Despite being a central component of any commercial strategy, the concept of the supply chain remains virtually unknown to the public. Yet this management of tasks and flows is what enables organizations to control their production and procurement. Above all, it constitutes a real competitive advantage. Here we examine the seven fundamental pillars of a resilient and sustainable supply chain...
The supply chain – what is it ?
The supply chain is the name given to the entire network used to deliver products and services, from the point of departure (the supplier) to the point of arrival (the end customer). This network encompasses physical flows (storage in warehouses, deliveries by trucks, etc.) as well as information flows and financial exchanges.
Coordination of this network is called “supply chain management”. What are its objectives ? To coordinate operations (physical operations and information flows), while maximizing benefits to customers (satisfaction and loyalty), sales (profitability) and the environment (regulatory compliance).
The scope of the supply chain is therefore not limited to warehouses and the transportation of goods, but ranges from the development of a product or service to measurement of customer satisfaction. All with one vital objective – to ensure that all the company's functions are aligned with this process. This strategic approach aims to “break down silos” between a company’s different departments.
Revealing and resilient
Everything would be perfect in an ideal logistics world… but life also includes crises which can reveal malfunctions within these well-oiled mechanisms. Especially since supply chains are often organized from end to end, i.e. based on “just-in-time” flows, and must meet the expectations of buyers who are now used to the ultra-fast delivery times popularized by e-commerce giants. This impatience places significant pressure on the costs and performance of logistics operations.
So how do you make a supply chain resilient to the challenges of the times ?
Agility and frugality: what if the key to a resilient supply chain was a return to fundamentals? These can be broken down into seven pillars.
1 – Mastering the basics of the profession
Because it concerns all departments in the company, supply chain management relies on fundamentals that it is vital to master, such as rigorous management of stocks, forecasts and procurement, sales planning, definition of KPIs, control over total costs, etc. No long-term action can succeed without respecting the basics of the profession.
At Saint-Gobain, several procedures exist for ensuring that best practices are followed on the ground. Continuous improvement of the supply chain is based particularly on industrial excellence programs, such as World Class Manufacturing (WCM). Adopted by Saint-Gobain in 2007, WCM is an integrated management system designed to improve the company’s performance by aiming for industrial excellence in accordance with global standards. Its ambition is for each Group plant to be exemplary, in terms of personal health and safety, listening and customer service, the quality of the products it delivers and its economic and environmental performance. Performance is measured using quantitative indicators as well as satisfaction surveys, mainly of relevant stakeholders, customers and employees. WCM involves a commitment from the entire company, at all hierarchical levels. Out of all of the program's actions, 80% are carried out locally, to implement improvement actions, develop customer culture and participate in collaborative processes.
2 – Aligning functions to improve collaboration
As we have seen, the supply chain aims to align the company's various functions. Major competitive factors are at stake and many questions need to be asked. What do I want to offer? What services will be included? Will they be the same for all my customers and all my products ? What stock strategy do I need to adopt so that what I offer is seen and is sustainable? How can I measure my quality of service ?
Saint-Gobain has conceived a program called “Streamline” to address all of these questions. It supports teams in transforming how they work and breaking down silos between departments, while working on unique datasets that are understood and shared by everyone. It is more than simply a supply chain program – it is a transformation plan affecting all of the company’s activity and which must strictly be supported by a manager, e.g. the General Manager.
3 – Creating a digital twin of your supply chain
In view of recent developments (customer expectations for ever-greater speed, reliability and services and demand for cheaper or even free delivery) and the crises we have experienced (particularly the health crisis), the supply chain strategy must be reviewed increasingly frequently. This ambition is only possible with regularly updated processes that can be rapidly implemented, allowing agile decision-making at various levels (tactical and local).
A process that already exists within the Saint-Gobain Group. The central team allows the various departments to use software (llamasoft) to challenge their supply chain network. A typical project lasts about four months and includes the creation of a digital twin (a faithful, but virtual, copy) of the logistics network and definition of its overall distribution cost. It is then possible to work on scenarios that question the existing model.
4 – Having precise knowledge of costs
No strategic decision can be made without understanding the costs. It is vital to provide decision-makers with a financial insight into the various supply chain scenarios available to them. The objective is to gradually move from volume-based analysis to cost-based analysis and, ultimately, to margin-based analysis.
The prerequisites are having a good understanding of costs throughout the entire value chain, for example by performing end-to-end mapping. It is then possible to determine the costs relating to production and distribution, the expenses associated with product returns and destruction (when they are not reusable), as well as customer relationship and information system costs.
5 – Digital – the cornerstone
The creation, enhancement and sharing of data are absolutely vital in supply chain management. They provide an end-to-end view, from products and services offered, forecasts, capacities, stocks, order and delivery tracking, etc. to measuring customer satisfaction – the objective remains the same: to share information in order to improve efficiency.
Digital is a real lever to achieve this objective. In an extremely vast and shifting ecosystem of solutions, it is important to strike a balance between the complexity of the solutions and the complexity of the activity. For instance, there is no need for the “Rolls Royce” of warehouse management systems for 200 product references to be managed in a 1,000 sq. m space. It is therefore important to provide a clear and comprehensive vision of existing solutions in order to inform the company's departments and business lines about the various possible options according to their needs.
6 – Surrounding yourself with talent and supporting it
Supply chain management is increasingly attractive. This attractiveness is accelerating with the growth of digital technology and the need for the skills and profiles required to support its development. Talented employees specializing in digital/data are increasingly sought after by startups, as well as large groups. There is real competition for talent and this needs to be managed properly.
At Saint-Gobain, a dedicated supply-chain academy is being developed. At the same time, a supply chain community has been created to boost career development, exchange of good practice and the gateways and talent management that the group needs.
7 – Moving towards a sustainable supply chain
A sustainable business needs a sustainable supply chain. Transportation has a significant impact on carbon footprint and the logistics chain therefore has an important role to play in controlling scope 3. The term “scope 3” covers all greenhouse gas emissions not directly linked to the manufacture of a product, i.e. procurement, transport, customer use, etc. A sustainable supply chain also contributes to maximizing recyclable solutions, which should in turn lead to zero-waste management.
Saint-Gobain's ambitions of carbon neutrality are driving initiatives to reduce the impact of transport, through various actions. The Group has a particularly strong position in the “zero waste” approach and pays particular attention to the recyclable nature of the materials used in the design of its products.
Collaborating, anticipating, innovating, digitizing, breaking down silos, minimizing costs, reducing losses, adjusting processes, training teams, attracting and developing talents and, above all, coordinating everything to establish a sustainable supply chain – at the center of all this is the amalgamation of all the talents found within a company.
Photos credits : TMLsPhotoG / Shutterstock, Don Pablo / Shutterstock