Supply Chain Governance
At its core, Supply Chain Management is about identifying sources of variability within supply chains, and mitigating any risk related to that variability. This is true from the material requisition stage right through to the receipt of those materials, and affects both direct and indirect supply chains.
Indirect supply chains often face a greater amount of complexity due to the relative uncertainty of demand over time, which leads to challenges in managing the availability of Maintenance, Repair and Operations (MRO) Parts.
However, even though the importance of managing MRO inventories is clear, we often see a lack of attention in the industry to the establishment of high-quality policies, processes and procedures in the procurement and supply network that would positively impact MRO stores. Without adequate supply chain risk management, your global supply chains could be at risk.
Because senior management in successful businesses expect their global supply chain performance to be predictable and dependable, improving overall supply chain performance is a must. This involves finding ways to better manage supply chain risks, and developing more robust supply chain governance mechanisms based on a more sustainable supply chain theory.
Improving Supply Chain Performance
In a fast moving supply chain such as for consumer goods companies, we have come to expect strong category management, vendor performance score carding and robust shipment tracking from our supply chain partners.
Unfortunately, when we dig deeper into the inventory of asset-intensive companies by reviewing supply chain strategy and governance mechanisms within maintenance stores, we often see internal supply chain vulnerabilities and governance models and practices with plenty of opportunities for improvement.
While supply chain variability is an unavoidable fact within any supply chain governance model, disruptions can come from any number of sources including changes to economic or weather conditions. That’s why, as supply chain governance professionals, it is our duty to anticipate, mitigate and overcome these factors to provide the highest possible service level to end users.
Not all risk is controllable, but with solid and repeatable supply chain governance structures in place, even the most challenging risks can be mitigated. It’s the responsibility of the management team within the organization to adjust their operation as necessary to get the results their company deserves.
What is Supply Chain Governance?
Supply Chain Governance is the framework that ensures:
Establishing a supply chain governance mechanism that works well typically requires addressing the trinity of People, Process and Technology.
The Importance of People in Effective Supply Chain Management
Having clear roles and responsibilities is critical. Ensuring everyone is clear on their individual responsibility, as well as insisting on clear and consistent accountability, can go a long way towards ensuring consistent execution.
For instance, order delays are often the result of accountability gaps. Clarity within the team can go a long way towards avoiding these kinds of issues.
The Importance of Process in Healthy and Sustainable Supply Chains
There are many benefits that can be enjoyed by having business processes that are widely understood within your organization, and that are well-supported by clear policies.
Setting high standards, developing a clear stocking strategy, and making better decisions on supplier selection can take the ambiguity out of day-to-day operations for staff members, improving operations and further serving to drive consistency and ensure supply chain sustainability.
The Importance of Technology Within Supply Chains
For supply chain professionals, the challenge of working “in the business” to support daily transactional requirements is always balanced with working “on the business.” This includes proactively identifying risks in global, complex supply chains, and exploring operating-cost reduction strategies, all while improving service levels.
Thankfully, technology is playing an increasing role to help us collectively do more with the same (or even less) time. This creates the opportunity for a better balance between keeping the lights on and improving services and overall performance.
The purpose of advanced analytics helps us to identify exceptions quickly, and focus effort where it matters most. Additionally, data visualization helps us better understand what is happening within our function, allowing us to spend our time on addressing the issue at hand, rather than hours tumbling data to uncover insights.
At Xtivity, our experience tells us that many companies have fundamental gaps in policy and operating processes that work counter to an inventory optimization program. For that reason, focusing on process and supply chain governance improvements is key when trying to achieve a more efficient MRO supply chain.
To help, Xtivity can build out a full supply chain governance framework for any client, whether that is through providing well-structured and effective operating guidelines, or by reviewing and refining existing policies, processes and procedures.
This process-focused work is supported by leveraging Xtivity’s cloud-based parts management software, Pulse, to provide you with updated ordering values and customized reporting and performance dashboards. Our inventory optimization solutions will help focus your effort, minimize stock-out risks, and provide the insights your team requires to drive your MRO supply chain more efficiently.
In our experience, the last piece of the puzzle is to ensure that work is balanced, and that functional roles throughout the supply chain organization are aligned to the overall goals of the business and its site operations. Xtivity helps clients ensure accountabilities are defined, roles are clear and that an organizational structure is in place that will provide sustained performance in your supply chain network for years to come.
Connect with Xtivity Today
Reach out and get in touch with us anytime to discuss how our inventory optimization solutions can improve supply chain collaboration with suppliers, improve the standards of your supply chain governance, policies and processes, or use our technology to help you get the information you need right away to improve your services.