Supply chain optimisation focus areas
Optimising across the end-to-end supply chain
STRATEGIC
Strategic supply chain optimisation is a strategic scenario planning, evaluation and decision-making process with the aim of determining the overall future direction of an organisation's supply chain over a specified time horizon (usually multiple years, e.g. 5-30 years). The process is aligned with the business strategy and completed within the context of the current and expected future business operating environment (including elements such as expected competition, -social, -technological, -economic, -environmental, -political, -legal, -and- ethical conditions).
Strategic supply chain optimisation is a collaborative process involving senior management and other key business stakeholders. The process is typically completed annually or on a project basis through multiple structured workshops, analysis of strategic information, and analysis, evaluation and decision-making around strategic options.
The process covers long-range decisions such as the setup of future supply chain infrastructure, directional decision-making on future supply chain technology options and assessment of broad organisation structure and process options to support future infrastructure-and-technology options.
Generally, the most significant achievable value linked to the optimisation of supply chain performance is at the strategic level. Supply chain infrastructure, technology architecture, network design, and facility sizing and location decisions lock in a large portion of supply chain cost and play a major role in determining supply chain competitiveness. It is therefore imperative for any organisation to follow a structured process based on careful, analysis, evaluation and selection of all key options when making strategic supply chain optimisation decisions. A deliberate structured approach completed on a regular basis (e.g. annually) will optimise the potential for organisations to appropriately gear their supply chains for optimum future business value.
TACTICAL
Tactical supply chain optimisation is the process of optimising supply chain performance within the tactical horizon (a few months to a few years). The process aims to apply scarce supply chain resources (people, processes, technology, and infrastructure) optimally to meet supply chain and business objectives. It operates within the context and constraints set up by the strategic supply chain planning-and-optimisation process.
Tactical supply chain optimisation is a collaborative process involving senior management and other key business stakeholders. The process is typically completed on a project basis (e.g., investigate options to improve logistics performance over the next 12 months) or driven by monthly processes such as Sales and Operations Planning processes.
The process covers tactical decisions such as transport fleet sizing and fleet operating philosophy decisions, decisions to optimise the supply chain network within the tactical horizon, decisions around focus areas for tactical supplier improvement initiatives, tactical supply chain technology interventions, and decisions and processes to optimise and improve Sales, Inventory and Operations planning.
Tactical supply chain optimisation ensures supply chain resources are applied in the most effective, efficient and economical ways to meet business objectives aligned with the constraints and objectives set-up by strategic optimisation processes. It typically provides the second most significant achievable value linked to the optimisation of supply chain performance after strategic supply chain optimisation. It ensures early visibility and appropriate management of tactical opportunities and risks towards optimised business value. Tactical supply chain optimisation done correctly will result in significantly lower business cost and optimised customer service levels.
OPERATIONAL
Operational supply chain optimisation is the process of optimising supply chain performance within the short-term horizon (immediate timeframe to a few months into the future). Operational supply chain optimisation is where plans become reality. Operational supply chain optimisation aims to support supply chain execution to ensure operational objectives are achieved in the most effective and efficient ways aligned with strategic and tactical plans, overall business objectives and operational realities.
Operational supply chain optimisation is a collaborative process involving operational management and teams, and related stakeholders. The process is typically completed on a project basis (e.g., investigate options to improve daily logistics execution) or driven by daily execution processes.
Operational supply chain optimisation is concerned with operational decision making such as which vessel to load in the next hour, which truck to send to which customer with the next delivery and which inventory to pick next. Information requirements and decision making is real-time or near real-time.
Operational supply chain processes are the links within businesses and between businesses, their customers and their suppliers. Failures in these processes can result in major financial loss and or reputational damage. Operational supply chain optimisation ensures operational processes are continuously optimised towards maximum effectiveness and efficiency aligned with business and supply chain objectives. Operational supply chain optimisation ensures critical links within organisations and between organisations, their customers and suppliers function optimally and result in lower overall supply chain-and-business cost, as well as optimised customer service levels.