SUPPLY CHAIN STRATEGY

GROW YOUR BUSINESS

How to grow and increase revenues while maintaining the level of service to your customers?

INCREASE PROFITABILTY

How to reduce costs and increase business productivity and efficiency?

IMPROVE CASH-FLOW

How to enhance cash flow and the flow of goods and information through supply chain management?


Do you want to better understand the supply chain and what the future holds for you?

As a supply chain consultant, my goal is to help clients improve their efficiency, flexibility, and market competitiveness. To achieve this, LOGIKO offer new and innovative services that will enable them to better understand and manage their supply chain.

One of the LOGIKO services you can use to glimpse possible futures and better manage uncertainty is Peripheral Signal Detection in the supply chain. Peripheral signals are weak or ambiguous signals indicating potential changes in the supply chain environment, such as new trends, needs, technologies, competitors, or threats. Peripheral signals can help you detect early signs of potential disruptions or opportunities in the supply chain and respond more quickly and effectively.

Another possible service you can use is Scenario Planning for your supply chain. Scenarios are alternative futures that can impact the supply chain, such as changes in demand, technology, legislation, competition, risks, and opportunities. Scenarios can help you identify key factors affecting the supply chain, assess their impact, and develop strategies to adapt or capitalize on different outcomes.

A third possible service you can devise is Supply Chain Modeling and Mapping. Modeling and mapping are techniques that allow you to visualize and analyze the structure, flows, processes, costs, performance, and risks of the supply chain. Modeling and mapping can help you identify weaknesses, inefficiencies, losses, bottlenecks, disruptions, and improvement opportunities in the supply chain and propose solutions for optimization and transformation.


How to formulate supply chain strategies that will help you achieve these goals?

Defining a supply chain strategy from a detailed, functional analysis of future expectations and current constraints is not only overly complex and time-consuming but also carries the risk of losing sight of the overall strategic ambition of the supply chain. As a result, supply chain leaders often face the challenge of translating visions and goals into understandable, easily communicated priorities.

Therefore, LOGIKO suggests using a disciplined framework to collaborate with key stakeholders in the supply chain on strategy, priorities, and interdependencies. The Supply Chain Matrix is a framework that assists in developing an end-to-end (E2E) supply chain strategy. Key elements of the supply chain strategy include:

  • Current state of the supply chain
  • Future possibilities
  • Deviations between the current and future state
  • Priority activities and initiatives

LET’S MAP THE SUPPLY CHAIN STRATEGY TOGETHER!

  1. SCOPE

The initial phase of defining the scope of the strategy requires a top-down approach to understand the internal and external environment of the supply chain, both now and in the future. The key focus is to gain a comprehensive overview of the supply chain capabilities from start to finish, rather than delving into specific details.

The Supply Chain Matrix is an empty canvas that organizations can use to map the current capabilities of their supply chain and plan for their future desired state.

  1. PLANNING

A supply chain strategy must include the consideration and development of a range of capabilities and resources, including organization, processes, skills, data, and technology.

LOGIKO helps SCM managers and leaders align supply chains with business and customer needs, ensuring that capabilities, competencies, organizational design, cost optimization, and innovation choices provide sustainable competitive advantages in the long term, regardless of changes in expectations or disruptions.” 

LOGIKO TEAM

  1. EXECUTION

Executing the strategy requires gaining consensus among functional leaders within the supply chain and ensuring the support of key stakeholders, including management and top executives. The matrix helps determine how all parts of the supply chain are interconnected and communicate with each other.

The Supply Chain Matrix is a journey that begins with forming a team from different areas of the supply chain and operations that designs the Matrix of the supply chain strategy.

How to Teach a Frog to Think Strategically?

The story goes like this: "Three frogs were sitting on a white lily in a pond. They sat all day and around evening one of the frogs decided to jump into the water. The award question is: How many frogs were left on the white lily?" Although I get different answers, from – none, to – all three of them, maybe the right answer will look like – two frogs. But the correct answer is three! One of the frogs decided to jump but it didn’t jump. This can be a problem with strategies - they may be made, but they are not implemented. Long ago, wise men said that we need to move from words to deeds. Of course, it is much easier to theorize in the comfort of your office than to prepare to work and start a "hard physical work" of implementation somewhere in one of the operative departments.
The lesson is as follows: Many organizations have a formulated and accepted strategy, but in the course of implementation, gaps emerge that distance us from the perfect execution of the outlined strategy:
- Knowledge Gap: the difference between what we would like to know and what we actually know.
- Alignment Gap: the difference between what we want people to do and what they actually do. Similarly, we desire alignment across all departments in the company (procurement, sales, production, etc.).
- Performance Gap: the difference between what we expect our actions to achieve and what they actually accomplish.

