Category Archives: Supply Chain & Logistics

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Ethical supply chain

5 Tips for the Ethical Supply Chain in 2018

By Morgan International Staff Writers 

The world we are living in is changing and individuals and businesses are increasingly paying attention to the ethical attributes of their supply chains. Some of that interest is altruistic and some of it is surely driven by the desire of their customers to be more socially responsible. These are our 5 top tips to maintain an ethical supply chain in 2018.

  1. Do your due diligence

Before you begin working with vendors, or indeed their vendors, plan out how you are going to find out if anything unethical is happening within their businesses. Consider asking questions around human trafficking, child labour, poor working conditions and so on. It may also be appropriate to conduct a site visit.

  1. Define your CSR policy

As a business, define your CSR policy and socialise it internally. Ensure your own employees are committed to maintaining ethical processes and procedures. Then make sure your entire supply chain commits to the policy. It may be worthwhile to run training sessions to bring vendors up to speed with your expectations.

  1. Review and update supplier contracts

Have a look through the contracts you have with your suppliers and ensure that they are bound by your CSR policy and any changes that you introduce in line with updated country level legislation.

  1. Audit

Check what your suppliers are doing. Within the contracts you have with them, make sure you have the right to periodically visit site. Go to their facilities or offices, speak with employees and check there are no unethical practices.

  1. Hire a CSR manager

This one will very much depend on the size of your organisation and their ability to fund a full time CSR manager. If this is not possible, ensure that somebody within the organisation has responsibility for ethics and CSR. This may fall quite neatly with an individual in a supply chain role.

In Summary

The attention given by customers, governments and businesses to ethics within the supply chain has exponentially increased in recent years and is only set to expand further. It would be prudent to begin the process now of reviewing the current supplier contracts and producing a robust CSR policy.

Supply chain planners

3 Top Tips for Supply Chain Planners

By Morgan International Staff Writers 

Perhaps you already work within the profession, or maybe you are interested in working within a supply/inventory planning role. We have compiled our top 3 tips that we think you should know (if you don’t already).

  1. You can’t be certain of the future

The majority of this role is about predicting the future – predicting what we expect consumers to do based on a number of factors. Indeed the demand planning models really can become rather complex, taking account of hundreds of variables including the weather, fashion, macroeconomic events, and so on. However they remain predictions. None of us can be assured of what the future holds. Therefore the best supply chain planners embrace uncertainty and factor in the reality that some predictions made are likely to be incorrect. That means build in some slack.

  1. This isn’t a one-time only exercise

We already said that plans have a high chance of being wrong, but as time moves on and the reality becomes clear, you need to re-plan. We are not suggesting you be overly reactive when sales take a slight dip. However set boundaries for action and stick to them. For example, if sales increase/decrease more than 5% against the plan in a given week then look into the detail of what is happening and reassess purchase commitments.

  1. Check the big picture

Sanity check the final results of all of your calculations. Hopefully the demand planning model is spot on. But there could be an error that delivers some unlikely predictions. So validate what you have and also triangulate the entire picture. What do we mean by that? Let us take an example to explain. You should look at overall sales of a product range as well as a single product. So you may know that one product within that range is likely to increase, perhaps because of a seasonal colour trend. However you know that the range numbers tend to be stable. Therefore you would expect to see that increase in one product cannibalise the other product sales rather than increase sales of the product range overall.

In Summary

The role of a supply chain planner is really interesting as it works at a number of levels – product, line, range level, and so on. To be successful in this role, the individual needs to use demand planning models, sense check the output, and build in shock absorbers whilst not being overly cautious.

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A Day in the Life of a Supply Chain Manager

By Morgan International Staff Writers 

Perhaps you are considering a career in supply chain and are wondering exactly what the day to day entails. At a high level they are responsible for all of the steps required to produce a product/service and get it to the customer. Some would argue that their role does not stop there, but also extends in the case of some products to their appropriate disposal. However for our example let’s take a Supply Chain Manager with responsibility for a product set. Let us look at a typical day:

9am:10am – Review emails from suppliers, many of which are likely to have come in through the night if the supply chain is global in nature. Take a look at the meetings in the diary for the day ahead and ensure all preparation has been done.

10am:11am – Meet with internal stakeholders to agree a strategy for a negotiation with one of the materials suppliers later in the afternoon. Agree parameters for each variable due to be discussed and agree who will take the lead role.

11am:11.30am – A one to one with the head of Supply Chain to discuss ongoing projects, priorities and pipeline work. A discussion is had over maintaining the quality delivered by suppliers whilst making cost reductions in the coming year.

11.30am:12.30pm – Work through your upcoming contract renewals and begin emailing stakeholders and arranging meetings to agree the terms of potential renewals or whether you might go out to tender. Working through the detail carefully so that you do not miss any termination dates.

