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The Supply Chain Team

What is a the human organization of a Supply Chain?

The answer depends mainly on areas of responsibility which are relevant to the Supply Chain in the company. Each business has its own school. These are our recommendations for businesses mainly focused on assembly or like stamping or molding processes.

The mission of the Supply Chain

The mission of the Supply Chain is to ensure the delivery of products sold to the customers at the date requested, in the quantities required and at the lower cost.

Its levers are the control of the material planning and the physical flows.

We cannot optimize the total cost if we limit the scope of the Supply Chain team to a part of this mission (eg planning only, or planning, transport but not feeding of production lines). Therefore what are the specific activities covered by the Supply Chain?

Main activities of the Supply Chain

We are going to speak about the management of these activities but not their execution. For example, it make no sense today for a company to insource the transportation activity as well as the management of external warehouses.

1 - Planning.
First of all, the planning. If we use the standard vocabulary defined by the Association for Operations Management (APICS), the Supply Chain is responsible at least of all the following processes:

  • Sales and Operation Planning;
  • Master Production Scheduling;
  • Shop Floor Scheduling.

Within this activity, the goal is to find the best use of the ressources in order to speed up material flows.

2 - Physical flows.
Secondly, the control and management of the physical flows and storage:

  • warehousing;
  • transportation;
  • feeding and evacuation of production lines.

Here, the goal is to find the optimum cost within the respect of the defined planning.

Classical organizations

One classical way to organize the Supply Chain work force is to split it into 2 teams:

  • one in charge of the planning, contact with customers, suppliers;
  • one in charge of the physical flows management.

An other way to organize the Supply Chain is to split people between:

  • the ones managing the customers (from the Demand management to orders shipping and eventually the control of outbound transportation);
  • the others in charge of the material planning, production control, raw material procurement, receiving and the control of inbound transportation.

In both solutions, each team is roughly autonomous to define its own standards, procedures and managing its daily activities. The result is always the same: poor coordination between the 2 teams and a slow improvement of the processes because all members are oriented on the short term .

Other companies have merged the Supply Chain with Purchasing or have the Supply Chain included in the Production organization. In these models, Supply Chain is always the servant of specific interests and is not contributing to the global benefit of the company. Insuring that the Supply Chain is a distinct actor within the company is a garantee that the Supply Chain will always be able to provide the best solutions for the company, taking in account all constraints and advantage of all other departments.

The Supply Chain is the conductor for customer deliveries. Its role is to find the best global compromise, taking in account all company's strenghts and weaknesses in order to insure this mission with the highest financial results in the short and long term. It cannot be associated to an other activity of the company in order to not be influenced.

Our organization

To implement an organization deploying a Kaisen spirit, i.e. a continuous focus on the Supply Chain improvement, it is important to split the Supply Chain activities between people:

  • dedicated to the daily management;
  • in charge of the design, processes definition, sizing and evolution of the Supply Chain.

Relations between these groups need to be defined as customer-supplier relationships (responsibilities, type of deliveries and timings).

For the day to day management, we can distinguish 2 major daily activities:

  • Material Planning Management (includes Demand Management, Production Scheduling and Procurement Planning);
  • Physical Flows Management (includes Receiving, Shipping, Feeding and Picking to and from the production lines) mainly focused on handling operations.

The Supply Chain sizing, processes definition and deployment, new product/project launches is consolidated within one distinct group of people in charge of the design of the Supply Chain.

All of them are lead by the Supply Chain Manager.

Learn more...

Material Management and Production Control The Material Management Team is responsible of the Demand Management, all the planning processes and daily operations related to customer orders, the production and vendors scheduling.

Physical flows management The Physical Flows Management Team is responsible of all the handling activities (trucks unloading/loading, storage, picking, kitting), receiving and shipping as well as the internal distribution and pick up to/from the production lines.

Supply Chain Design The Supply Chain Design Team is responsible of the sizing , definition, improvement of the Supply Chain processes.

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