Listen to: "Anticipating SOC for Supply Chain: Creating a Sophisticated Supply Chain can Reduce Risk"
Today’s business needs to be flexible and agile to keep up with changing conditions. Yesterday’s boom may be tomorrow’s bust, and adaptability can make all the difference in whether your business survives or is just a part of the past. Digitization is helping many businesses keep on top of these rapid changes, including adding technology to the supply chain. Here’s a quick look at how a sophisticated supply chain can help reduce your company’s risk.
How to Reduce Risk by Creating a Sophisticated Supply Chain
For middle-market manufacturers, supply chain design and efficiency can make a critical difference in how well these companies compete in the market. Effective supply chain management can make all the difference in whether your business is successful or not, and adding digitization and sophistication into your supply chain can make the distinction between whether it’s an efficient, effective part of your business or a detriment that can cause serious headaches and hassles.
Your company’s supply chains are integrated systems that extend throughout your company’s buying and selling cycles. These systems communicate information, products and capital across your entire business process. They pass from your supplier networks through to your end customers. They cover your tools, business processes and individuals across all levels of your supply chain. By adding a level of sophistication to your supply chain, these communications and networks become stronger and more intelligent.
Whether you’re adding a new supply chain to your business or simply enhancing your existing supply chains, the first part of the process needs to cover what you’re hoping to achieve with that supply chain. In addition to that, you’ll need to have a solid understanding of the necessary planning, design and execution requirements to meet that anticipated goal. These requirements have different levels of sophistication, from passive and labor-intensive options that require you to reflect on what actions and events have already taken place to automated options that work in real time and can help you take a proactive approach with efficient forecasting and value-added strategies. Let’s take a more in-depth look at each of the requirements to gain a better understanding of them.
Planning Supply Chain Updates
In its earliest stages of sophistication, planning your supply chain strategy includes strong ties between sales and production driving each other, contingency planning that is focused on single options, tying up time and resources, forecasting that must be based on past performance and planning with partners only on an as-needed basis.
When the supply chain has evolved into a sophisticated entity, planning takes place in an environment that integrates sales, production and finance together, a wide range of contingencies are socialized in a number of possibilities, machine learning drives business forecasting and partner input is leveraged as a part of the process for intelligent decision-making.
By modeling your entire supply chain, you can gain a better understanding of how your customer demand approaches can impact overall supply chain management. With that model available, you can develop projections based on a range of different scenarios, taking operational considerations and financial impacts into account, such as production bottlenecks and customer capacities.
Adding Intelligent Design to the Process
Once you have grasped the basics of planning your supply chain and modeling different scenarios, it’s time to start designing sophistication into your supply chain. In the most basic approach, supply chain design includes manufacturers who are monitoring their asset capacity at the highest level, then take the time to determine how planning will impact that capability, lacks a solid technological roadmap and is primarily focused on transactions with its partners.
However, as the design becomes more sophisticated, the strategic vision is brought to the forefront of the supply chain’s focus, with clearly laid out priorities to develop a strategy that uses the supply chain’s capabilities in a way that is integrated with the capital plan and partners help develop value-added strategies to help manage risk.
Execution of the Overall Vision
When a new supply chain is formed in its most basic sense, metrics are unclear, as are the requirements for reporting. There is little to no automation and daily activities are focused on past performance and company rules, while communications are limited to file transfers, email and phone calls.
As sophistication is added to the supply chain, real-time reporting of individual and company performance, automation, optimization to particular plans and shared information between customers and suppliers help to deliver effective insights into exactly how the entire supply chain reacts to different situations, instead of simply relaying information.
Building Your Team and Implementing SOC for Vendor Supply Chain
When you’re building your company’s supply chain team, you need to include people at every level of the company so that the right perspectives and skill sets can be integrated into the process. Companies that fail to properly assess its current and projected future state need to take the time to verbalize short-, medium- and long-range goals for the company’s service levels, lead times, costs or similar metrics.
Having system and organizational controls (SOC) in place in your company allows management to have a better grasp of the supply chain that is used in producing and distributing goods, as well as how the controls inside of that system work. This allows them to help address risks in the process of doing business. This style of reporting provides senior management with a better evaluation of the risk of doing business with that entity.
Preparing for SOC for Supply Chain
By adding sophistication to your company’s supply chain, you can make your business more flexible to changing market conditions. This, in turn, helps you drastically reduce risk to your company when these changes happen. If you need help digitizing your supply chain, the experienced professionals at IS Partners are here to help with SOC for vendor supply chain. To learn more about SOC for supply chain, call us at 215-675-1400. We invite you to experience “Audits without Anxiety!”™ by filling out our online form to request a quote