12.30pm:1.30pm – Working lunch with a current supply to discuss their performance and to run through the balanced scorecard.

1.30pm:3.30pm – Supplier negotiation to agree the terms of a new deal, working through a number of contractual clauses and having a final price conversation.

4.30pm:5.30pm – Back to the desk to speak with the legal team about a number of points that came out of the supplier negotiation and to take their advice. Then back to emails to see what has come in through the day and reply.

5.30pm:6pm – Have a look at what is in the diary for tomorrow and do any prep that you won’t have a chance to do in the morning.

In Summary

The day to day role of a Supply Chain Manager is very varied with tasks ranging from very tactical, to extremely strategic. This is what makes the role interesting and exciting – there is never a dull day!

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How to Successfully Tier a Supply Chain

By Morgan International Staff Writers 

As an organisation grows, it is typical for the number of suppliers they do business with to also grow. As with any type of relationship, to be effective it must be nurtured. The issue arises when there are simply too many suppliers to be successfully managed by the buying organisation. An effective strategy is to tier the supply chain. How can this be done in a robust way?

  • Assess the risks

Consider which of your vendors present the most risk to the production of your product/service. These are your tier 1’s. You need to manage them closely, perform the most due diligence on them, and look to grow a strategic relationship. Your tier 1 vendors should be your most trusted, and therefore you may decide to ask them to manage your tier 2 vendors. Any vendor that could cause you significant reputational damage should be a tier 1.

  • Insist on visibility

Many companies rely on their tier 1 suppliers to manage their tier 2’s and maybe the tier 3’s. Of course some have a waterfall model whereby the tier 1’s only manage the 2’s, the 2’s manage the 3’s, and so on. Devolving management does not devolve responsibility. A good approach is to implement a global supplier database and insist on it being kept up to date with various pieces of important information. For example you may ask for tier 1’s to formally manage supplier performance of 2’s and update summaries of metrics and meetings to the database.

  • Maintain your culture

Just because a tier 1 supplier is managing a tier 2, does not mean that you don’t want the tier 2 supplier observing your company values and culture. A key way to permeate company culture is to hold events for all suppliers where you update them all on your vision and strategy. Also ensure you still communicate important news to the entire supplier database.

In Summary

For many organisations it is not feasible to manage the entire supplier base appropriately. Therefore a good option is to tier the supply chain – however this must be done in a robust fashion, and should never involve attempting to devolve ultimate responsibility.

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4 Ways to Reduce Supply Chain Waste

By Morgan International Staff Writers 

As competition becomes fiercer than ever, organisations are closely examining their supply chain with the aim of reducing costs. In fact specifically reducing waste has become a fundamental aspect of any cost reduction program. We are going to look at 4 specific areas to investigate in the hunt to reduce supply chain waste.

1. Product design

Review the design of the product and identify if and where raw materials can be reduced, or perhaps be swapped out for cheaper alternatives that still satisfy quality requirements. This also extends to the way in which the product is manufactured due to the design, and the packaging it is sold in.

2. Manufacturing process

Just as the product is designed, so should the manufacturing process be. Each part of the production process should be carefully considered to reduce the waste of raw materials. Where waste is unavoidable, it is prudent to examine if it can be recycled or used elsewhere. This point is inextricably linked with the first, whereby the product design and production process should be optimised.

3. Improve quality

Quality should be built into the product design and the production process. The aim of quality management is to minimize the waste of raw materials, avoid rework and of course deliver a high quality product. Quality inspection is a key requirement as it not only identifies product that should not make it out of the factory, but it also highlights key issues that can and should be rectified.

4. Speak to your employees

Who knows your product and its manufacturing process better than those producing it? They will almost certainly know where there is avoidable waste. Speak to your employees and ask for their recommendations. This can be done in focus groups as this tends to encourage a debate and spark ideas.

In Summary

If there has previously been no real consideration of waste within an organisation, the best approach is likely to be to kicked off with a waste reduction program and implement the review as outlined above. There will of course be a cost implication of undertaking this, but done robustly, it will most likely pay off through cost savings from reduced waste.

 

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How to STOP Supplier Mistreatment

By Morgan International Staff Writers 

In any relationship, personal or professional, there is a balance of power. In positive and productive supplier relationships, neither party abuses a power imbalance. Put simply, the larger organisations should not bully smaller organisations. However very often the giants do come under fire for alleged supplier mistreatment. For example, Amazon are facing a €10m fine from the French Ministry for the Economy for supplier mistreatment. Amazon are not alone – each year many businesses face fresh accusations. So how do we prevent supplier mistreatment?

What about Strategic Relationships?

Over the past few years there has been extensive conversation about a move from transactional and tactical buyer/supplier relationships, to long term strategic unions. The argument has been that the benefits from the latter will outweigh the former. But in a time when customers are demanding products faster and cheaper – is it of any great surprise that some organisations are pushing their own suppliers harder than ever?

