the post-pandemic world of the 2020s is teaching us is that many Organizations have overly complex and over engineered products and raw materials it may be that the products themselves don't lend them eles to a streamlined supply chain so if you have a product that requires thousands of different raw materials to complete your product we may want to look at
ways that you can streamline that and from a product development perspective and also from A supplier perspective to ensure that you're not so dependent on so many Different suppliers often times when you have that many raw materials you're just increasing the odds of something going wrong in the supply chain so if we can streamline and simplify our supply chain that can oftentimes mitigate that risk Supply chains in general struggled to have a clear visibility into their cost structure their landed cost structure even before the pandemic and certainly now in the 2020s that's becoming even more
difficult because of inflation Because of supplier breakdowns and bottlenecks within the supply chain that's creating a number of challenges that makes it difficult to see what the real cost structure is what is the real landed cost of our procured and manufactured materials so in order to over come this we need to make sure that we have a solid understanding of what that cost structure really is what are the labor costs that go into it what are our direct costs what are our shipping Costs our 3pl cost our freight costs all that stuff that goes into
the supply chain we want to break it down and understand at a unit level how those costs equate to a total Landing cost for any given product and that's going to help us battle inflation it's going to help us make sure that we're holding our margins steady in the current environment of inflation and other price fluctuat so that cost transparency is something That's very critical and it may be that having better systems and better Technologies is one way to do that as organizations have extended lead times as they've Diversified their supplier base as they have
in some cases entered into new Partnerships and new agreements with new suppliers that has created a cash constraint for some organizations it's caused more cash to be consumed and tied up in your supply chain in a way that wasn't the case a couple of years Ago so now organizations to be effective in their supply chain management need to make sure that they have enough cash liquidity to ensure that they can finance and support these strains on cash flow that supply chain issues are creating right now so this is more of a Band-Aid fix it's more
of a reaction to the challenges that organizations are currently facing but organizations that are stronger financially and on more solid footing have access to credit have A line of credit they can draw from that's going to be a good way to mitigate some of the challenges that come from having new suppliers that have more stringent payment terms for example or the fact that you're not going to get paid from your customers until later because it's going to take you longer to get the raw materials to be able to produce it and ultimately get your products
to your customers so that extension of the overall duration and The overall supply chain delivery is creating more cash constraints that the more financially sound organizations are going to be able to navigate more effectively now the last two strategies and Trends I've talked about are related to financial considerations one related to cost and the other one related to cash liquidity on top of that a third Financial consideration is your overall pricing strategy once you understand your overall landed cost and your per Unit cost to include your supply chain cost once you understand the liquidity and
the cash implications of your Supply Chain management now we can revisit our pricing models and ensure that we have the right price structure to account for some of those considerations as well as other inflationary pressures currency fluctuations and other things that are going to affect our supply chain so a prerequisite to having the right pricing strategies is a lot of the other stuff I've already talked about but ultimately you want to take that information that you've gathered those processes you've put in place and those new technologies and data points that you put in your supply
chain to ensure that you have the right pricing structure in place as well now the first seven things we've talked about can all be enabled in some way by better Technologies better visibility into information better tracking of your supply chain and just overall business Intelligence better business intelligence for your supply chain so organizations going forward need to rethink their digital strategies because the digital strategies of pre-2020 were no longer relevant to where we are today so we need to make sure that we have a digital strategy that's right sized for the 2020s that takes into
account the realities of today so that we can take all these factors into consideration and that we have a technology road map that Allows us to accomplish those strategies and trends that I've talked about so far in this list now part of this is looking at the software applications that can automate your supply chain or provide some of that visibility but it also relates to your data you know how do you capture data what's the business intelligence that you're getting from your systems are there other Technologies outside of software and Enterprise applications that can help
Automate and improve your supply chain things like robotic process automation or robotics in general smart sensors on your factory floors things that will help provide more realtime visibility into what's happening so you want to take a holistic view of your entire digital strategy look at what you have today that's working well and look at things you could be improving in the 2020s to make your supply chain more right sized for the realities of today Now something I alluded to in passing earlier in this discussion is the fact that we need to look outside of our
immediate supply chain we have our raw material suppliers all the way through our customers and everything in between that stuff's all important we need to get a handle on that we need to have the right processes and Technologies and data and organizational structure to support that supply chain and provide that flexibility for the future we also Need to look outside the supply chain we need to to look at those end customers like I mentioned before we need to look at the second and third tier suppliers those suppliers that may not be immediate suppliers to us
but they affect our immediate suppliers and the better visibility and the better we can reach out into the other parts or outside the supply chain the better visibility we're going to have and the better we're going to be able to plan And predict and be effective in managing the overall supply chain so it's important to not only look at your immediate supply chain and those immediate stakeholders and touch points that you're used to working with but also the touch points and stakeholders outside of your supply chain as well whether we like it or not or
want it to happen or not chances are fairly high that there will be some sort of government regulations as it relates to The supply chain at the time I'm recording this video for example the United States government is already talking about and exploring the idea of imposing regulations and taking a more active role in managing Global Supply chains as a way to try and fix the problem and again doesn't matter what your political beliefs are whether you think this is a good idea or not the reality is it's it's likely to happen so we need
to make sure that we have a Supply chain structure and processes and systems in place that gives us the flexibility to be able to adapt if or when those government regulations come into play and one thing about government regulations is they often times aren't realistic often times they're painful and often times they don't give you a lot of time to really plan and prepare for it so if you can start planning and preparing for potential regulations now that's going to make your life a lot Easier if it were to happen in the future worst case
scenario if the government regulations never happen or if this All Passes and Supply chains somehow get back to normal at the very least hopefully you've built some flexibility into your supply chain that can respond to other third party and unpredictable aspects of Supply Chain management so prepare for government regulation even if the government regulation doesn't happen you'll be Better prepared to manage a successful supply chain in the future so I hope this has provided some context and deeper understanding of what Supply Chain management is how Supply chains work where Supply Chain management is headed as
a discipline as well as how you can improve and automate your supply chains with technology now if you'd like to learn more and go deeper into Supply Chain management I encourage you to read our guide to Supply Chain management it's a free guide you can download it on our website using this QR code right here or the links below it'll help you understand some of these Concepts we've talked about here today in a lot more detail so hope you found this information useful and hope you have a great day