Assuring the availability of materials across the supply chain is crucial for organizations to provide an excellent customer experience. Delivery performance to customers can be impacted by material shortages. Eventually, this will result in lines going down, late customer deliveries and unavailability of products. Which affects costs, customer satisfaction and revenues.
Material shortages often also result in many and unstructured escalations throughout the organization, potentially ending up at the desks of the highest management. But where to start if you wish to better secure availability and become more effective in the mitigation of issues?
Establish a framework
The Industry Consulting experts of Philips Innovation Services established a framework of key elements that need to be in place to assure reliability and flexibility in material supply and improve customer satisfaction. They teamed up with the Procurement Excellence team in Philips to represent and secure a cross functional view of the total process: costs from a procurement perspective, inventory and product availability from a supply chain perspective.
The framework looks at all elements that have an impact on material availability. Process control forms the core of the framework. This is about how the smooth process would look like going from forecasting, placing orders to receiving goods on dock. Next to that, the framework takes into account the impact when something goes wrong in the process by covering phases of identifying, mitigating, escalating and root cause elimination. The basic enablers, like master data accuracy, supplier flexibility agreements and supply chain design, were also incorporated, because these are conditional for a smooth material management operation. Finally, the framework includes the foundation of the supply process, such as procedures, tools and trainings that are provided to define and secure standards across the organization.
Spin off of the assessments: Operational Material Management
The framework was applied in assessments of material management operations in Philips manufacturing sites all over the world. As integral part of the site assessments, workshops, training sessions and interviews were conducted. To trigger awareness, increase competency and enable sites to make a site plan to improve local supply chain processes.
The assessment conclusions over multiple sites also triggered the initiative in Philips to strengthen the global Operational Material Management (OMM) function. Building on the findings and experience of the assessments, the Industry Consulting experts of Philips Innovation Services facilitated in the design and in the deployment of the initiative, which drove substantial improvements through:
- Standard processes and digitization by leveraging best practices
- Focused training to build people competencies and skills
- Operational supplier performance management with Commodity Teams
- Harmonized daily management and effective problem solving
All these efforts enable a customizable and flexible material supply chain that contributes to excellent customer satisfaction in the end.
Read more about Supply Chain management one of our services from the Industry Consulting key area of expertise.
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Jack van Lieshout