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Perfect SCM Podcast
22 minutes | Jun 4, 2014
PSCM 010 – Define The Perfect SCM KPI Set
Maybe you know that "What Gets Measured Gets Done"! Or in other words if you do not have a measurement for a certain business aspect do not expect any change (to the better). As long as you do not create transparency it is very easy to hide, to ignore weaknesses and people will do so. Colleagues will focus on other things out there which are more important, which feel more painful. But in most cases not because the topics are more urgent as such but the urgency is given by reports, maybe even by linking transparency and the required improvements to incentive targets. The power of transparency So transparency is a very sharp saw. But this saw could easily become stump if it is not used in a proper way. A common mistake is to have the wrong transparency, you might put light onto a symptom but not onto the root cause. Another mistake is to jump to frequently from one area not to miss any challenge. Last but not least a transparency can be jeopardized by to many lights as you might not see the wood for the trees, you lose focus very easily. Keys performance indicators The key to transparency is a key performance indicator a KPI. But the term is spelled out too easily. Sharpen the saw by understanding the true nature of a key performance indicator, by knowing what turns a performance indicator into something which is KEY to your business. It is a lot about focus, it is a lot about business requirements and it is about discipline. The perfect KPI set We learned that transparency is a sharp saw, that creating the right transparency makes things changing, makes people taking actions. Key performance indicators is a great tool to create transparency. But is it about one single KPI or do I need several KPIs. One part of the answer is pretty simple, most likely one KPI is not good enough. Just think about strategic procurement (one of our most recent podcasts) if you just focus on price, e.g. defining one single KPI which create price development transparency, do not expect that the replenishment lead time improves, that the quality of goods improve, the only thing which will improve is the price. So this is not the right approach. But listen to perfect SCM's latest podcast and learn about the perfect KPI set, about the criteria which turn a KPI set into a perfect KPI set. Define kpi; Processes are crucial Last but not least learn about the link to processes, learn how processes facilitate the definition of key performance indicators and how key performance indicat
39 minutes | May 20, 2014
PSCM 009 – 6S in Warehouses
Many of us are familiar with the workplace organization method of 5S. It is one of the many tools in the ‘lean manufacturing’ arsenal. We at perfect SCM are recommending 6S for warehouses. Originated from Japan, 5S is an abbreviation for: Seiri (Sort) – Ensure that only the necessary items are available in and around your workspace. Seiton (Set) – Ensure that the identified necessary items are properly organized in an easily accessible way. Seiso (Shine) – Ensure that the workplace is being kept clean and equipment and tools are maintained well. Seiketsu (Standardize) – Ensure that you have established a standard way of working. Shitsuke (Sustain) – Ensure that standards are maintained. Traditionally, 5S principles have been applied to improve manufacturing processed in order to reduce cost and lead time. Nowadays 5S principles are not only applied in manufacturing environments but also in knowledge work, software development and of course Supply Chain Management. Within the supply chain, the impact of 5S is mainly visible within the Logistics or Warehousing environment. Also within warehouses, being organized with without a doubt improves speed, reduces waste and increases accuracy. What is the 6th ‘S’ in warehouses? Besides the traditional 5S, more frequently a 6th ‘S’ is being adopted. Depending on your environment this could be: Safety – Ensure safety for staff and goods preventing injuries ore damages. Security – Ensure that all assets (including Intellectual Property) and goods are being kept secure preventing theft of burglary. And even sometime ‘satisfaction’ Generally the choice is yours… Also IF you’d like to add the 6th S at all… You could argue for example that safety is taken care of when your 5S is in place. Here at perfect SCM we would recommend the additional focus on safety and have prepared a practical checklist for you execute regular audits in your warehouse. When you prefer reading over listening, you can download our transcript here. For the premium content members, this week’s article elaborates in detail how to implement and maintain a proper 6S in your warehouse. Our advised 6S checklist will be available for download here. Not a premium content member yet? Find out how to become a member here.
