To develop a Lean resilient supply chain seven key capabilities must be mastered by Chief Supply Chain Officers.
The first one is to be capable of Mapping the Supply Chain End-To-End. We want to be able to see what we call logistics loops, how is the supply chain divided, to know where to start.
Mapping the supply chain from end-to-end (E2E) enables visual identification of critical operations (Pacemakers & Flowbreakers). When understanding logistics loops in the supply chain, it is relevant to consider the key performance metrics to consequently identify where the flow breakers occur.
The most important KPIs in the supply chain are the ones related to the customer, namely On-Time-Delivery (OTD), On-Time-in-Full (OTIF), and Order-Delivery Lead Time. These happen in the last logistics loop (downstream), where the operations are closer to the customer, for instance, orders delivery and transportation - so these should be the first metrics to be optimized.
The second loop regards manufacturing supply and is more difficult to monitor due to the complexity of the production processes. Lastly, the sourcing and procurement loop refers to the suppliers and material warehouses, and these supply chains upstream must also be analysed, as they affect the customer KPIs.
On top of the several logistics loops, there has to be a consistent supply chain strategy and operations planning, based on an efficient value stream analysis and loop selection, to then move to the project execution phase through the implementation of KAIZEN™ practices.
The file Strategic E2E Mapping of the Supply Chain outlines the process for Mapping a Supply Chain.
In our next post we will talk about Capability #2 Implementing a Pull Planning System.