Supply Chain Management Tiers

Next level details of supply chain optimization.

Supervisor monitoring shipping work
Paul Bradbury / Getty Images

To make sure your optimized supply chain is “getting your customers what they want when they want it – and doing that at the lowest cost” you may have adopted tiered Supply Chain Management processes and the technology necessary to do this.

  • At a strategic tier, you or your management will be looking to high-level strategic decisions concerning the whole organization, such as the size and location of manufacturing sites, partnerships with suppliers, products to be manufactured and sales markets.
  • Tactical decisions focus on adopting measures that produce cost benefits.  Think of using best practices, developing a purchasing strategy, working with logistics companies to develop cost-effective transportation and reducing the cost of storing inventory.
  • Decisions at the operational or transactional level are made each day that effects how your products move along the supply chain.  These decisions involve making schedule changes to production, purchasing agreements with suppliers, taking orders from customers and moving products in the warehouse.

Technology

If your company expects to achieve benefits from their supply chain management process, at some point, you’re going to need investment in technology. The backbone for many large companies has been the vastly expensive Enterprise Resource Planning (ERP) suites, such as SAP and Oracle. These enterprise software implementations encompass your company’s entire supply chain, from purchasing of raw materials to sales and delivery to invoicing to returns of sold goods.

Time & Resources

The cost of ERP isn’t only monetary cost, but you’ll have to plan for the time and resources required to implement and maintain an enterprise-wide solution successfully. Buy-in by senior management and adequate training of personnel is key to the success of the implementation.  Make sure you right-size your ERP needs, and it fits the overall needs of a company’s supply chain.

  Don’t spend hundreds of thousands of dollars on an ERP solution if your company’s annual revenue is twenty million dollars.