‘Effective supply chain will help sustain real sector ventures’
Tunji Gomes is the senior manager, supply chain at Accenture. In this interview, Gomes says it is important for manufacturers and the business community to take supply chain management seriously to cut costs.
What is supply chain management?
It has to do with the management of the interfaces and relationships that exist from the raw material stage of a product or upstream component of a service down to the end consumer. Along this chain, you may find several suppliers, transport, process (production or manufacturing), storage and consumers. If force is applied along the chain greater than the strength of that link in the chain, a break could occur, which would cause disruptions. Such disruptions could cause a ‘bullwhip’ effect (greater disruptions) in the upstream. The headache of any supply chain manager is to ensure the chain is robust and resilient enough to withstand disruptions that occur and protect service delivery to their customers.
What are the key pillars of supply chain management?
There are traditionally four flows that exist along the supply chain. They are: information, goods/services or people, cash and the ‘reverse’. Each of these flows is very crucial to the successful execution of activities along the chain. Similar to body parts, they cannot exist in isolation, hence need to work together to ensure there are no bottlenecks along the chain. These flows are vulnerable to external and internal factors, which could hinder movement from source to intended recipient. A supply chain professional requires these four flows to move unconstrained in order to build resilience and conduct contingency planning along his or her supply chain.
It is often said that planning is key to effective logistics and transport. How have Nigerians business community been able to harness this?
Goods rely heavily on several transport modes for movement from one location to another. The third quarter 2015 Nigeria GDP report by the National Bureau of Statistics provided an insight into the contribution of each of the transport modes.
Over the first three quarters of 2015, rail, the most suitable for movement of heavy goods contributed zero percent. Road, the most commonly used mode contributed an average of 85 percent; water contributed an average of 0.66 percent and air an average of seven percent (transport services, post & courier services made up the difference).This heavily skewed distribution already paints a picture of the kinds of challenges faced by logistics managers operating within these shores.
What are the most effective means of transport for manufacturers and the business community.
All over the world, the most effective means is
the oceans, seas and rivers (waterways). They have been a viable outlet for moving goods from one point to another cost effectively. Within our shores and region, this happens as well, but not at the same frequency. Constraints such as low water depth, low throughput at ports and security risks owing to militancy tend to make this an unattractive option.
Airways are known to be the fastest and most expensive when moving goods, services and people from one point to another. Locally, this mode is a distant second in relation to contribution to the sectors share of GDP. However, the cost, relative ease and access to vehiclesfor road haulage will keep this mode in a non-competitive position for the foreseeable future.
The examples of the three transport modes in relation to the peculiarities of our local environment provided above elucidate into the frustrations and constraints faced by logisticians on a daily basis. As the end goal of every logistician is to ensure goods and services get to customers at the right place, time, price, in the right quantity and quality. Relying solely on one plan or transport mode to get products to customers would not be prudent of a logistician.
WHAT STEPS SHOULD A SUPPLY CHAIN MANAGER TAKE TO MITIGATE THESE SITUATIONS?
A recent Gartner article summarised areas of focus to mitigate the impact of supply chain disruptions. They include the ability to make empowered decisions quickly and with transparency, strong lines of communication with customers, suppliers and employees, and scenario planning to assess potential future risk impacts and contingency plans. Businesses today cannot afford to run an operation without taking into consideration ‘what-if scenarios’ and making adequate accommodation for the impacts these scenarios will have on their internal and external customers. Whilst contingency planning could be an expensive exercise,each business needs to determine their appetite or capacity for having predetermined responses to scenarios that could play out within their value chains. They need to consider the opportunity cost of not having appropriate cover for these scenarios, and whether they could live with that opportunity cost.
ODINAKA ANUDU