by Alan Lupas, Meaden & Moore Business Solutions
A brief video found on YouTube, called “Power of the Market- The Pencil”, features Milton Friedman stating that “there’s not a single person in the world that can make this pencil “. He goes on to explain what it takes to make a pencil from the wood, lead and rubber to paint and glue, as well as all the people involved. The video exemplifies all of the resources required to manufacture something as simple as a pencil, thus signifying the interdependencies of the global supply chain.
Some of these basic concepts may be obvious, but organizations seeking supply chain optimization must go beyond the basics. A critical step includes establishing specific terminologies with clear definitions that are understood both inside and outside of the organization. This is the purpose of a basics of supply chain education program. One of the priorities should be developing a well-trained team that knows and understands the features and functions of the company’s enterprise resource planning (ERP) solution. Whether you have an expensive and comprehensive ERP platform or one that is homegrown for a specific process, part of the knowledgebase should be a solid understanding of industry standard terminology that ERP software typically assumes. If this knowledge is not developed or is lacking within your enterprise based on the basics of supply chain management (BSCM), you may experience slower adoption by various user groups which means slower payback or return on investment (ROI). BSCM education prepares key employees with foundational understanding and knowledge by laying the groundwork for terms, such as: ERP, BOM (bill of materials), MRP (material requirements planning), BOL (bill of lading), Traveler, Work Order, Sales Order, Routings, and Infinite/Finite Scheduling. This background is especially helpful when an internal ERP implementation team is assembled so they have specific goals and purpose of what needs to be accomplished.
A basic understanding of supply chain management will also help your team gain appreciation for both upstream and downstream tasks and how they affect overall throughput and customer satisfaction. Here is a snapshot of some additional advantages for building team knowledge of BSCM:
- Creates a common language on the shop floor and in the office to help ERP systems move forward
- Reduces confusion and miscommunication that leads to less involvement and slower adoption of new systems and processes
- Provides basic understanding of order process flow from receipt through fulfillment
- Sets fundamental understanding of how an organization functions, both internally and externally, to meet customer demand
- Increases internal productivity and efficiency
The overall goal and benefit of all the above is ultimately to reduce costs which increases profitability.
Alan Lupas is Senior Manager of Business Development at Meaden & Moore Business Solutions. He has over 33 years’ experience in sales, marketing, and business development in small to mid-size manufacturing, distribution, and information technology.
Side Note: NWIRC will offer a 3-day Basics of Supply Chain Management course starting on October 25th. This class is developed by APICS (American Production and Inventory Control Society), a professional association dedicated to supply chain management. The class will be taught by Scott Holter, a Certified APICS Professional from Meaden & Moore. He has been teaching and helping people learn more about BSCM for over 20 years.