Articles

Restarting Your Supply Chain Takes a Different Skill Set

By Bill T. Walker, CFPIM, CSCP-F, CLTD-F, CIRM 

June 2020

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Bill Walker

The Farmer’s Market restarted…with significant changes.  The restart had a regulatory constraint as it had to be approved by the Governor’s Office.  The restart had a policy constraint as the city moved the location to a larger parking lot and fenced its perimeter. The restart anticipated peak demand but expected much lower demand. Capacity was controlled by counting shoppers into the market at the entrance and out of the market at the exit maintaining a maximum number of shoppers.  The restart had process changes with shopping proceeding through the stalls in one direction with one person per family, no children, no dogs, and with the requirement that everyone, buyers and sellers alike, wear face masks. The restart had supply substitutions with the absence of some vendors.

Restarting your supply chain takes a different skill set than operating an established well-functioning supply chain.  Focus on these four basic concepts:

  1. Reimagine the network container – This is a revised set of company relationships, import/export logistics, order flow connections, and cash flow connections to SOURCE, MAKE, and DELIVER your products. Old assumptions are validated, and the revised network design is iterated to achieve a profitable customer landed cost. 

  2. Reorganize the product contents – This is the organization of inventory locations, reorder points, lot sizes, lead times, and safety stocks in the transformation of raw materials into end products. Most likely there will be some supplier and inventory item substitutions. Iterate to achieve inventory turns that your cash flow can afford.

  3. Match erratic market demand with product supply – The placement of the push/ pull boundary sets your BTS, ATO, BTO, or ETO operating strategy. Demand may be pent up, then sporadic rather than its pre-pandemic regularity.  Match supply to demand through planning inventory and capacity.  If you are starting from a high residual inventory, consider matching demand to supply through dynamic pricing.

  4. Measure startup performance using diagnostics to find and correct issues – This is the application of key performance indicators to measure network throughput, landed cost, inventory turns, and ROIC against a restart budget. This is validation that the redesigned supply chain can achieve its expected performance and still be tolerant to the risks of demand uncertainty, supply variability, and cash illiquidity.

APICS certification gives you the skill set to help your company restart its supply chain!

©2020 William T. Walker, CFPIM, CSCP-F, CLTD-F, CIRM has 42 years practitioner experience, authored Supply Chain Construction and Supply Chain Architecture, and teaches Supply Chain Engineering at NYU Tandon plus Demand Planning at Rutgers. He is a 40-year ASCM member and APICS E&R Foundation past president. email: [email protected]