Supply Chain Assessment9.30.17
When you need one and what to expect.
Q&A with Colin Mewburn-Mercer
Colin Mewburn-Mercer leads supply chain assessments for companies in retail, FMCG, automotive, technology, aerospace and other industries. He is Vice President/Global for Agility Integrated Supply Chain Solutions (ISCS).
Q: When do companies ask you to look at their supply chains?
When something’s not working correctly. When a client runs out of inhouse expertise to deal with the situation, or when a client is at a decision point and unsure which way to progress. Sometimes clients come to us because their existing providers aren’t pro-active enough. We provide a variety of services, covering projects from major multinationals down to very local companies.
Q: How does an assessment start?
Typically, it starts with on-site orientation, learning about a client’s business processes. This leads into the gathering of data, in order to put together fact-based models to represent how their business processes function. A (supply chain) re-design and solution proposal has to be supported by data in order to argue the case for change in the specific challenge area. The initial dialogue is critical. We have to be better listeners than talkers. You can’t learn about a client’s challenges unless you give the client a chance to explain what they are experiencing. The key question we have to answer is: how are we going to add value?
You can’t learn about a client’s challenges unless you give the client a chance to explain what they are experiencing.
First, you need to focus upon the customer’s challenges, find out about what keeps them awake at night. You can often start a project and end up with massive mission creep, unless you have a clearly defined scope. You want to find out why it’s important for a customer to go down the analytical route – understand their reasoning. You don’t want to focus on the problem or challenge in isolation, so you need detail about the hand-offs on either side of the stage in the process where the customer identifies challenges. You look at cases, examples, data, documents, exceptions – failures to resolve problems in the supply chain and shipment.
Customers often like options, different ideas to solve the same issues. This gives them the opportunity to combine the input they get with their own views about what could or should work best. We are able to help the customer re-design the process, but we also know how to help implement the changes.
Q: What happens after the assessment is finished?
Clients engage not only to solve initial challenges but also because we try really hard to focus on developing individual continuous-improvement plans, where we take responsibility for driving cost out of the supply chain as part of continuous evolution.
Q: What about companies that aren’t Agility clients to begin with? Do they use you?
Sure. A large multi-national consumer goods company wanted our help defining lead times to market. They wanted us to show what we’d estimate as representative lead times rather than what they internally defined those times to be. They wanted to develop a model for getting products from India to certain Latin America markets because they were having problems developing forecasts.
They needed models for how much stock would be required in a particular market for particular periods. If they don’t know the lead times, they either oversupply – too much stock coming in too quickly – or they undersupply, and stock runs out.
Clients also like neutrality, the feeling that they are speaking to a team that isn’t placing them constantly under buying pressure. Some clients are cautious about going to their freight forwarder for consultative or assessment projects. They need to feel that we won’t just try and steer them towards using our forwarding and 3PL services.
Q: Big Four consulting firms do supply chain assessments, too. Why would a client choose to use a 3PL instead?
When a client finds it difficult to justify a $100,000 supply chain evaluation by a Big Four consultant, a 3PL provider with expertise in the same area is a welcome solution. The best 3PLs have scaled up their services and modeling capabilities over the past 10 years.
Assessments by 3PLs are generally a cheaper route, so that has become quite a powerful argument in our favor. Another advantage is speed. We typically move quicker. With existing clients, if you’re already handling their freight, you already have a lot of data that can be used to build the models we rely on to gain an understanding of their supply chain. We can eliminate chunks of time required to get the clients’ data, make assumptions on how to interpret it, etc.
Q: What about emerging markets?
We’ve had a relatively small number of projects coming out of Africa and the Middle East, but in Latin America and Asia Pacific the number has grown significantly in the last few years. But ISCS has experience in all geographic areas.
Q: When is an assessment worth it?
When you can bring sufficient savings to pay for the cost of the consultancy. If it’s going to cost me $25,000 to have the study done and I’ll get recommendations that will save $500,000, it’s not a difficult calculation.
For clients, it’s about learning where they actually spend their money, and how they could spend less to get the same impact. Or it is about developing the structure or processes to be able to absorb much bigger volumes with a similar cost footprint.
Many of them want a checkpoint, a benchmark where they can get an external view on how they shape up against other companies within their sector. They want new ideas and approaches that they may not have considered or may not have known how to achieve.
Q: What’s different about Agility ISCS?
We are a much more bespoke provider. We try to escape from the one-size fits all model. Clients used to see “bespoke” as time-consuming and unnecessary. The trend we are seeing, increasingly, is that they want providers who will listen and design processes around the very specific challenges they have to address.
Secondly, Agility ISCS has developed a reputation as being an innovative solutions player. We usually come back with different ideas from our mainstream consulting industry competitors. Lastly, we manage supply chains – that’s Agility’s principal business – so we know whether our solutions will work and what it will take to make them work.
Where’s the problem? What’s the answer?
Companies with goods to move can break down their supply chains into eight areas that get scrutiny in a thorough assessment.
VISIBILITY Am I managing shipments, orders, vendors and exceptions efficiently?
NETWORK SOLUTIONS Do I need a control tower? Should my customer be on-site? What about a 3PL or 4PL provider?
CASH FLOW How can I maximize it?
CARGO MANAGEMENT Vendor consolidation? Value-added services? Where are the savings?
HUBS & LOGISTICS SOLUTIONS Cross-docking? Cargo rework? Warehousing? What’s most efficient?
PRIMARY & SECONDARY DISTRIBUTION Do I need a distribution center? What’s best for product launches? Do I need packaging help? How do I handle returns?
PROCUREMENT How do I work with my franchisees? Do I need help with e-booking? What about “greening” my procurement
MODULATION Do I really have a grasp of my operations, compliance and performance?
For more information about Agility’s approach to supply chain solutions click here