27 minutes | May 7, 2014
PSCM 008 – Sales and Operations Planning Process (S&Op Planning)
You can call the Sales and Operations Planning Process as the backbone of supply chain execution. It is about getting everybody on the same page in regards to future market demand. It is about generating the “one number” which synchronizes all necessary activities to guarantee future shipments to the customers. It is a simple but powerful process – five steps are sufficient to align Sales, Marketing, Supply Chain, Production and even Finance. After successfully closing the process Marketing and Sales can setup a strategy how to penetrate the market without overcommitting, Supply Chain can start communicating to the suppliers and could prepare the shipping capacities and production is able to adjust production capacity to be able to process the supplies ordered by Supply Chain Management. Even Finance can develop plans how to finance a ramping scenario and can analyze if the agreed shipping volumes fit to the revenue numbers communicated to the shareholders. Planning review as THE synchronization point On a regular basis, normally on a monthly frequency the planning review meeting takes place. All big guys of the company get together and decide upon constraint volumes and required actions to secure capacity and supply. If this meeting is properly prepared it could be quite smooth but if demand and supply differs significantly, if Sales and Marketing want to go for risk orders to achieve revenue targets, if Supply Chain Management has issues to secure required material supply or if production is not able to cope with the flexibility requirements it could be a tough and lengthy meeting. But it is worthwhile! One number planning The meeting will be closed no sooner than all parties agree to one single constraint number; the one and single number which is reference to all adjacent activities. It is the number which decides upon success or failure of the entire company. It is the number which was decided by all key players in the company! So join the journey through the fascinating process of Sales and Operations Planning! Read this weeks article here. When you prefer reading over listening, please download the transcription. (Coming Soon)
30 minutes | Apr 21, 2014
PSCM 007 – Golden Purchasing Rules
"A purchaser should just purchase according to the requests that have been issued to him." - Either follow the ERP-system or follow a purchase order requisition form, depending your organisations' system… Besides ‘just issuing purchase orders’, a purchaser has to follow-up to ensure that goods are delivered as per request. First of all this means, regular contact with suppliers to check on the status of the purchase orders. Secondly, once the goods have been delivered, ensure that they are delivered in the right quantity and the right quality. A purchaser will normally be assisted by his colleagues from logistics to confirm that the right quantities are received and assisted by his quality colleges to verify that the goods meet the required specifications. In case of any discrepancy, it is the buyer who will have to go back to their supplier to get discrepancies rectified. Purchasing Rules encourage Rescheduling Then the buyers also has to continuously check if the internal requirement dates for the purchase orders have remained the same. When you operate in a volatile business, you might be confronted with regular rescheduling messages. Or, if your customer demand don’t change frequently, you’ll have less rescheduling work to do. Also for the rescheduling activities, your ERP-system could be your best friend. Both to give you status updates on the purchaser orders - whether rescheduling is required or not - and by providing an 'easy standard way' to get rescheduling messages extracted from your system. In today’s world everybody is facing similar challenges; do more with less. For the purchasing department this could mean; manage more purchase orders will less buyers. To achieve this, it is getting more and more important to work smart. Working smart basically means; work on those activities that have the most impact. Working SMART To provide a good ‘smart working’ guideline for buyers, we have developed ‘9 Golden Purchasing Rules’. This is a great tool for purchasing managers to communicate setting priorities to buyers and suppliers. Read our full article to and download the our ‘9 Golden Purchasing Rules’. If you prefer written content over the podcast, read our full transcript here.
27 minutes | Apr 8, 2014
PSCM 006 – Strategic Procurement
It seems that defining strategic procurement is pretty simple. It’s all finding the best supplier, negotiating contracts, signing and especially about two digits savings every year. You might want to add that it is not only about price, other aspects like quality, flexibility and other criteria should be considered too. And the answer is not a surprise, yes, if you do not want to scarify all dimension for the price you should definitely consider all aspects. The truth about strategic procurement But listening to the podcast you will encounter that this aspect of strategic procurement is not as strategic as it should be. Basically this approach is not strategic it is more on the tactical side of procurement. But listen to the enlighten podcast #6 to get the true insights into strategic procurement. 8 steps in strategic procurement So you will have a little bit of a challenge to implement true strategic procurement in your company. But be assured that we also provide some practical advice. We are pretty sure that our eight steps in strategic procurement supports you in not just setting up the correct role but also empowering the organization to deliver a significant value add to the company. Strategic procurement and operational purchasing Last but not least we give you some more insights why strategic procurement is different from procurement and purchasing. We give you some details why we think it makes sense to clearly differentiate between the two functions and where is the handover from strategic procurement to operational purchasing. For the impatient we have the takeaways which condense the podcast in three short and solid statements – you will find this as usual at the end of the podcast!
