What do companies like Bristol-Myers, 3M, Johnson & Johnson, Nestle, and General Mills have in common? Gartner recently cited them in their annual rankings of supply chain management best practices. The annual Supply Chain Top 25 recognizes leaders in supply chain management and cites best practices as well as emerging trends.
Small to mid-sized businesses can learn from these global giants how to weather the current supply chain storms and glean creative ideas to repair, restore, and secure their supply chains from ever-changing internal pressures. Whether it is a shortage of a particular raw material, wars, natural disasters, pandemics, labor shortages, or political unrest, the global supply chain is fraught with challenges and potential disruption. These companies have found ways to work around supply chain issues and grow despite these challenges. Here’s what you can learn from them.
Resiliency and Agility Key to Supply Chain Management Best Practices
Among the top companies cited in the Gartner listing, those near the top of the “best” list demonstrate both resiliency and agility in the face of supply chain challenges. In fact, among all the qualities listed for the top supply chain companies, these two characteristics seem to be what sets the best companies apart from the rest.
What does agility and resiliency look like in action?
- Last year, global consumer giant Nestle faced many of the same supply chain woes as their competitors. Instead of relying on the same old solutions, the company launched a crowdsourcing effort among their supply teams to solve complex problems. One solution: ethical sourcing of farm-produced raw materials, which is a key to their commitment to supporting farmers and ethical sourcing. This new supply chain management concept came directly from the teams able to share ideas and collaborate internally on them.
- L’Oreal is best known as a maker of cosmetics and beauty products, but the company is also a contender in the Gartner top 25 supply chain companies. L’Oreal faces unique challenges in that like many beauty and cosmetics companies, new product launches dominate the marketing map. The company handles and ships 7 billion products per year worldwide. To do so effectively, especially when the roadmap is constantly changing and new challenges pop up with increasing frequency, L’Oreal expanded its network of delivery methods, adding distribution centers and transportation methods as needed to handle the constant demands.
- King Arthur Flour, while not on the Gartner list, is also a great example of agility. The 230-year-old company shifted production quickly from their wholesale 50-pound bags to manufacture more consumer 5-pound bags of flour as the pandemic shut restaurants and commercial bakeries down and home baking became more popular. The ingredients industry uses specialized machines that can only fill specific bag sizes, so this shift was challenging for the company. Nevertheless, their commitment to customer service enabled them to find creative ways to meet the sudden increases in demand. They adapted their supply chain with additional equipment and production shifts and more distribution centers in key areas to ship goods as quickly as possible.
Technology Supports Supply Chain Management Improvements
Many companies leveraged technology to support supply chain improvements. While technology by itself cannot fix a broken supply chain, upgrading to an enterprise resource management system or making improvements to the current ERP in use can repair and sustain supply chain improvements.
Two examples of companies who utilized improved technology to boost supply chain best practices include:
- Unilever took a different approach to improve their supply chain management issues. The company, producer of such ubiquitous products as soap, food, beverages, and personal care items, set about an aggressive five-year growth plan starting in 2003. To accomplish their plan, the company focused on the technology undergirding the supply chain, as well as involving suppliers in problem solving. Improvements in the procurement process as well as new leadership enabled them to achieve their growth projections.
- 3M, makers of everything from dental equipment to adhesives, consistently makes the Gartner list. The company invested in its supply chain management technology back in 2013, which has stood it in good stead throughout the challenges it faced in the decade that followed. Technology enhanced supply chain management by improving communications, collaboration, and sourcing. The digitization of supply chain management helped 3M reduce and break down business silos, integrate communications among all parts of the supply chain, and adjust and integrate product lines between suppliers and consumers.
Shock-Proof Your Supply Chain Management
All of this is well and good, you may be thinking, but most companies don’t ship a product out every few seconds, like L’Oreal, or have over 55,000 products, like 3M. Small to mid-sized companies, however, can learn many techniques to shock-proof their supply chains from the big companies.
When facing supply chain disruption, the experts at MIT Sloane Management have several tips to offer. These include:
- Face the issue squarely. Don’t dodge it.
- Establish a crisis management center.
- Open lines of communication. Make sure everyone who touches the supply chain has a way to communicate during the disruption. Listen to the experts for each part of the supply chain. The team who bags the flour knows the bagging equipment and challenges, for example, while the team who procures the wheat understands their part of the chain. Allow everyone to contribute their thoughts and ideas to problem-solve.
- Ensure that key decision makers are at the helm. These should be people who know the supply chain in your company the best.
- Keep the C-suite informed. Schedule regular check-in meetings or touchpoints to ensure executives at the top of the company have all the facts, especially if they are called upon to communicate to shareholders or the public about supply chain disruptions.
Use Your Company’s ERP for Data and Information Sharing
Here’s where having a good enterprise resource planning system can help your company “shock proof” against supply chain disruptions. Like the large, global companies cited as examples in the earlier sections of this article, your company can leverage its ERP system to:
- Improve communications: Systems such as Acumatica allow you to add additional users as needed, in some cases paying only for use, rather than a site license. This enables you to add your suppliers to the system so they can provide updates on shipments, supply levels, and more. Enhancing communications throughout the system will improve your ability to proactively respond to potential supply chain disruptions and stock shortages.
- Break down silos: ERP systems are famous for their ability to break down silos. The data sharing inherent in an ERP ensures that everyone can access data to make decisions.
- Collaboration: Like breaking down silos, ERP systems foster collaboration. With a shared data source, cross-functional teams can utilize their expertise to find new solutions to the age-old problem of stock shortages, outages, and delays.
- Creative thinking: Access to the data from your ERP system can enhance creative problem solving. You may need to think outside of the box and look at data beyond your own area of expertise to come up with creative solutions. It’s a cliché to say to a carpenter, all problems are solved with a hammer, but it’s also true—marketing reaches into its marketing toolbox to solve problems, operations into theirs, and so on. When you can gather together and use consistent data as a springboard for creative problem solving, teams can reach beyond their familiar “tools” to find new solutions.
Another category of software that may help you improve your supply chain management is warehouse and distribution management systems. These systems can help you improve distribution, stock arrangement and management, and more to enhance productivity and ensure that every aspect of your distribution system is functioning at peak efficiency.
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Each company is unique and faces its own supply chain management challenges. But whether you’re L’Oreal, 3M, Unilever, or Joe’s Fishing Lures, Inc. (we made that up, so if you’re Joe and make fish lures, we apologize), you can still draw upon these ideas of best practices and tap into top-of-the-line ERP and WMS software to improve your supply chain.