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Basic Supply Chain Practice Cheat Sheet by

A supply chain practice cheat sheet serves as a quick reference guide for professionals working in supply chain management. It provides a concise summary of the key practices and processes that are essential for managing a successful supply chain.

Defini­tions

Supply Chain Manage­ment: design, planning, execution, control, and monitoring of supply chain activities - five key supply chain activi­ties: Plan, Source, Make, Deliver, Return - with the objective of creating net value, building a compet­itive infras­tru­cture, leveraging worldwide logistics, synchr­onizing supply with demand, and measuring perfor­mance globally.
Supplier manage­ment: Selecting, monito­ring, and evaluating suppliers to ensure they meet the organi­zat­ion's requir­ements.
Inventory manage­ment: Overseeing the flow of goods and ensuring that the organi­zation has the right amount of inventory at the right time.
Demand planning: Foreca­sting customer demand for products and services.
Logistics manage­ment: Managing the flow of goods from the point of origin to the point of consum­ption.
Transp­ort­ation manage­ment: Managing the movement of goods from one location to another, including shipping and receiving.
Warehouse manage­ment: Overseeing the storage and movement of goods within a warehouse.
Order fulfil­lment: Processing and delivering customer orders.
Reverse logistics: Managing the return of goods from customers.
Perfor­mance measur­ement: Tracking and measuring key perfor­mance indicators (KPIs) to evaluate the effect­iveness of supply chain operat­ions.
Risk manage­ment: Identi­fying and mitigating risks that could impact supply chain operat­ions.

SCM

Plan-s­our­ce-­mak­e-d­eli­ver­-return framework

Plan: Developing a strategy for the supply chain, determ­ining the demand for products and services, and planning production and inventory levels accord­ingly.
Source: Identi­fying and selecting suppliers, negoti­ating contracts, and managing the procur­ement of raw materials, goods, and services.
Make: Transf­orming raw materials into finished products or services, managing production schedules, and ensuring quality control.
Deliver: Managing the logistics of getting products or services to customers, including transp­ort­ation, wareho­using, and distri­bution.
Return: Managing the reverse logistics process for returning goods from customers, including handling returns, repairs, and recycling.

Plan, Source, Make, Deliver, Return

1. Demand planning and foreca­sting

a. Collect data: Collect historical sales data, customer orders, and any other relevant data on demand for the product or service.
b. Cleanse data: to remove any anomalies, outliers, or errors that could skew the forecast.
c. Analyze data: using statis­tical techniques such as regression analysis or time series analysis to identify trends, season­ality, and other patterns in the data.
d. Determine key demand drivers: for the product or service, such as changes in customer prefer­ences, economic condit­ions, or competitor activity.
e. Develop foreca­sting models: based on the data analysis and demand drivers. Use a combin­ation of quanti­tative and qualit­ative foreca­sting techniques to produce the most accurate forecast possible.
f. Validate foreca­sting models: by comparing the forecasted demand to actual demand over a period of time. Adjust the models as necessary to improve accuracy.
g. Incorp­orate external factors: that could impact demand, such as weather patterns, political events, or natural disasters.
h. Review and update foreca­sting models regularly: to ensure they remain accurate over time. Factors such as changes in the market, customer prefer­ences, or economic conditions could impact demand and require adjust­ments to the models.

