3rd Step: Assess the material resources in your Supply Chain
06-05-2020
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3rd Step to restart after COVID crisis: Asses the material resources in your value chain.  

Third article to go into detail about our restart methodology focused on 6 priority actions. After creating transparency in the value chain (article available here), our supply chain managers must take the time to assess the material resources of their supply chain, they may find some good surprises! 

 

Indeed, most companies would be surprised by the quantity of inventory in their value chain and would have to estimate the quantity of these inventories and their availability, including spare parts and retrofitted products.

In addition, why not use the inventory of product reserved for after-sales markets, they could be used as a temporary relay to keep manufacturing activity. This last point which is based on Plossl's law means it is necessary that flows circulate to restart industrial activity.

 

The inventory assessment exercise should be carried out in parallel with creating transparency throughout the supply chain. Estimating all inventory along the value chain will facilitate capacity planning during the ramp-up period.

 

Which categories to take into account?

  • Finished products held in warehouses and inventory blocked for sale (we will return to this point in a future article), quality control and test inventory
  • Inventory of spare parts that could be reused for the production of new products, keeping in mind the compromise between reducing potential service to customers for after-sales service and maintaining sales of new products;
  • Parts with inferior quality level or quality problems must be evaluated to determine whether they are returned to the circuit or not. Keep in mind that this could solve supply problems;
  • Parts in transit must be assessed to identify the measures to be implemented to accelerate their arrival - in particular those in customs or in quarantine.

 

Obviously, all production and supply outstanding must also be identified and evaluated. Neither wealth of the company should be forgotten.

Should we do an inventory analysis and ongoing audit like the end of year audits for accounting closings? The idea comes close.

If possible, take the last balance sheet of your company, get closer to your accounting colleagues and watch the circulating part, the one that should normally go by during the year. It’s your wealth.

Once again, we see that supply chain managers will be tested, but they are not alone in this test. Teamwork like bringing together finance, quality, supplier management, production around the Supply Chain Manager to identify the wealth of the company.

The destination is defined, we must now define the path.

 

Philippe Bornert, AGILEA CEO

 

To find the previous articles : 

1ST STEP: TRANSPARENCY & VISIBILITY DURING THE RESTART PHASE

2ND STEP: THE STATUS OF THE WEALTH