Supply chains – often involving many vendors and complex relationships – have always been a logistical challenge. As business evolves in our modern, mobile world, and enterprises are doing more global transactions than ever before, it is also becoming a collaboration, communication and accountability challenge.

While the process of managing a supply chain is getting more complex, the environmental consequences, labor considerations and sustainability of supply chains is also under extreme scrutiny. These challenges can all be rolled into the concept of supplier responsibility; how responsible is an enterprise when choosing suppliers and how socially responsible are those suppliers when creating their products or services?

Building on this trend, an increase in the prevalence of flexible, center-led models indicates that top leadership in procurement is now occupied with more strategic roles. Forty-nine percent of procurement executives report that their departments are organized around a Center Of Excellence (COE), reflecting a longstanding trend of consolidation of oversight and jurisdiction within companies. 

What is interesting to note is that the newer, center-led model is behind by a margin of only ten percentage points, accounting for 39 percent of the response. Put in perspective, a decentralized procurement model was in use within only 12 percent of represented organizations. 

What becomes clear from these numbers is that procurement’s increasing responsibilities can no longer be met within a decentralized environment. The consolidation of control within businesses is now being reflected in the structure of procurement departments themselves. 

Supply chain distribution centers ultimately have one overarching goal: get products to customers as efficiently as possible while motivating and encouraging their workforce to achieve greater performance. But as supply chain operations become leaner, even the smallest exception can cause a major disruption in a company’s material flow and labor efficiency.

maximizing productivity

Many measurements help determine the overall efficiency and productivity of supply chains, including metrics measuring wave efficiency, optimal product flow and labor productivity. Today’s supply chain managers need to know data such as units picked per hour (by line or work cell, or better yet by individual) and where product flow is impacted – via exceptions like blocked chutes or missing totes – when and exactly where they occur. But at the same time, there are three big threats supply chain managers must overcome. 

In the healthcare industry, having a better supply chain doesn’t simply mean reduced costs, increased efficiency and improvements to the bottom line – it also can have a direct impact on improving patients’ quality of life.

Healthcare reform has contributed to a very interesting industry landscape. The Affordable Care Act and other new policies are contributing to the need for healthcare providers to evaluate more value-based supply chain models. With demand for healthcare high, and continuing cost pressures, the industry is on the brink of a major revolution. But in order to overcome the unique challenges facing the industry – drug shortages, evolving reimbursement processes, patient safety, security breaches and drug counterfeiting – all industry players are going to need to collaborate for a next generation solution. The best place to start: the supply chain. 

Think payday lending with a twist. 

You may have heard of a hot topic that’s gaining more and more ink in the press lately: payday lending.

After President Obama touched on it in his State of the Union address, the Consumer Financial Protection Bureau announced February 9 it will be drafting regulations “that could sharply reduce the number of unaffordable loans that lenders make” and specifically targeting payday loans, according to The New York Times.

But what exactly is a payday loan? In general, a payday loan is a short-term loan that lends money against one’s paycheck, and the borrower then pays back the lender once they receive their paycheck. According to Pew, the average payday borrower takes out a $375 two-week loan with a fee of $55. Though this difference might not seem enormous in terms of a dollar amount, the annualized interest rates for payday loans can range from 300 to 2,000 percent—and some have even reached over 5,000 percent. Many payday lenders, in addition, require long-term contracts, which locks desperate borrowers into a never-ending cycle.

Smart meters free utility companies from having to dispatch meter-readers to collect billing information. What’s more, they provide near real-time information about energy consumption. In 2012, the United Kingdom mandated that every residence and small business install smart meters by 2020 as part of a long-range plan to reduce carbon emissions. That equates to at least 53 million smart meters. Between 2012 and 2030, the policy will have a net benefit of an estimated $21 billion, according to an Oxford Economics research report commissioned by British Gas.

But reducing those carbon emissions and energy costs is anything but simple. For British Gas, the U.K.’s largest energy utility, the policy requires reinventing an aging supply chain management system. It needed to schedule millions of smart meter installations and track the flow of new and old meters between its distribution centers and customer buildings. With TCS’ help, British Gas has modernized quickly: enabling an industrial-strength supply chain management system; accelerating implementation time without increasing errors; and establishing precise planning for a major reverse logistics initiative. 

Ethical and profitable operations coexist quite nicely with ethical behaviors, making it easier for companies to profit. So why is it that businesses struggle with the concept? What is holding back the development of ethical or socially responsible supply chains? 

The reasons may vary but it’s not uncommon for businesses to view the maintenance of profitable supply chains as an exercise in trade-offs: that cheaper upstream labor affords better downstream customer service. Others struggle with the business case, “getting the numbers straight” and failing to justify necessary investments. 

Essential Practices

In reality, ethical supply chains are no longer just “nice to have.” Companies that choose to “talk the talk” instead of “walking the walk” when it comes to responsible supply chains may begin to lose their ability to grow and compete for several reasons. 

More than 1,500 of the world’s most forward-thinking supply chain executives gathered for four days this past May at the JW Marriott Desert Ridge in Phoenix, Ariz. to participate in Gartner’s Executive Supply Chain Conference. Five tracks of educational sessions, workshops and roundtables were delivered by more than 40 Gartner analysts and 25 supply chain executives highlighting their experiences on today’s most critical supply chain initiatives.

The theme of the conference was “The Art of Supply Chain: Creative Solutions for the Next Generation.”


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