30 minutes | Mar 24, 2014
PSCM 005 – Material Requirement Planning
Material Requirement Planning (MRP) is for many organizations the beating heart in their arsenal of planning tools. MRP is an inventory control mechanism that plans material based on requirements. The first company to use MRP was Black & Decker. They started off in 1964 as a response to the Toyota Manufacturing program. The basic inputs for MRP are: Required Quantities Bill of Materials Production Lead Time Purchasing Lead Times (safety) Stocks Based on the these inputs, MRP will calculate: Which materials need to be ordered by when, and Which materials need to be produced by when To be able to have sufficient materials available. This is a rather based material planning calculation, not always sufficient in this day and age... Material Requirement Planning evolves Since 1964 the world has changed. The ability to respond to rapidly to changing markets has become 'the standard' instead of a competitive advance. We have excess to faster computers that can calculate more accurate and handle increased sets data. Not surprisingly, also MPR evolved: MRP-I: The original Material Requirement Planning. Calculates when what has to be available based on given demand and suggest purchase order dates based on predefined lead times. MRP-II: Manufacturing Resource Planning. Not only material availability is calculated based on a given demand but now the planning logic also calculated with capacity constraints. This improved version of MRP will prevent that you end up with high raw material inventory because you have a bottleneck at your production. MRP-III: Also called DDMRP, or Demand Driven MRP. DDMRP determines optimum places where inventory could be held. In MRP-I or MRP-II inventories (or safety stocks) are predefined parameters, normally based on a forecast or 'gut feeling'. DDMRP calculated this proposal on larger sets of available data. The optimization of Material Requirement Planning is a journey that will never end! If you are as exited as we are, make sure you subscribe to our bi-weekly podcast! Also this week, this article is available for everyone, not only our premium members. Click here to get immediate access. Download the full transcript of the podcast here. Resources: Wikipedia - Material Requirement Planning
25 minutes | Mar 10, 2014
PSCM 004 – Influence of Purchasing on Inventory
Listening to the podcast will be an eye-opener for a lot of colleagues in your organization and maybe yourself. If you follow the theory that purchasing is the only role which has influence on inventory – as they buy it – or if you think that purchasing is just following what the system tells them to do – so their influence is ZERO - you might be surprised. The world is not perfect Even if this might sound like a philosophical question but key to the answer of the question which kind of influence purchasing has on inventory is to understand the imperfection of the world we live in. Listen to the podcast and you will get a good idea about the day to day challenges the imperfect world is keeping for us. And we will link this to the daily tasks in the Purchasing environment. Taking this together it is interesting to see that theory and practical live might not always match. Day to-day constraints requires day-to-day decisions on priorities, on resource allocation, it requires a clearly outlined expectation from management. A buyer struggles every day what to do first, does he need to issue new purchase order – and spend another bunch of money – or does he need to cancel or push-out as many purchase orders as possible to keep inventory levels low. Or is it more about micro management of shipping dates to achieve 100% just-in-time deliveries? Influence of Purchasing to Answer to constraints A buyer is most likely lost in the complexity of prioritization. Therefore the podcast will also give you first insights on how to an answer to these constraints; it will enable you to express your expectations properly to your staff. If you are not able you will encounter just a negative effect on inventory! So enable your Purchasing organization to optimize the supply situation, to win the daily discussions with your suppliers and to establish Purchasing in the Supply Chain Management organization by listing to this podcast! Click here to read the full article, also this week publicly accessible! (not only our premium members) Download the full podcast transcript here.