S&OP

2. Source Management

Supplier Evaluation and Selection:
Source management begins with evaluating potential suppliers and selecting those that align with the organi­zat­ion's requir­ements. This involves assessing factors such as supplier capabi­lities, financial stability, quality standards, capacity, track record, and adherence to social and enviro­nmental respon­sib­ility. Supplier evaluation may also include site visits, audits, and perfor­mance assess­ments.
Sourcing Strate­gies:
Source management encomp­asses determ­ining the optimal sourcing strategies for different categories of goods or services. This involves decisions regarding whether to source locally or globally, single or multiple suppliers, make-o­r-buy choices, and strategic partne­rships. Sourcing strategies aim to balance factors such as cost, quality, lead time, risk mitiga­tion, and respon­siv­eness to customer demand.
Supplier Relati­onship Manage­ment:
Building strong relati­onships with suppliers is crucial for effective source manage­ment. It involves establ­ishing clear expect­ations, commun­ication channels, and perfor­mance metrics. Supplier relati­onship management includes activities such as contract negoti­ation, supplier develo­pment programs, collab­oration initia­tives, and joint improv­ement projects. Effective relati­onship management helps foster trust, collab­ora­tion, and continuous improv­ement throughout the supply chain.
Supplier Perfor­mance Measur­ement:
Source management involves measuring and monitoring supplier perfor­mance to ensure compliance with contra­ctual agreements and quality standards. Key perfor­mance indicators (KPIs) may include metrics such as on-time delivery, product quality, lead time, respon­siv­eness, cost, and customer satisf­action. Supplier perfor­mance measur­ement helps identify areas for improv­ement, manage risks, and drive supplier accoun­tab­ility.
Supplier Collab­oration and Innova­tion:
Source management encourages collab­oration and innovation with suppliers to drive mutual benefits and value creation. Organi­zations can work closely with suppliers to identify cost-s­aving opport­uni­ties, process improv­ements, new product develo­pment, and joint innovation projects. Collab­orative relati­onships foster knowledge sharing, technology transfer, and agility in responding to market changes.
Supply Chain Risk Manage­ment:
Source management also involves assessing and managing risks associated with suppliers and the supply chain. This includes identi­fying potential disrup­tions, developing contin­gency plans, divers­ifying the supplier base, and establ­ishing risk mitigation strate­gies. Risk management aims to ensure continuity of supply, minimize disrup­tions, and enhance supply chain resili­ence.
Ethical and Sustai­nable Sourcing:
Source management increa­singly focuses on ethical and sustai­nable sourcing practices. Organi­zations strive to ensure that suppliers adhere to social and enviro­nmental standards, including labor rights, fair trade practices, enviro­nmental regula­tions, and respon­sible sourcing of raw materials. Ethical sourcing practices help protect brand reputa­tion, meet consumer expect­ations, and contribute to sustai­nable develo­pment goals.
Supplier Perfor­mance Improv­ement:
Source management involves collab­orating with underp­erf­orming suppliers to improve their capabi­lities and perfor­mance. This may include providing training, sharing best practices, implem­enting corrective actions, and incent­ivizing continuous improv­ement initia­tives. Supplier perfor­mance improv­ement aims to enhance overall supply chain perfor­mance and maintain a compet­itive advantage.
 

