* Supply Chain Overview – A Generic interpretation

I have noticed over the years the term “Supply Chain” used in a number of different contexts.  Some of what I read had me pondering, thinking that the meaning may be morphing into something else, for example adverts for jobs looking for a Supply Chain Manager yet the role was traditionally a Purchasing Manager – based on the tasks allocated to the role.

It just appears that some have tried to keep up with the trends and used newer terms but in the wrong way, whether through misunderstanding or up-selling the role. Using the above example I could understand the job title being Supply Manager.

So I looked through my reading materials and across the web to see if someone had drafted an overview of the supply chain on a function bases, not systems or processes. The best, only one really, was found in a project for AUSTROADS  (AP-R150). The aim of Austroads was to improve knowledge and understanding of the freight industry and the customers it services.

I my attempt to get a clearer impression of how the current Supply Chain functions tie together I expanded the diagram published by Austroads. My amendments are based on industries I have had experience with including manufacturing, distribution, wholesale and MRO.

This, I believe is a good representation (Click PDF below) and can be validated by turning it into a real world application by just adding “Manager” after most of the functions shown.  This is the hierarchy I have seen in the majority of cases, although functions can be combined depending on the size of the company.

Over the top of this of cause, can be laid systems such as MRP, DRP, ERP, etc.

I would be interested to see if you have other options or configuration.

PDF: Supply Chain Overview diagram

Request For Proposal – Freight

A salesman visits your company and suggests his company “On Time Trucks” is the best in the market and is going from strength to strength. It is also able to keep its rates at a very competitive level while beating all others on performance. You have all heard it before – if every transport company was this great, we would have product delivered next day anywhere in the world, for the same price it takes to deliver a letter.

Ok some are good and some will send you broke but it is up to you to decide before you take them on. Reviewing a few charge sheets and glossy brochures is NOT the way to do it.  You need an RFP (Request for Proposal or Request for Quote), basically via this document you are asking selected providers to give you a proposal in YOUR format. Why? so you can compare apples to apples – directly, without you having to manipulate or change data.

They will all promote the things they do best but what you really want is what can they do for you and at what cost. Their rates could show that although slightly expensive in one region they are super cheap in another. Do not trust this oversimplified premise.  Your best bet is to use real data (de-sensitized history) and get them to base their quote on that.  Then there are all the other benefits you will be expecting eg: compensation for damages and losses – remember they often state (in small print) that they are not “common carriers” and as such cannot be held accountable for damages or losses.  Wrong: you can ask them to advise you what regime/system they will use to compensate you, they always come up with something.

Freight is a major cost, along side storage, for any company that sells products.  Make sure you get the best provider for your type of product and delivery profile. This has the potential to reduce your total freight costs by as much as 30-40%.   Further information on how to write an RFP for freight is found on my FOCUS Expert page.

Cheers
Mark