26 minutes | Nov 5, 2013
PSCM 003 – Roles in Supply Chain Management
Organizing Roles in Supply Chain Management properly and giving it the right management attention could be a challenging journey. For some it is common sense that Supply Chain Management is a competitive advantage. For others - most of the time - it is just seen as a function which is responsible to issue purchase orders! In our view, real Supply Chain management is much more diverse. It starts with the business planning. The whole supply chain need to be setup properly. Only when this is done, issuing purchase orders is the very last mile. It’s really only 10% of the job! The other 90% is done BEFORE any purchase orders are issued. Structure! This podcast focusses on the structure of Supply Chain Management. It gives insights into the different roles. We will discuss seven to eight roles! So there are at least six more than just purchasing. It doesn't mean that you need to increase the number of 'boxes' in your organization chart but at least you need to know about the different single roles SCM needs to play within an organization. Then you can see for yourself if your organization has covered every single role or if the one or the roles is under-represented in your organization. Journey So let’s start the journey and create the whole picture. Turn your Supply Chain Management into a competitive advantage! Click here to read the full article, also this week publicly accessible! (not only for our premium members) Download the full transcript of the podcast here.
29 minutes | Nov 5, 2013
PSCM 002 – Inventory Accuracy
I don't think we have to explain the importance of an accurate inventory to supply chain management professionals, do we? Besides the financial consequences that Inventory Accuracy may have, the operational consequences can also be huge! I am sure we all have a story were we were trying to ship the extremely urgent customer order and 'bahm' system says 'quantity on hand 1 PCS' physical found 0 PCS... Here, at Perfect SCM, we define the inventory accuracy as follows: The difference between your system inventories versus your physical inventories In other words, does what the system thinks you have on inventory really match the physical stock in your warehouse? Measuring Inventory Accuracy So we understand the importance and have agreed on a definitions. The next question is; How do we measure inventory accuracy? We suggest three different measurements: Value or Accounting Accuracy Item Accuracy Bin Accuracy The value accuracy is simply the difference between what finance 'thinks' the total value of the inventory in hand is versus the physical found inventory. Or 'book' versus 'actual'. The item accuracy measures the overall difference between quantity in 'system' and 'actual' quantity. Take note, we are talking about overall quantity. The last and arguably the most difficult the achieve is the bin accuracy. This measures the percentage of bins that we found to be 100% accurate in terms of items and quantity. Maintaining accurate inventory Now we know how to measure, it is important to understand how we can create or maintain. We will discuss a total of 5 strategies in our article (this week the article is accessible for everyone, not only our premium content members). Her we want to stress on the following two: Ownership Accurate Counting It all start with understanding who 'owns' the inventory. That is obviously 'everybody in the warehouse'. In addition we would recommend to have a dedicated person in charge for different area's in your warehouse. Secondly, accuracy of counting is extremely important. It might sounds simple or obvious, but you'd be surprised how many inaccuracies the warehouse are caused by inaccurate counting. Not in the last place because counting is often done inexperienced staff (e.g. office staff during year end stock take). And do not forget the impact that extremely complex inventory lists (counting sheets) do have on the accuracy of counting! What can you do improve the accuracy in your warehouse? Clic
14 minutes | Jul 5, 2013
PSCM 001 – Supply Chain Management Definition
Welcome to Perfect SCM! This is the very first podcast on a brand new platform for Supply Chain Management Professionals. Perfect SCM strives to be 'THE place to go to' online for all answers to your supply chain management questions. Welcome / Introduction In this podcast you'll be meeting your German and Dutch hosts Frank Stegherr and Paul Goes. Both have a vast experience in the theoretical and practical world of SCM. Frank has completed a Phd. in Mechanical engineering. He has spoken all over the world on various topics in Supply Chain Management. Franks will enrich every single podcast with interesting theoretical insights! Paul on the other hand, is more the 'practical guy' and keeps Frank on track for 'real world discussions'. Besides a short self introduction these two, there will be a discussion the best 'supply chain management definition'. This is not as straight forwards as one might think! Supply Chain Management Definition There are many many different definitions of Supply Chain Management 'out there'. A quick google search will show you that all definitions at least have some truth in them. Wikipedia defines SCM as "the management of the flow of goods". For us, the definiton needs to cover not only the flow of good but also the flow of information and the monetary flow. The perfect SCM 'Supply Chain Management definition' is: “The management of upstream and downstream relationships with suppliers and customers to deliver superior value at less cost to the supply chain as a whole” You might agree or disagree, listen to our podcast to hear how we arrived at this definition! What ever it is, we encourage you to share your opinion in the comment section below! We hope you enjoy the content, we love to your your feedback, speak soon! To download the full transcript, click here.
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