3. Manufa­cturing or production management

Production Planning and Schedu­ling:
Manufa­cturing management involves developing production plans and schedules that optimize resource utiliz­ation, minimize bottle­necks, and meet customer demand. It includes determ­ining production quanti­ties, sequencing orders, allocating resources (including manpower and machines), and consid­ering factors such as lead times, capacity constr­aints, and inventory levels.
Inventory Manage­ment:
Effective manufa­cturing management requires efficient inventory management practices. This involves optimizing inventory levels, implem­enting inventory control measures (e.g., just-i­n-time principles or lean manufa­ctu­ring), managing reorder points, and ensuring adequate availa­bility of raw materials, work-i­n-p­rogress (WIP), and finished goods. Inventory management aims to minimize carrying costs, reduce stockouts, and balance production with demand.
Production Process Optimi­zation:
Manufa­cturing management focuses on contin­uously improving production processes to enhance effici­ency, quality, and produc­tivity. This includes analyzing and reengi­neering workflows, reducing cycle times, implem­enting automation or technology solutions, and employing lean manufa­cturing princi­ples. Process optimi­zation aims to eliminate waste, improve throug­hput, and achieve cost savings.
Quality Manage­ment:
Ensuring product quality is a crucial aspect of manufa­cturing manage­ment. It involves establ­ishing and mainta­ining quality standards, implem­enting quality control measures, conducting inspec­tions, and performing tests throughout the production process. Quality management aims to identify and resolve quality issues promptly, minimize defects, and deliver products that meet or exceed customer expect­ations.
Mainte­nance and Equipment Manage­ment:
Manufa­cturing management includes the effective management of production equipment and mainte­nance activi­ties. This involves regular equipment mainte­nance, implem­enting preventive mainte­nance schedules, managing repairs, and ensuring optimal equipment perfor­mance. Proper mainte­nance helps minimize downtime, enhance reliab­ility, and extend the lifespan of machinery.
Workforce Manage­ment:
Managing the manufa­cturing workforce is essential for efficient operat­ions. Manufa­cturing management involves workforce planning, training, and develo­pment to ensure that the right skills are available when needed. It also includes tracking labor produc­tivity, managing staffing levels, fostering a safe working enviro­nment, and promoting employee engage­ment. Workforce management aims to optimize labor utiliz­ation and enhance overall produc­tivity.
Continuous Improv­ement Initia­tives:
Manufa­cturing management embraces a culture of continuous improv­ement. It involves implem­enting method­ologies such as Six Sigma, Kaizen, or Total Productive Mainte­nance (TPM) to drive ongoing process improv­ement. These initia­tives focus on identi­fying and elimin­ating waste, reducing variab­ility, and enhancing overall operat­ional perfor­mance.
Integr­ation with Supply Chain:
Manufa­cturing management works in close collab­oration with other functions within the supply chain, such as procur­ement, logistics, and demand planning. It ensures seamless coordi­nation and inform­ation flow across these functions to optimize produc­tion, inventory, and distri­bution activi­ties. Effective integr­ation supports efficient material flow, demand fulfil­lment, and overall supply chain optimi­zation.

4. Inventory management

a. Determine inventory requir­ements: for the project, including the desired inventory levels and the minimum order quanti­ties.
b. Identify inventory costs: identify the costs associated with holding inventory, such as storage costs, handling costs, and the cost of capital tied up in the inventory.
c. Classify inventory: into categories based on their importance or value, such as high-value items, slow-m­oving items, or critical items.
d. Set inventory policies: including reorder points, safety stock levels, and lead times, based on the inventory requir­ements, costs, and classi­fic­ation.
e. Monitor inventory levels: regularly to ensure they are within the desired range. Use inventory tracking tools such as barcodes, RFID, or inventory management software to track inventory levels accura­tely.
f. Implement inventory control measures: such as just-i­n-time (JIT) inventory, vendor­-ma­naged inventory (VMI), or consig­nment inventory, to optimize inventory levels and minimize costs.
g. Analyze inventory perfor­mance: regularly to identify areas for improv­ement. Use key perfor­mance indicators (KPIs) such as inventory turnover, days inventory outsta­nding (DIO), or inventory accuracy to evaluate inventory perfor­mance.
h. Optimize inventory manage­ment: by contin­uously improving inventory policies, control measures, and processes based on the analysis of inventory perfor­mance.

Inventory Management

5. Logistics management

a. Plan logistics requir­ements: for the project, including transp­ort­ation, wareho­using, and distri­bution.
b. Develop transp­ort­ation plans: based on the project requir­ements, including selecting carriers, modes of transp­ort­ation, and routes.
c. Manage transp­ort­ation: shipping and receiving, tracking shipments, and ensuring on-time delivery.
d. Plan wareho­using requir­ements: selecting the approp­riate warehouse locations, layouts, and storage methods.
e. Manage warehouse operat­ions: receiving and storing goods, order picking, and shipping.
f. Implement distri­bution strate­gies: to ensure timely and cost-e­ffe­ctive delivery of goods to customers, including cross-­doc­king, direct shipment, or multi-stop delivery.
g. Monitor logistics perfor­mance: using key perfor­mance indicators (KPIs), such as on-time delivery, order accuracy, and transp­ort­ation costs.
h. Continuous improv­ement: for all logistics processes, including transp­ort­ation, wareho­using, and distri­bution, based on the analysis of logistics perfor­mance.

