Supply Chain Velocity

How can supply chains ensure that they can maintain the necessary velocity of goods and services not only to meet the potential of threats of disrupting events, but also to effectively manage the supply network in an era of lean and super efficiency?

Understanding Supply Chain Velocity
From the very beginnings of modern production and distribution management, companies faced the fundamental problem of how to optimize the dispersion of goods and services to the marketplace.  As a result of today’s fast-paced global business environment, the gap between the velocity of supply lead time and customers’ order cycles is widening.

Most companies address this gap by attempting to increase forecast accuracy and carrying additional inventory in the channel pipeline. Unfortunately, the solution for increasing velocities lies in another direction other than focusing on forecasting and expanding channel inventories.

Mitigating the risk of supply chain disruption while simultaneously increasing product velocities requires the creation of supply chains that are agile and nimble enough to thrive in today’s global marketplace.

Such an objective requires that supply chains possess the following attributes:

1. Knowledge of customer demand

2. Increased supplier flexibility

3. Increased internal flexibility

4. Technology-enabled

How do these four attributes increase supply chain velocity?  Lean, collaborative and adaptive supply chains are capable of increasing supply chain productivity and profitability by reducing waste found in the channel network.

Lean supply chains want to create value at the lowest cost through the real-time synchronization of product/service needs with the optimum supplier. Achieving such objectives requires supply chains to be both responsive (capable of meeting changes in customer needs for requirements such as alternative delivery quantities and transport modes) as well as flexible (adapting assets, pursuing outsourcing, and deploying dynamic pricing and promotions).

 

Competencies of the High-Velocity Supply Chain
While the above four attributes provide the foundations for lean, high-velocity supply chains, deeper investigation reveals that they can be better understood when deconstructed into six competencies.

1. Application of Process Kaizen Tools

2. Process Standardization

3. Channel Partnership

4. Demand Management

5. Lean Implementation

6. Strong Communication

Today’s best supply chains relentlessly pursue the above six “lean” competencies.