Supply chain mindset will overcome bad service-delivery
Improving supply chain skills should be a national priority, argues Liezl Smith, president of SAPICS, in this month’s SmartProcurement.
Poor service delivery has been grabbing headlines for many months, often because supply chain mishaps are hampering the public and private sector’s efforts in multiple areas.
Part of the problem is a failure to understand that supply chain dynamics lie at the heart of many of the issues relating to service delivery, says Smith.
Therefore, educating South Africa’s private and public sector on the basics of supply chain management needs to become a focus area. “Building broad supply chains in all sectors would pay huge dividends in the struggle to get service delivery back on track,” says Smith.
The root cause of many service delivery problems can be traced to the focus area of the supply chain used in the environment where problems are experienced, says Smith.
“If your focus is only on one or two areas of the supply chain, you may neglect other very important areas. For example, in the public sector, there tends to be a focus on effective procurement. Although this is in line with the Public Financial Management Act and facilitates the measurement of how well taxpayer money is spent, in order to deliver a complete service, not only the spending needs to be wise, but also the planning, demand management, transportation and warehousing.”
Smith’s argues that a supply focus can be applied to all the basic elements necessary to deliver the services that South African citizens want: the right quantities of these products arrive at the right place, at the right time, because of a smoothly functioning supply chain.
“Specialised supply chain training and expertise is widely available, and if everyone adopts the same point of view, the resulting alignment between all parties should foster a more competitive marketplace, rather than a culture of wasting resources on fixing avoidable mistakes,” says Smith.
Demand is the foundation of any supply chain, and this means that any supplier needs to be able to forecast demand in terms of both quantity and location. In the case of textbooks, for example, this would mean building an accurate picture before the school year begins of how many pupils are expected to register at each school in order to procure the right amounts of books. All goods have a lead time in terms of distribution from the supplier; without the ability to forecast, it is likely that deadlines will be missed.
However, the process should not end at procurement. Warehousing is another consideration: the goods need to be stored somewhere before they are distributed to the end users. “Storing everything centrally would be cheaper, but if goods need to be delivered quickly, more expensive regional warehousing might be necessary,” Smith explains. “This is something that needs to be decided, and costs traded off with service delivery goals.”
Of course, suppliers themselves have their own supply chains, so the sourcing of the right supplier is of prime importance. These are just a few of the links that make up even a simple supply chain.
“The key is to start with the date on which you want the product delivered, and then work the schedule backwards—just procuring it will not guarantee it will arrive on time. It is also very difficult to have this complex web of interconnecting events and players running smoothly. One needs to have the skills and experience to manage a supply chain environment that is highly dynamic, with every new development having multiple knock-on effects,” concludes Smith.
SAPICS, an industry association dedicated to helping organisations and individuals improve operational performance through supply chain education, certification and knowledge-sharing. It is the Southern African custodian of three internationally accredited certification programmes: Certified in Production and Inventory Management (CPIM) Certified Supply Chain Professional (CSCP) and Certified Professional Forecaster (CPF).