Best Practices are Strategies and Tatics Employed by (or Common Attribute of) Successful Companies.
- Not Easy
- Time Consuming
- Breaking Internal Barriers
- New Approach to Suppliers
- Investment in People, Training, Measurement, Technology, Suppliers.
Best Practices for no two Companies are alike.
- Commodity Product-Low cost Strategy
- High Technology Products-Technology, Speed
- Different Companies have different Strengths and Weaknesses
- Can not Copy
- Depends on People, Suppliers, Processes, Other Specific Business Elements
Factors responsible for effective & successful implementation of Supply Chain Management (SCM)
- Active Support from top Management.
- SCM is Considered as a Profit Contributing Function, not as a Liability.
- SCM is an active Participant in Company Decisions, knows the Business Strategies and Policies that drive the company and what is happening in the marketplace at the national and international level.
- SCM Function is not Fragmented and headed by an SCM Professional.
- MM Personnel in purchase and stores are qualified and understand the process and specifications.
- Performance evaluation of suppliers systems and employees with key result areas exist.
- Responsibility is assigned to the lowest possible level.
- Authority to carry out the responsibility is also assigned to the lowest possible level with audit and monitoring.
- Training budget is at least 4 % of the wage bill.
- Multi-skilling between trade disciplines.
- Stress on teamwork, many cross functional team projects and improvement programs exist.
- Open door communication. Ideas are encouraged.
- Commitment top down and bottom up.
- Clear sight of costs in value chain upto lowest level.
- Purchase is not total cost.
- There is constant effort to collect and analyze data, monitor and improve on prices, quality and reliability of deliveries.
- Advanced use of information technology and communication.
- Culture of continuous improvement.
- Organisation is target driven.
- Vision of benefits not only cost.
- More than 85% of the work is planned.
- There is a sales, production and materials plan.
- Market to production planning to purchase communication is seamless and quick.
- Low cycle time leading to higher sales and better penetration in new markets.
- Budgets exist and percolate to all levels.
- Item master is logical and not cluttered with duplicates.
- There is a real operations manual.
- Approved updated vendors database.
- Vendor performance evaluation exists.
- Competitive bids are taken.
- Quality & rejections are taken seriously.
- Suppliers are happy. Mutual respect and trust purchaser feels responsible for payment to supplier.
- Suppliers participate in development and cost reduction.
- Purchase dept receives an updated outstanding status and is consulted for release of payments.
- SCM Personnel are clear about company ethics policy and are respected for their honesty.
- Top management are upright in dealings and are seen to be so.
- Purchase dept. has an updated pending indent / pending order status and shares it with user depts.
- Prices are not kept secret from the very people who have to control costs-the user depts. and stores.
- Purchase function feels concerned about prices as well as inventories and there is constructive dialogue on quantities and specifications in users indents.
- Entire material dept. works focused on a items.
- Critical and non critical items procurement procedure is highly simplified with lowest operational cost.
- Cash purchase is charged direct to expense account with no po or receipt document.
- Rate contracts for regular items.
- Transportation and insurance costs are analysed and controlled as well.
- A Constant effort to keep update in SCM – active membership of associations, reading journals and in house training.
- Information data on market trends of companies raw materials & suppliers raw materials is always analysed for action.
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Mr. Ashok Gupta
Mr. Ashok Gupta , management consultant, is a chemical engineer from Indian Institute of Technology, Bombay, with over 30 years experience in senior management positions and as a management consultant in reputed companies in Supply Chain/General Management/ Techno-Commercial areas in India and Indonesia.
He has an international management exposure having worked and undertaken consultancy assignments in USA, India and Indonesia . He also has experience in facilitating software development and implementation of computerization including ERP.
A Consultant and industrial trainer, he has published paper in management journal. He has given lectures, Conducted workshops and seminars in India as well as in Jakarta, Indonesia.
The areas of his experience are:
- Production Planning. & Control
- Imports, Excise and Customs
- Inventory Control
- Sales Co-ordination.
- Project Management
- Technology Transfer
- General Management