Reducing Costs through Collaboration in Supply Chains - Martin Christopher

| 0 Comments

 

Martin_Christopher.jpgThe need to contain costs in all aspects of business is now more crucial than ever for most companies. Many challenges lie ahead in these uncertain economic times; input costs, particularly raw materials, are on the rise again, and the search for greater cost reduction in business is intensifying. But after years of significant cost-cutting programmes, there is very little low-hanging fruit left, says visionary supply chain thinker Martin Christopher .


UK-based supply chain thought leader Martin Christopher will be in South Africa in October to participate in the Chartered Institute of Logistics and Transport: South Africa’s ‘Meet the Gurus – Global Supply Chain Update’, taking place on 22 October in Cape Town and on 24 October in Sandton, Johannesburg.


The only remaining aspect ripe for trimming is actually outside the company – in its interfaces with other partners in the supply chain. Companies focus on internal efficiency but are unaware of the significant layers of costs in badly managed supply chain interfaces.


Supply Chains Compete – Not Companies


Some companies still try to reduce costs or grow profits at the expense of their supply chain partners. But transferring costs upstream or downstream does not make them more competitive; all costs filter to the final marketplace as the price paid by the end user. Smart companies strive to make the supply chain more competitive using the value it creates and the costs that it reduces as a whole. The real competition is supply chain against supply chain. Three related key drivers of costs at supply chain interfaces can be eliminated by collaborative working: transaction costs; process costs and uncertainty costs.


Transaction costs include the costs of placing orders, progress chasing, raising invoices, confirming delivery arrangements, handling queries and many other activities of companies doing business with each other. However, these can be dramatically reduced using collaborative working arrangements supported by modern B2B e-commerce tools.


Today’s information and communications technology makes it possible to connect supply chains from one end to the other. The availability of ‘Software as a Service’ (SaaS) over the web means the cost of communications across networks is relatively low.


Removing Barriers to Collaboration


The barriers to improving supply chain collaboration are not the technology, but rather the mindset of people in business reluctant to work as partners and share information. The benefits far outweigh the risks; shorter cash-to-cash cycles, and improved supplier/customer relationships.


Process costs arise because suppliers’ processes do not always align with customer processes. Different product codes and unitisation requirements; discontinuities and duplications; manual or multiple or erroneous data entry can all add to costs. Process alignment can be achieved using joint process teams with people from both sides of the customer/supplier interface.


Uncertainty costs arise through a lack of confidence in forecasts and a lack of knowledge about customers’ precise requirements. This can create buffers of duplicated inventory at the interfaces between supply chain entities, as well as at the manufacturer and retailer or end user.


The key to reducing unnecessary buffers of inventory is improving supplier/customer communication – by giving suppliers immediate information about their rate of usage or sales of product using e-commerce tools such as Vendor Managed Inventory (VMI).


Martin Christopher has been at the forefront of the development of new thinking in logistics and supply chain management for over thirty years. His contribution to the theory and practice of logistics and supply chain management is reflected in the many international awards that he has received.


For more information on CILTSA’s ‘Meet the Gurus’ Global Supply Chain Update, email Catherine Larkin at CILTSA cvlarkin@ciltsa.org.za.


About Martin Christopher


The science of supply chain management has its own alchemist; Martin Christopher, a visionary thinker in supply chain excellence. He believes effective development and management of any supply chain network is a sustainable advantage in today’s global marketplace. Christopher is renowned for recognising that the real competition is between supply chains, not companies and created a number of guiding principles for supply chain managers to gain a competitive edge. These are summarised as the ‘4Rs’; responsiveness, reliability, resilience and relationships.

Leave a comment


SmartProcurement Newsletter
X

Please enter your details below to receive the SmartProcurement Newsletter for FREE on a regular basis.

As part of the SmartProcurement Newsletter you will be receiving World Class Procurement News, Tools, Tips, Tactics, Procurement Training updates, Upcoming Events, and the latest Procurement Career Openings.

* Email Address:
* Title:
* First Name:
* Surname:
* Company:
  Position:
* Country:
* Public / Private:

 

Career opportunites

Head: Supply Chain Management (P6)

  • <500 000 >500 000 Limpopo Permanent Procurement Management Supply Chain
North east of the Tropic of Capricorn, just ...More

Purchasing and Supply Manager

  • <500 000 >500 000 Gauteng Permanent Procurement Management Supply Chain
Purchasing and Supply ManagerThe CSIR has a vacancy ...More

Senior Manager Public Sector

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
 Senior Manager Public SectorTotal Cost to Company: R1.1mil ...More

Senior Manager: Mining

  • >500 000 Gauteng Industrial Engineer Permanent Projects / Category Management
Senior Manager: MiningTotal Cost to Company: R900k – ...More

SUPPLY CHAIN MANAGER

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
SUPPLY CHAIN MANAGER(Total Cost to Company R750k – ...More

Master Data Management Advisor

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
 MASTER DATA MANAGEMENT ADVISOR(Total Cost to Company R750k ...More

PRO - Performance Reporting

  • >500 000 Permanent Procurement Consultant Procurement Management Projects / Category Management
PRO - Performance ReportingTotal Cost to Company: R800k ...More

PRO - Risk & Governance

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
PRO - Risk & GovernanceTotal Cost to Company: ...More

Supply Chain Site Manager

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
Supply Chain Site ManagerTotal Cost to Company R1mil ...More

Chief Financial Officer

  • >500 000 Gauteng Permanent Procurement Officer / Specialist
Chief Financial OfficerTotal Cost to Company R1.5mil – ...More

Process Engineer- WMS

  • <500 000 >500 000 Industrial Engineer Permanent Projects / Category Management Western Cape
Process Engineer- WMS(Total Cost to Company R350K – ...More

Forecast Analyst

  • <500 000 Analyst Permanent Procurement Management Western Cape
Forecast Analyst(Total Cost to Company R350K – R500K) Location: ...More

Group Category Manager: Indirects

  • >500 000 Permanent Procurement Management Projects / Category Management Western Cape
Group Category Manager: Indirects(Total Cost to Company R700K ...More

Group Category Specialist: Chemical

  • >500 000 Gauteng Permanent Procurement Officer / Specialist Strategic Sourcing
Group Category Specialist: Chemical(Total Cost to Company R700K ...More

Sourcing Specialist - 3rd party

  • >500 000 Gauteng Permanent Procurement Officer / Specialist Strategic Sourcing
Sourcing Specialist - 3rd partyTotal Cost to Company ...More

Global Procurement Lead (Processing)

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
 Global Procurement Lead (Processing)Location: JohannesburgTotal Cost to Company ...More

Global Supplier Performance Manager

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
Global Supplier Performance Manager Location: Johannesburg  Cost to ...More

Group Customer Service Lead

  • <500 000 >500 000 Analyst Gauteng Permanent Procurement Officer / Specialist
Group Customer Service Lead  Location: Johannesburg As the ...More

Business Intelligence Manager

  • <500 000 >500 000 Gauteng Permanent Procurement Management Supplier / Business Development
Business Intelligence Manager Location: JohannesburgLead the development, implementation, optimization ...More

Group Procurement Manager

  • <500 000 >500 000 Gauteng Permanent Procurement Management
Group Procurement Manager Location: Johannesburg  A Global Organization ...More