Case study: Unlocking efficiency and impact through SCM | by Madoda Shushu

Madoda Shushu 2Supply chain management (SCM) is a key enabler of both operational efficiency and bottom-up Impact. As an SCM practitioner, I happen to be in the right role to assist business to achieve its strategic missions, objectives, goals, and plans – specifically through targeted SCM interventions.

This is because SCM is value-driver, and one that I’ve had the first-hand opportunity to see the transformative effects thereof. But before we delve into that, it should be noted that SCM is an umbrella term for a range of actions and functions which, together, help realise the greatest impact.

With that in mind, some of the SCM pillars that I regard to be key are as follows:

1. Start with an SCM Model and framework, so you know where you’re going and how you plan to get there.
2. Formulate appropriate divisional strategy, policy, procedures, and processes, in-line with core business goals and regulatory requirements, and actioned according to best practice.
3. Be smart about divisional human capital investment: professionals should be deployed according their expertise and strengths, and once again in-line with business goals
4. Embrace strategic sourcing
5. Partnering: You will need to foster collaboration and partnering internally (within your company divisions) and externally (with suppliers).
6. Enterprise resource planning, which may require tailored enterprise resource planning (ERP) software
7. Materials management, dependent on industry.

There are a few others which are not necessarily part and parcel of SCM, but which your SCM interventions must reflect, including:

1. Risk and sustainability thinking.
2. Your organisational transformation framework. (If you don’t have one, why not?
3. And always, always, aligned to company operations and profitability.

These pillars, naturally, should be embedded in the organisation to ensure that there is success in the business operation’s production, eventually resulting to a positive impact, such as increase in profitability.

Case study
As mentioned, I’ve had the opportunity to see the impact of this across several industries and sectors, including tertiary institutions, water, ports operations, mining, consulting services, revenue services, and broadcasting. In particular, my experience in mining provides an illuminating example.

I spent six years in SCM within mining companies, and was afforded an opportunity to start a SCM division from the scratch without any form of resources i.e. office space, tools of trade, human capital, ERP system, no existing divisional strategy, no policies, no, procedures, no processes, etc. This was off the back of five years experience as a materials manager / supply chain management leader at a dolomite mining operations, and a brief stint within the diamond sector.

The organisation at the time had a system that could mainly account for financial management, excluding the SCM component. Our main challenge was that there was a very limited time to develop a division, let alone one that was well structured and operationally ready to enable business efficiency. The first realisation was that it was critical that the organisation should have formal processes that are properly governed, with limited risks, and in full compliance within all of the requisite mining industry – as well as offering SCM best practice.

Within two years, we had established a fully functional division, and had brought in the talent needed to run the various sub divisions such as strategic sourcing, materials management, BEE management, all complemented with professional resources to effectively execute the functions’ activities. The appropriate frameworks, tools, models, etc.) were developed, a properly governed ERP system (with defined rules according to the policy restriction) was acquired which was then integrated into the finance and operations system, as well as materials management systems and application. The inventory management strategy was implemented to accommodate the mining operation’s need to minimise (and where possible eradicate) production operations. SCM Image

I had joined the company at a critical phase – while we were still going through the process of securing the mining rights and maintenance thereof. Procurement and SCM ultimately played a role in getting these rights.

Through implementing the key pillars and best practices of SCM, the desired organisational outcomes gradually came to light. The organisational budgeting process forecast was based on a well-tested market, and procurement was contributing significantly to business planning (demand management) efficiency. Plus, the savings drive resulting from strategic sourcing categories/commodities were being realised. A fair, equitable, transparent, and competitive sourcing process was furthermore providing opportunities to the supply market, leading to the development of a well-governed supplier database.

On the case of the latter point, supplier development programmes with collaboration partners were in progress to capacitate SMMEs with appropriate skills to manage business efficiently. The localisation strategy was gaining momentum, providing business opportunities within the prescribed communities boundaries, according to the supplier localisation-defined parameters.

In conclusion, this example shows how vital the SCM division can be, as a key enabler or lever to pull for value extraction within the organisation.

Madoda Shushu is a Principal Associate at Bespoke Group Africa - www.bespoke.co.za

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Posted on March 14, 2019

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