Supply chain management is an inherently difficult process that is critical to the success of any organization that manufactures, distributes, transports, or resells physical products. Not only must internal supply chain processes operate at a 99% (or better) performance level but your supply chain partners must also operate at similar levels to ensure customers get products on time and that your supply chain has the agility and resilience to respond to unexpected issues. Even small issues such as material shortages, delayed shipments, manufacturing process errors, or damaged cartons can turn into a major supply chain disruption if left unresolved for too long.
Digitalization of the supply chain issue management (SCIM) process is the best way to ensure internal issues or supply chain issues do not go unresolved. Organizations that digitalized SCIM have dramatically improved six key performance metrics:
- 65% reduction in resolution time
- 35% reduction in total open issues
- 96% reduction in defects per million
- 50% reduction in repeat deviations
- 97% reduction in manufacturing disruptions
- 82% improvement in delivery performance
There is a three-phase progression to achieving issue resolution performance improvements:
- Phase 1: Utilize multienterprise supply chain issue management software for the reporting, root cause analysis, and resolution of all problems and issues that occur across internal operations and the end-to-end supply chain. All issues are captured in one multienterprise SaaS application, and companies and their supply chain partners have one source of shared truth as they work collaboratively to resolve incidents. Reporting issues in SCIM requires less work than creating the emails that most companies are currently using to report issues. Organizations that leverage a multienterprise software solution for supply chain issue management have achieved a 65% reduction in time to resolve supply chain issues and a 35% reduction in the total number of open issues.
- Phase 2: Use the resolution history and root cause data captured in SCIM to support continuous process improvement methodologies like Six Sigma. This data enables process improvement teams to prioritize projects, to identify root causes, and initiate process improvement projects to reduce or eliminate recurring business process and product quality defects. It should be noted that this data is collected as part of the reporting and resolution process and requires no extra effort. These projects, supported by SCIM data, have produced 50% reductions in repeat deviations and 96% reductions in defects per million.
- Phase 3: By combining SCIM digitalization and using the data collected to support continuous process improvements, organizations have made their issue management process significantly more responsive which results in fewer issues with less impact that reduces manufacturing disruptions by 97%. With fewer disruptions, organizations have achieved as much as an 82% improvement in customer delivery performance.
While these results may seem hard to believe, they are very achievable by deploying Agile Process Teams for Supply Chain Issue Management which will indicate the partners and processes that need improvement. Once identified, yours and your partners’ subject matter experts will have data they need to deliver these results. More importantly, by improving these six key issue management metrics, you will improve key financial metrics including a reduction in cost of goods sold, improvement in on-time, in-full, and maximized revenue but this is a subject for future blogs.