When the American Production and Inventory Control Society, otherwise known as APICS, formed more than 60 years ago, its very name exemplified how organizations approached improvements in their supply chains. For APICS, that meant targeting companies’ inventory management and production processes.
They’re both key parts of overall supply chain management – which itself is evolving into an integral part of the overall enterprise – but remain only two of many aspects of global, interconnected supply chains that need greater efficiency.
Supplier sourcing, risk mitigation, logistics, warehousing, compliance – the list goes on. But because professionals have approached improvements in supply chains by targeting individual aspects of them, the effectiveness of this strategy has been limited.
“For more than 60 years, supply chain functions have been viewed as siloed aspects of the business that were reactive to, not a key part of, business decisions,” explained APICS CEO Abe Eshkenazi, CSCP, CPA, CAE, in a recent interview. “As a result, supply chain professional development has also been siloed, and predominately focused on functional training for an employee.”
Eshkenazi is now the CEO of a new company, the Association for Supply Chain Management (ASCM), launched by APICS in recognition of the “shift in the way businesses look at supply chain within their organizations,” he added.
Part of what’s driving organizations’ evolved view on supply chain management stems from contemporary pressures like talent gaps, heightening customer demands and technological disruption. There are factors that Eshkenazi said can be addressed and mitigated by enhanced supply chain management, though only if businesses are able to address their supply chains in a holistic, end-to-end fashion. But the many facets of supply chains make for a challenging path to overall supply chain management improvement – one Eshkenazi said must include benchmarking, process management and other key concepts.
Currently, APICS works with companies to implement the Supply Chain Operations Reference (SCOR) model, “one of the most widely recognized supply chain frameworks on the market … used to identify weaknesses and inform a workforce development program to address them.”
Despite its popularity, SCOR isn’t without its critics. Eshkenazi said one of the most common responses to the model from businesses is how siloed it is from other aspects of a procurement workforce development program, offered by other providers like CIPS (the Chartered Institute of Procurement & Supply), Deloitte and others. The establishment of the ASCM means organizations will be able to access resources from a single place.
The goal, Eshkenazi explained, is to facilitate collaboration, which is key to addressing what some companies may consider an overwhelming, monumental task. Indeed, attacking supply chain efficiencies from a holistic, rather than siloed, perspective does not necessarily have to mean addressing multiple weak points at once, especially for organizations at the very beginning of their supply chain management strategies.
“If you are looking to implement a supply chain strategy for the first time, start by focusing on sales forecasts,” Eshkenazi suggested. “Make sure you have a backup plan and invest in your employees and suppliers. Make sure you look two to three years ahead in terms of sales forecasting and planning.”
Companies should be able to identify long-term risks and proactively respond to them, he continued, adding that overall, all partners and stakeholders in the supply chain must have access to the information they need to comply with guidelines and specifications that an organization develops.
It’s a kind of group effort necessary to usher in what’s been dubbed “Supply Chain 4.0,” the modern supply chain characterized by interconnected systems and data analytics. This supply chain modernization effort could yield a 30 percent reduction in operational expenses in the next two years, and decrease lost sales and inventories by 75 percent at the same time, according to a recent PYMNTS Global Payments Architecture Report.
Much of this evolution stems from technology, including the Internet of Things and artificial intelligence, even drones and other modes of transportation within supply chains. But this area of the enterprise is seeing a shift at the human level, too.
Supply chain professionals are “moving out of their silos and into the C-suite,” said Eshkenazi, offering them, and their organizations, a chance to wield supply chain management in their overall growth strategies. With supply chains reaching out into new partners and new jurisdictions, there is an ever-growing list of points at which a company is exposed to risks – including operational, financial and regulatory.
Export and import taxes, foreign exchange volatility and trade agreements are today especially important in the design of a supply chain game plan, he noted.
“More than ever, in addition to strategic sourcing and supply chain decisions, professionals in the field have to consider complex geographical and economic factors,” said Eshkenazi. “The best way to address any potential enterprise risk is to consider the different business areas that could be affected, including supply chain, and put together a risk response plan.”