How Strong Is Your Supply Chain?
There’s a well know
proverb that goes “A chain is only as strong as its weakest link”. We apply it to many situations, but how often
do we stop to think about how it applies to the products or services that we
provide or on which we rely to provide our own products and services?
Recently, our home internet service went down. Where we live, this is starting to become a
“regular” occurrence, and we have the service provider’s helpline number
committed to memory. We can’t switch,
because there’s only one service provider in our country. So we have to live with and make the best of
the situation.
The impacts of when we lose internet are that I can’t:
·
Work from home
·
Send emails
·
Surf the web
·
Attend conference calls
·
Order goods
·
Do research for clients
·
Stay up to date on current news
·
Do electronic banking (e.g. making payments or
checking I’ve received them)
·
… and lots more
I have two children who are students, so they can’t:
·
Do research for projects, homework
·
Keep up with friends
·
Submit homework
·
Check emails form their teachers
We’re lucky in that we can go to the neighbours next door
and ask if we can use their wifi, and my office isn’t too far away so I can use
the internet there. It’s not a total
disaster, just inconvenient until it’s fixed (and our provider got us back up
within 3 days).
The point is that all organisations dealing with customers
have a “supply chain”, that is, a series of activities and processes that, when
put together in the right order, result in the production of goods or services for
which customers are willing to pay. When
something happens to disrupt this harmonious coordination of people, processes
and production, there’s a problem. Organisations
then realise how vital a seemingly minor (on the face of it) aspect of the
chain can be. That’s when they identify
their “weakest link”.
The weakest link is often in the most unexpected place. There’s a great story about a company which
built its production plant on high ground to make sure that it didn’t get
destroyed by floods. The floods duly
came, the plant was unharmed, but the workers all lived on lower ground. Equally, suppliers’ warehouses were on lower
ground, so workers couldn’t get to work and neither could supplies be
delivered.
Another company realised that the two staff who received
telephone orders from customers were they key to its operation; with no purchase
orders, they didn’t make money.
How do you go about identifying your “weakest link” (or
links)? To start with, look at what it
is your organisation does. Look at the:
- Customer base (who are they and what are their needs?);
- Outputs (what it produces, and for whom);
- Quality standards of outputs demanded by customers;
- Where they go;
- How they are delivered (road, rail, truck, courier, air, internet);
- How your organisation gets paid for them (bank transfer, cheque, cash).
- Where are these outputs produced (factory, call centre operator answering questions, etc)?
- How do they produce them (machinery, computer, paintbrush, etc)?
- How long does it take to produce?
- Who else is involved in the “assembly” line?
- What tools do they need?
- Where are they stored/how are they accessed?
- How many stages are needed to produce products/services?
Finally, look at the inputs (what is needed to for the
production of goods):
- Who provides it?
- How do they deliver it?
- How do you pay for it?
- How often do you need it?
- How do you order it?
- How long does it take to get there once the order is received?
- What quality standards are needed?
- Do you have more than one supplier available in case things go wrong?
Do this for both internal
and external suppliers and
customers. It’s all very well to be
focused on end buyers and suppliers, but remember that a team producing
something may also need input from other departments or teams. To this end, look at:
- How they communicate;
- Does one team produce output faster than the receiving team can handle it?
- Do teams need “buffer stocks” of material to accommodate a team that produces more slowly?
- How is quality assured between teams?
- What happens if a mistake is spotted?
- How many stages are needed to produce products/services?
- How do staff get to the place of production?
When Bangkok gets flooded, PC manufacturers who rely on
“just-in-time” stock delivery have problems because a number of hard disk drive
manufacturers are located there. If you
rely on just-in-time as well, bear this in mind. Find out what plans your suppliers have if
things go wrong. Your output and process
may be first-class, but you could be knocked over by a supplier who can’t
deliver or by not having a backup supplier, and that will be your “weakest link”.
Labels: Crisis Management, Customer Care, Productivity, Strategy
posted by William Martin @ 09:04
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