The 7S Supply Chain Cycle
A supply chain is often defined as a linear series of connected events, from the suppliers, through the business and to our customers. As we compete in a changing environment, it is important to manage a supply chain as an interconnected and continual cycle. The 7S Supply Chain Cycle defines such an approach that helps us to cope with the iterative nature of supply chain management.
We define what is required, starting with the material, component, product or service specification. We also define the types of companies that we want to work with and translate our own company values into a comprehensive specification. It is preferable to invest effort and time in selecting the right suppliers rather than seeking to change when the supply chain isn’t working well. Therefore we choose well by conducting a deeper examination of the kinds of companies we want to do business with and what level of service we expect to receive.
We identify the suppliers or service providers to fulfill the business need. The internet has brought accessibility to a large number of global suppliers in all industries, but how do we decide which are suitable for our supply chain? We address this challenge by defining a selection process to hone the large number into a small number of suppliers, each with a good chance of fulfilling the business need. We research the available networks – internal, wider industry and new search areas. From this search we generate a list of potential suppliers. More detailed examination leads to a shortlist of between 3 and 5 that demonstrate a good fit with the specification. Shortlisted suppliers are invited to participate in the final selection process, involving quotations or tender exercises, supplier audit, final selection and contract negotiation.
The physical provision of product or service by the supplier and payment for those goods or services. An operating agreement is used to define in detail how the company and supplier will engage on a day to day basis. The agreement also includes performance feedback and regular touch points to discuss ongoing challenges.
The physical act of warehousing. We explore inventory management processes and how these can be improved to reduce losses and increase warehousing efficiencies. We examine the flow of goods through the warehouse and how different types of storage can be best utilised. A single storage solution isn’t a good fit for many companies and all of the product range. Therefore, we examine hybrid arrangements that offer flexibility whilst providing the best possible operating efficiencies.
The inventory we hold within the business exists to support optimum sales for the company. Over time, some businesses build up large amounts of just in case stock. In some cases a business will continue to hold stock of a product that was once a big seller that has since become a slow moving item. In this activity we examine how to optimise that inventory to maximise sales whilst minimising cash invested and storage cost. We reduce the total amount of inventory, reduce cost of storage and reduce obsolescence. We reach into the business replenishment processes and identify opportunities to improve the current supply chain model to achieve the best financial return.
Traditionally, service defines our ability to supply goods or services on time and in full to meet customer expectation. The traditional view of service is now an expectation for our customers and is no longer a tool by which we differentiate from the competition. Therefore we need to go beyond the traditional approach and seek new ways to exceed customer expectation. We examine all aspects, from service recovery, shorter lead time, to the effectiveness of the after sales processes. We also examine how to make best use of technology to provide exceptional levels of customer service and satisfaction.
Supply chains must be fit for purpose in a changing environment. Change can be triggered at any point along the supply process. Sustain is about developing frameworks that encompass regular review and assessment of fit for purpose. We look at emerging market requirements and assess adaptability of the current supply chain to meet those emerging needs. We examine risk to the supply chain, whether from economic, environmental or legislative origins. Where concerns are identified, we bring together the business stakeholders to agree an action plan to mitigate or resolve these concerns.
The 7S Supply Chain Cycle is a framework to guide us through the creation and management of our supply chains. The effectiveness of the model relies upon how each step is integrated within the business management processes. It is important to remember that, as a cycle, a change to any one activity within the 7S Supply Chain will have an impact upon the cycle itself. If you need any more help on supply chain management or wish to deploy the 7S Supply Chain Cycle in your business, you can contact me through the enquiry page.
Andrew Kilkenny, Founder