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Digitalizing Supply Chain Issue Management Yields Quantifiable Cost Avoidance

By Andy Curtis, Business Manager, Agile Process Teams

One APT-SCIM customer estimates their annual cost avoidance at $100M, or about 1% of COGS.

Smooth, efficient supply chain operations and the ability to continuously improve these operations over time are critically important to supply chain leaders. Digitalizing the supply chain issue management process enables supply chain leaders to keep their supply chains running smoothly and provides the data to support continuous improvement programs such as Six Sigma. A key benefit of digitalizing supply chain issue management is the ability to understand the financial impact of these incidents.

Understanding the potential financial impact of failing to resolve or even slowly resolving an issue enables better decision making and can help you put a quantifiable monetary value on your supply chain issue management deployment. TraceLink Agile Process Teams for Supply Chain Issue Management (APT-SCIM) supports financial impact analysis by:

  • Enabling assignment of a monetary value to each incident to ensure everyone is aware of the potential financial impact if the issue goes unresolved or is resolved after its due date
  • Providing an important data point as issue history is reviewed to determine candidates for continuous improvement programs such as Six Sigma based on quantified financial impact 

Summarizing the financial impact across resolved issues enables you to track the success of your APT-SCIM deployment. Much of the success of supply chain issue management digitalization is measured on events that did not happen such as resolving a material shortage quickly to avoid a cancelled order, or reducing issue resolution time to avoid express shipping fees. Over hundreds or thousands of issues, this “cost avoidance” can add up to millions of dollars.

One APT-SCIM customer estimates their annual cost avoidance at $100M, or about 1% of COGS. This same customer creates SIx Sigma process improvement projects for any repeating issues that have high financial impact. While there is a good chance that the issue resolution history and the efficiency of APT-SCIM will enable you to resolve the high-financial-impact issue quickly, it is even better when it does not happen again.

 

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Learn more in our Supply Chain Issue Management Resource Center. 

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