{"id":7248,"date":"2018-08-20T09:39:00","date_gmt":"2018-08-20T13:39:00","guid":{"rendered":"https:\/\/demand-planning.com\/?p=7248"},"modified":"2018-09-21T11:20:28","modified_gmt":"2018-09-21T15:20:28","slug":"5-supply-chain-habits-that-will-cripple-your-business","status":"publish","type":"post","link":"https:\/\/demand-planning.com\/2018\/08\/20\/5-supply-chain-habits-that-will-cripple-your-business\/","title":{"rendered":"5 Supply Chain Habits That Will Destroy Your Business"},"content":{"rendered":"

When it comes to supply chain professionals, most of us like to think we know the best way of doing things. Starting off with the best of intentions, we work under an unproven premise that our little supply chain foibles are typical in organizations like ours. Ignoring some consistent fault lines, however, will eventually expose costly cracks in the supply chain process, leading to lost sales, a decline in morale and the loss of talented personnel. <\/strong><\/p>\n

By normalizing day-to-day chaos, we may be avoiding a hard truth\u2014some of our entrenched behaviors are, in fact, sabotaging our everyday and long-term goals. Consider these bad behaviors so that they can be squashed before they integrate themselves into your business processes.<\/p>\n

1. Allowing Customer Service to Pass Judgment on Available-To-Promise (ATP) Data<\/h2>\n

Our ability to commit to customer orders begins with our statement of product availability through our ATP. This ATP is based on the culmination of many demand planning processes. The longer-term demand forecast drives the planned procurement of materials and production of finished goods. These plans reflect the prioritization of that demand, which is based on the corporate objectives and financial goals of that organization.<\/p>\n

These plans also reflect the supply chain\u2019s capability and constraints \u2013 lead times, cycle times, manufacturing planning parameters, and level-loaded capacity consumption over time, just to name a few. At any given point in time, this plan\u2014which serves as the foundation for the ATP\u2014is truly the best product availability signal. When customer service arbitrarily second-guesses or doubts ATP\u2014overriding a commit date to the customer\u2014the only logical result is a potential false commit to that customer. Do this enough times, and you will lose customers.<\/p>\n

2. Allowing Executive Management To Circumvent The Process<\/h2>\n

Controlling the actions of our executive management is not our responsibility. It\u2019s their prerogative to take action, and as an organization, we\u2019re generally compelled to comply. But, for example, how many times have we seen an executive return from a customer review meeting which resulted in a one-off, special action on that customer\u2019s orders? This kind of decision\u2014which overrides all the careful planning preceding it\u2014has a very good possibility of creating a disruptive ripple effect on the balance of the business. We can\u2019t control that executive\u2019s action, but we can provide them with the necessary data to make an informed decision. Understanding the full impact of their request may not change their decision but may get them to think before requesting the next one.<\/p>\n

3. Hiding Available Inventory Or Capacity<\/strong><\/h2>\n

Transparency in a supply chain is critical. Why? Because transparency is what enables very quick response times to the demands of a dynamic market. A sudden upside request from a customer can only be supported by inventory on-hand or projected inventory from future production. In a constrained environment where product is limited, an exception process may be invoked as an attempt to close on the upside opportunity. When inventory is hidden, sometimes asking a second time, or asking louder, can cause a sudden appearance of product availability. All this achieves is unnecessary internal chaos, which elongates the time to respond and creates additional frustration with the customer. While lack of inventory visibility may be a symptom of system capability, if it\u2019s due to forecast mistrust, manufacturing capability doubts, or just plain sandbagging, this kind of sabotage can and should be avoided.<\/p>\n

\"supply

Not sharing how much inventory is actually available is just one example of normalizing bad supply chain practices, and inviting chaos in the process.<\/p><\/div>\n

4. Allocating A High Percentage Of Supply Capability<\/h2>\n

In a perfect world, the supply chain is driven by a statement of demand that, through the S&OP process, has consensus from all organizations.\u00a0If we thought that forecasted demand was 100% accurate, reserving or allocating your supply capability\u2014including inventory\u2014to support that demand would not be a problem. We may turn away a customer order because those resources are being held for another customer. However, it\u2019s accurate to say that forecasts are less than perfect. If these reserved resources are not used for their intended purpose (i.e. the forecast was off), we could find ourselves with no orders. Reserving our supply capability to perfectly align with the forecasted demand can result in self-inflicted, lost opportunities. There are certainly business reasons to support reserving supply capability, such as contractual agreements with our customers or internal strategies, for example. But these reasons must be balanced with the total demand to provide flexibility that can react to a volatile, less-than-correct, forecasted demand.<\/p>\n

5. Allowing Conflicting Metrics Across Organizations<\/h2>\n

One thing I know all too well from running Chain Sequence<\/a>\u00a0is that internal organizations within a large enterprise often act as semi-autonomous fiefdoms. We all want our own fiefdom within the larger enterprise to succeed. Toward this end, we design our metrics to ensure that, on paper, our organization is performing successfully. By neglecting to consider how our internal group integrates with the bigger picture, our success may be at the expense of other business units, or even at the expense of the entire enterprise.\u00a0 For example, if our Sales organization is measured on orders received, regardless of product availability, that\u2019s great for Sales. But if there is no product available to fulfill those orders, as an enterprise, we have failed.\u00a0 Metrics should be designed to work in concert across all organizations to ensure success for the greater good of the entire organization.<\/p>\n

Break Out, And Stay Out, Of Bad Supply Chain Habits<\/h2>\n

Whether your organization has just completed a significant process improvement effort, or you\u2019re about to embark on one, keep in mind that business processes across various organizations within a company are ultimately executed by people. Technology can support a process and enable speed and accuracy, but that technology needs direction from each of these organizations.\u00a0 It\u2019s human nature to doubt the ability of these systems to make the right decisions, so results are often second-guessed. \u00a0Don\u2019t let these kinds of bad habits creep back in to cripple your planning processes\u2014by being mindful of the harm these behaviors can do, all internal organizations can more collaboratively create opportunities for positive business gains.<\/p>\n<\/span>","protected":false},"excerpt":{"rendered":"

When it comes to supply chain professionals, most of us like to think we know the best way of doing things. Starting off with the best of intentions, we work under an unproven premise that our little supply chain foibles are typical in organizations like ours. Ignoring some consistent fault lines, however, will eventually expose […]<\/p>\n","protected":false},"author":5767,"featured_media":7255,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[384],"tags":[444],"class_list":{"0":"post-7248","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-supply-chain-management","8":"tag-supply-chain-management"},"_links":{"self":[{"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/posts\/7248"}],"collection":[{"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/users\/5767"}],"replies":[{"embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/comments?post=7248"}],"version-history":[{"count":0,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/posts\/7248\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/media\/7255"}],"wp:attachment":[{"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/media?parent=7248"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/categories?post=7248"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/tags?post=7248"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}