Logistics

6. Transp­ort­ation management

a. Define transp­ort­ation requir­ements: mode of transp­ort­ation, route, and delivery schedule.
b. Identify and evaluate transp­ort­ation providers: carriers, brokers, or freight forwar­ders, based on their service offerings, pricing, and reliab­ility.
c. Negotiate transp­ort­ation contracts: rates, delivery schedules, and perfor­mance metrics.
d. Plan transp­ort­ation activi­ties: shipment schedu­ling, routing, and tracking.
e. Monitor transp­ort­ation perfor­mance: using key perfor­mance indicators (KPIs), such as on-time delivery, transit time, and transp­ort­ation costs.
f. Address transp­ort­ation issues: such as delayed delive­ries, damaged goods, or capacity constr­aints, through effective commun­ication and proble­m-s­olving.
g. Optimize transp­ort­ation manage­ment: by contin­uously improving transp­ort­ation policies, processes, and techno­logies based on the analysis of transp­ort­ation perfor­mance.

Transp­ort­ation Management

 

7. Warehouse management

a. Define warehouse requir­ements: storage capacity, location, layout, and material handling equipment.
b. Plan warehouse operat­ions: receiving, put-away, picking, packing, and shipping.
c. Develop inventory control proced­ures: cycle counting, stock rotation, and replen­ish­ment.
d. Implement safety and security measures: fire preven­tion, hazard commun­ica­tion, and access control.
e. Train warehouse personnel: on the proper handling of goods, use of equipment, and safety proced­ures.
f. Utilize warehouse management systems (WMS): to optimize warehouse operations - inventory tracking, order proces­sing, and shipping.
g. Monitor warehouse perfor­mance: using key perfor­mance indicators (KPIs), such as order accuracy, inventory accuracy, and warehouse produc­tivity.
h. Continuous improv­ement: warehouse processes, including layout, workflow, and inventory manage­ment, based on the analysis of warehouse perfor­mance.

WHM

8. Perfor­mance measur­ement

a. Define key perfor­mance indicators (KPIs): that align with the project goals and object­ives, such as order lead time, perfect order rate, on-time delivery, inventory turnover, or supply chain cost as a percentage of sales.
b. Collect data: on the KPIs using a variety of sources, such as ERP systems, logistics management software, or manual record keeping.
c. Analyze perfor­mance: by comparing the KPIs to establ­ished targets, benchm­arks, or industry standards. Use data visual­ization tools to identify trends, patterns, and areas for improv­ement.
d. Identify root causes: of perfor­mance issues by conducting root cause analysis, such as fishbone diagrams or Pareto analysis.
e. Develop improv­ement strate­gies: based on the analysis of perfor­mance data and root causes. Use a variety of improv­ement method­olo­gies, such as Six Sigma, Lean, or Kaizen.
f. Implement improv­ement strate­gies: by making changes to processes, policies, or techno­logies. Use project management tools to plan, execute, and monitor improv­ement initia­tives.
g. Monitor perfor­mance: to ensure that improv­ements are sustained over time. Use statis­tical process control (SPC) techniques to identify deviations from the target and take corrective action.
h. Continuous improv­ement: by updating KPIs, data collection methods, or analysis techniques based on the evolving needs of the project.

Perfor­mance Management

9. Risk management

a. Identify risks: Identify risks that could impact the project, including internal risks, such as process failures or organi­zat­ional changes, and external risks, such as natural disasters or supplier disrup­tions.
b. Assess risks: Assess risks based on their likelihood and impact on the project. Use risk assessment tools such as risk matrix or risk scoring to prioritize risks for mitiga­tion.
c. Develop risk management plan: Develop a risk management plan that outlines the strate­gies, resources, and respon­sib­ilities for managing identified risks. Use risk management techniques such as avoidance, mitiga­tion, transfer, or acceptance to manage risks.
d. Implement risk management plan: Implement the risk management plan by taking the necessary actions to mitigate or avoid identified risks. Use project management tools such as risk registers, issue logs, or contin­gency plans to track and monitor risk management activi­ties.
e. Monitor risks: Monitor risks regularly to ensure that they are being managed effect­ively. Use risk indicators or early warning systems to identify new or emerging risks.
f. Respond to risks: Respond to risks by taking approp­riate actions based on their likelihood and impact. Use risk response techniques such as contin­gency planning, crisis manage­ment, or business continuity planning to respond to risks.
g. Review and update risk management plan: Review and update the risk management plan regularly to ensure that it remains relevant and effective. Incorp­orate lessons learned from previous projects or risk management activities to improve the risk management process.

