What's a supply chain, and why do I care?
Our Inside Axon blog series is updated every Wednesday and features letters from executives within Axon. This week's post was written by Jim Brady, Axon's Director of Supply Chain. Check again next week for more experiences and insight from Axon leaders.
‘Supply Chain’ – two words alone that conjure thoughts of engaging conversations at cocktail parties. We've all been there: walking around the neighbourhood get-together when you catch someone's gaze and they ask the standard opening question, ‘What do you do?’
‘I work in Supply Chain,’ you answer with pride. You take a deep breath, full of anticipation and prepare to expand on the virtues of your chosen craft, until suddenly you hear the word, ‘Nice’, and you watch their back get smaller in the distance.
I am the first to admit that being a Supply Chain person does not have the same cool factor as ‘Radiologist’ or ‘VP of People Ops’. But hey, supply chain people are not in this for the cool factor; we do what we do because of our passion to give people what they want, when they want it, in a way that makes them remember their experience positively. We do this in the most efficient method possible (logistics), using the least amount of capital (think inventory and cash flow) while securing materials with the highest quality and lowest cost (strategic procurement).
I am getting a bit ahead of myself – my eagerness abounds – so let me start with a simple view of what a supply chain actually is. It starts with and ends with a customer want. The desired outcome is to get the customer their want in a timeframe that makes them happy – and actually exceeds their expectations. What differentiates a good supply chain from a bad one? In a word: speed. The more we can reduce lead times associated with our products from supplier to delivery, the better we become, and the more we exceed our customers' expectations.
My experience has led me to conclude that there are three primary functions associated with supply chain, which are illustrated below.
The first is Strategic Procurement, whose primary mission is to obtain high-quality products and services at an optimal cost so we can maintain competitiveness in our product offerings. Strategic procurement leverages our spend categories with a select few suppliers to ensure we are a meaningful customer, which allows us to command the levels of quality, delivery, price, support and terms to maintain our competitive position.
The second is Demand Planning. This role manages the levels of inventory associated with making or buying end products. Demand planning also schedules the receipt of raw materials and development of the production plan to run in tandem with outsourced or in-house manufacturing resources. People have built consulting careers on demand forecasting, and have written algorithms, software and books on the topic.
A cool subset of Demand Planning is the Sales and Operations planning process, which is actually a look into the future, typically 18 months ahead, into demand for new products and services. This planning stage allows adequate time to secure the supply and capacity to perform flawless product launches. Many companies use this process as a short-term planning approach.
After our products are bought or made in the right quantities comes the fun part associated with the last category – Logistics. Their role is to get the product into the hands of the customer in the most expeditious manner possible, taking into consideration delivery costs and regulatory requirements. Logistics is driven towards efficiency: determining where a product is placed in a warehouse to minimise the time it takes to pick a product, deciding how efficiently it is packed and the method by which it is delivered. Small parcel, truck, train, aeroplane, drone, horse-drawn sleigh: as long as it's the most efficient way to deliver a product to the customer.
So there you have it – a supply chain. Sounds easy, right? When things go well and we exceed the customers' expectations, life is pretty good. The challenges begin when things don’t go as planned, which is where a robust supply chain can become a competitive weapon. Our ability to react to a customer in our business can be the difference between saving a life, a career, preventing larger scale unrest and placing our customers in a position where they can succeed at what they do best.
That is what drives our mission in Supply Chain, and why we work every day to balance cost and capital to optimise our levels of service. It’s that important – and we know it.