The essential guide to supply chain management best practices
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For those in the enterprise who are concerned about and want to implement or improve the ability to trace products...
from start to finish, the challenge is how to encourage the rest of the organization to make a supply chain traceability program a priority.
It is difficult to get funds for things that might happen versus the here and now priorities of a business, such as launching a new product, increasing sales, cutting costs and so on. Presenting the statistics of "bad things happening in our industry" just is not motivating. Even when negative events happen, very large companies often have risk management insurance that can offset the costs.
That's why a supply chain traceability program is one that needs to get top-down support. In other words, the top executive needs to make it a priority, and that is not a given since traceability may not seem as pressing as other business priorities. To get top-level buy-in, it is essential to speak the CEO's language and present traceability efforts in terms of executive concerns.
Chances are, and our research bears this out, supply chain managers are far more concerned with risk issues. Whereas CEOs most-highly prioritize issues such as market share, shareholder value and working capital, those in the supply chain group tend to talk about efficiencies and optimization metrics, which can seem like a foreign language to the executive suite. Supply chain managers are also likely to be far more concerned with issues such as product liability and business risk. However, it is clear that a significant event affects brand -- and often the CEO's compensation for that period.
Waiting for bad things to happen is not the approach we are advocating. Rather, aligning a traceability program and investments to improve brand and working capital is the way to go. To that end, here are the key strategies and technologies that companies need to adopt.
Address partnership issues. Since traceability is an inter-enterprise issue, a trading partner traceability initiative is key. Map out the processes and data that will need to be shared and an automated method to achieve this.
Forge unity across departments. Within the enterprise, a cross-functional effort includes supply chain, which includes supplier management; risk management; quality; product design and engineering; and distribution. All these departments touch products and collect and can use data. They can influence the outcome of a traceability program. Their support and involvement will make the process easier and more meaningful throughout the enterprise
Think cloud products. From a systems perspective, cloud products are the best choice, since all the trading partners will be able to access such products. There are many fine traceability products that cater to specific industry supply chains -- such as grocery, automotive, pharmaceuticals and so on -- and that have a library of application program interfaces to integrate into major supply chain and enterprise systems.
Create a methodology for collecting data once. The most frustrating obstacle in supply chain traceability efforts is likely to be the data collection and management. There are two suggestions we offer here:
- Use products that are being used for supply chain, logistics and global trade management. Since governments around the world are requiring automation of licensing and customs filing, the information for import and export and other supply chain trade data can all be collected and used among many systems. Many of the supply chain networks are architected to collect item-level and serialized data.
- Use auto-ID. Barcoding and RFID are two approaches that reduce the labor burden and, most importantly, errors. We still hear about so many companies that manually enter data into home-grown spreadsheets, and poor data quality is often the result. Most importantly, spreadsheets are not shareable across the chain.
Initiate a supplier program. There are many reasons this is a good idea. For traceability, the program needs two elements:
- Create standards and data collection requirements. As noted above, data is critical to traceability efforts.
- Establish education programs. These can reach all the way to the factory floor so that employees in those far-flung locales become engaged in the producing better quality, safer products and understand requirements for accurate data management.
Join and align with industry groups that are involved in standards. Not only will this help enable your company to influence regulations, or at least the implementation of standards, this is a great place to learn from others what are best practices.
Get expert advice. And, finally, an approach often forgotten, but that may help shorten the time and effort to learn and implement a traceability program, is to get your risk management and insurance brokers involved. They will often have deep knowledge about best practices and technology. Most importantly, risk management and insurance brokers can help develop a value proposition for traceability, since they have lots of statistics on the impact of implementing best practices versus the risk of not doing so.
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