Risk Management

 

Top20 SCM KPIs and their formula

1. On-time delivery (OTD) rate: (Number of orders delivered on time / Total number of orders) x 100
2. Perfect order rate (POR): (Number of perfect orders / Total number of orders) x 100
3. Inventory turnover ratio: Cost of goods sold / Average inventory
4. Days of inventory outsta­nding (DIO): (Average inventory / Cost of goods sold) x 365
5. Order lead time: Date of order delivery - Date of order placement
6. Cycle time: Time taken to complete a process, from start to finish
7. Supply chain response time (SCRT): Time taken for a customer order to be fulfilled, from order placement to delivery
8. Transp­ort­ation cost per unit: Total transp­ort­ation costs / Total units shipped
9. Warehouse capacity utiliz­ation: (Total inventory / Warehouse capacity) x 100
10. Order accuracy rate: (Number of orders accurately filled / Total number of orders) x 100
11. Gross margin return on investment (GMROI): (Gross margin / Average inventory invest­ment) x 100
12. Cash-t­o-cash cycle time: Time taken for cash invested in the supply chain to be recovered, from payment for materials to receipt of payment for goods sold
13. Cost of goods sold (COGS): Total cost of producing and delivering products or services
14. Return on investment (ROI): (Net profit / Total invest­ment) x 100
15. Manufa­cturing cycle time: Time taken to manufa­cture a product, from raw materials to finished product
16. Capacity utiliz­ation: Actual output / Maximum output capacity
17. Backorder rate: (Number of orders on backorder / Total number of orders) x 100
18. Shipment lead time: Time taken for goods to be shipped, from loading to delivery
19. Supplier lead time: Time taken for suppliers to deliver goods or services, from order placement to delivery
20. Customer service level (CSL): (Number of orders delivered on time / Total number of orders) x 100

Formulas

30 best practices for SCM's project management

1. Define project scope, object­ives, and delive­rables clearly
2. Develop a project charter and obtain buy-in from stakeh­olders
3. Create a project plan and schedule using project management software
4. Assign roles and respon­sib­ilities to project team members
5. Establish commun­ication protocols and a commun­ication plan
6. Develop a risk management plan and a contin­gency plan
7. Establish a change management process
8. Conduct regular project status meetings and progress reviews
9. Use project management tools such as Gantt charts, critical path analysis, and work breakdown structures
10. Develop a budget and track project costs

Cont.

11. Monitor project progress using key perfor­mance indicators (KPIs)
12. Establish a quality management process and monitor project quality
13. Ensure data accuracy and integrity through data validation and verifi­cation
14. Obtain stakeh­older feedback and incorp­orate it into the project plan
15. Implement a continuous improv­ement process
16. Use standa­rdized processes and procedures to improve consis­tency and efficiency
17. Conduct regular training and develo­pment for project team members
18. Establish perfor­mance metrics for project team members
19. Implement a project governance structure to ensure accoun­tab­ility and alignment
20. Establish vendor management procedures for managing external suppliers and vendors

Cont.

21. Leverage technology to streamline processes and improve efficiency
22. Conduct regular project risk assess­ments and take proactive measures to mitigate risks
23. Establish project evaluation criteria to assess the success of the project
24. Use benchm­arking to compare project perfor­mance to industry standards
25. Establish a project closure process to ensure all project delive­rables are completed
26. Conduct a post-p­roject review to evaluate project success and identify areas for improv­ement
27. Document all project activities and outcomes for future reference
28. Ensure compliance with relevant regula­tions and standards
29. Foster a culture of collab­oration and teamwork among project team members
30. Establish a reward and recogn­ition program to incent­ivize project team members and promote success.
                   
 

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