LET US HELP YOU ACHIEVE STRATEGIC OBJECTIVES:

On one side, we have input elements of the supply chain, such as:

  • Procurement and suppliers, along with related sourcing strategies,
  • Storage, including the network of distribution centers and the quantity of stock in them,
  • Production with its capacities,
  • Types of primary transport and related costs, and lastly,
  • Types of channels (distributors, retail, online sales, etc.) through which goods will be distributed.

LOGIKO aims to help overcome these knowledge, alignment, and results deficits and implement your top-notch strategy together with you.” 

LOGIKO TEAM


Why Create a Supply Chain Model?

“Plan for what is difficult while it is easy, do what is great while it is small… That is why wise (business) people never do what is great, and therefore, they achieve greatness.” 

Sun Tzu, The Art of War

SUPPLY CHAIN MAPPING


Main Elements of the Supply Chain Model:

Procurement and Suppliers

The Covid crisis has highlighted how sourcing strategies, such as whether to have multiple suppliers with surface (transactional) relationships or one to two suppliers with deeper relationships, can mean the life or death of a company. In many industries, procurement optimization has become more critical due to the adoption of multi-sourcing practices and growing concerns about supplier risks, sustainability of procurement practices, and the impact of procurement on corporate responsibility. Even Toyota, a longtime advocate of sole sourcing strategy (a strategy with one supplier per product category with whom deeper relationships are built), has shifted to dual or multi-sourcing strategies.

When I talked to some clients during the lockdown, they shared how they were surprised to find out that they are part of a longer chain than they initially perceived. Initially, they thought they shouldn’t experience shortages and procurement issues for products sourced from suppliers in Italy. However, they then realized that their suppliers source their components from China. This was a wake-up call for those who hadn’t grasped that they are part of global supply chains and believed that their chain only extended as far as the eye could see.


PRODUCTION PLANNING

In the manufacturing sector, strategic decisions related to production planning, including the location of facilities and machine capacity, are directly linked to tactical decisions on the utilization of these resources. The most common segment in which I have assisted clients in recent years is – how, after the reopening of the economy that was closed due to the pandemic, to ensure sufficient capacity (human, production, and logistical) for increased demand. Often, the issue is not a lack of capacity, but rather processes being clogged with artificial bottlenecks, organizational misalignment with the company’s strategy and goals, and a lack of proper planning.

The most common segment in which I have assisted clients in recent years is – how to ensure sufficient capacity (human, production, and logistical) for increased demand. 

LOGIKO TEAM

These organizational deficits and tactical decisions that need to be made directly impact procurement decisions and the downstream supply chain, serving as key drivers of overall efficiency. Therefore, the supply chain model we aim to design should have tools that connect strategic and tactical decisions with operational outcomes in the supply chain.

Upravljanje zalihama  

My favorite analogy from lean management is the one that says, “Inventory hides problems.” The image depicts a lake (whose level indicates the inventory level) where a company sails, and sharp rocks (problems and deficiencies) lie beneath the lake’s surface. This analogy suggests that if we have high inventory levels, they will temporarily conceal issues in our processes, bottlenecks, unreliable suppliers, planning problems, etc. However, the management’s task is not to hide problems but to solve them.

Striking the right balance between material costs, transportation, inventory capital, and service levels to customers is crucial. With mapped inputs such as the cost of capital, logistics capacities, and transportation, decisions on optimizing cyclic and safety stocks can be easily made. These decisions can have significant financial effects and impact the service level.

With mapped inputs such as the cost of capital, logistics capacities, and transportation, decisions on optimizing cyclic and safety stocks can be easily made, which can have significant financial effects and impact the service level. 

LOGIKO TEAM

Distribution Planning 

In package delivery, distribution, and retail industries, transport planning has a strong impact on strategic planning. This particularly applies to inbound transport and ‘last-mile’ distribution, where decisions on the allocation of transport resources and the choice of carriers or transport methods must align with the company’s network design and goals.

Therefore, it is crucial to determine whether the strategic goal is to increase market share and coverage or if the main goal is cost reduction and profitability. The configuration of logistics facilities and their proximity to the customer affect the company’s ability to capture a larger market share but can also increase costs.

For example, deciding on the configuration of logistics facilities without considering last-mile transport costs can dramatically increase distribution costs. Therefore, the design of the distribution network should include a more detailed assessment of transport and routing costs, considering elements such as customer density, logistical infrastructure, and the expected level of service.

SUPPLY CHAIN MODEL

To overcome supply chain complexity, and avoid incongruence of supply chains with corporate goals, every serious company needs to create a simple supply chain model that incorporates all the listed elements, their relationships, and outcomes. This way, you can test various decisions from procurement to distribution through various scenarios and what-if analyses.