360 Responsibility

Large organisations who abuse their power to bully smaller vendors should be penalised. In some countries that action will be taken through the courts. In other countries there is legislation protecting the construction of unfair contracts in the first place. This is a useful deterrent. So the government and regulators have a fundamental role to play. Second, organisations of all sizes must continue to be educated about productive relationships with each other. But thirdly, and perhaps somewhat controversially, as customers we must support organisations doing the right thing.

In Summary

Supplier abuse has been happening since trade begun. There is no one answer to stamp it out. It requires action and responsibility from a number of parties. Within organisations of all sizes, where possible it is important to have a Supply Chain Manager overseeing the construction of contracts to ensure they are robust, and most importantly fair.

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Climate Change: The Important Role of Supply Chain

By Morgan International Staff Writers 

Al Gore said “Solving the climate crisis is within our grasp, but we need people like you to stand up and act.” In fact if you read what many of the key proponents of climate change say, they talk about individuals taking responsibility, because as a collective humans are typically waiting for somebody else to be the one to make the change. However, we can easily conclude that the biggest global businesses have a disproportionately large role to play in reducing their emissions. But, how do we hold them accountable? There are various global initiatives and legislation to limit climate change. Furthermore at a micro level, customers must take responsibility for supporting businesses who are environmentally responsible, and walking away from those who aren’t.

But what about supply chains?

This is a very interesting point as the supply chain has an incredibly important role in either reducing or increasing the emissions that an organisation is ultimately responsible for. It starts with the buying organisation deciding upon their expectations in terms of emissions. Usually this is written down in some kind of corporate social responsibility policy. Then all vendors within the supply chain are expected to comply with these standards as a minimum. Very often this is covered contractually and adherence is audited on a periodic basis.

The good news

There are organisations such as BP who are standing up and fighting against climate change – in fact BP are viewed as one of the fiercest corporate opponents. They have formulated specific actions and policies to address climate change. In fact, according to research by Influence Map, almost half of the world’s top 100 companies are actively trying to subvert climate change. This is being done through a combination of lobbying, advertising, and influencing.

In Summary 

Supply chain managers undertaking professional qualifications will obtain robust knowledge of promoting corporate social responsibility through the supply chain. However we must recognise that they may only implement this with support from the organisational leadership team.

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Top 5 Traits of a Supply Chain Leader

By Morgan International Staff Writers 

The most successful supply chain leaders typically exhibit a number of common traits. These are our top 5:

  • Avoid analysis paralysis

There is a lot of data to review in the bid to make a decision. For example during a tender process there will likely be stacks of papers with offers from the bidders. It is important to work diligently through the information but to avoid analysis paralysis and never move forward to a decision. A good way to do this is to have structures for decision making. In our tender example a pre-agreed scoring matrix is a good idea.

  • A skilled negotiator

A fundamental aspect of the role of any supply chain leader is the art of negotiation. This is a skill that can be learnt through courses, training, and practice. However it is evident that some supply chain professionals do have more of a natural aptitude for negotiation than others. Typically they exhibit attributes including active listening, persuasion, and utilising the art of silence. They also look to create win win situations as opposed to a win for them and a lose for the other party.

  • Honest and ethical

Leaders should set an example and that should be one of honesty, integrity, and good ethics. A supply chain rife with corruption will ultimately fail, either due to customers finding out and taking their business elsewhere, or because there is a legal infringement and the authorities step in.

  • A robust technical foundation

The best supply chain leaders will have a strong academic foundation which very often includes the CSCP professional qualification. This provides an excellent basis to further a career in leadership.

  • Put the right things first

There will always be a lot to do – contract renewals, new negotiations, disputes to manage. The skill is in prioritising what is most important to the organisation at that point in time and directing resource to that.

In Summary

Each supply chain leader will have a slightly different mix of skills that allow them to be successful. However the 5 skills above are in our opinion among the most important and typically found in those that stand out in the industry.

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5 Steps to Measure Supply Chain Performance

By Morgan International Staff Writers

Most organisations appreciate the importance of measuring the performance of their supply chain, but the question remains, what's the best way to do that? We've got it covered with these 5 simple steps:

1. Decide what you want to measure

There is no point in measuring something if the information will not help you make better business decisions. Within the supply chain, it is useful to consider that metrics fall within the following 3 main categories – cost, time, and quality. Try to cover each of these specific areas.

2. Decide upon the specific measures

All measures need to be clear and specific. It is fundamentally important that it is agreed how the measure will be taken, when, and by whom. It is very common for an organisation to want to understand how many orders they receive accurately from their suppliers. A specific measure would be the percentage of orders received correctly within a specific ‘time period’. Remember that good performance measures will drive good behaviours. Consider a balanced scorecard that combines both quantitative and qualitative measures.

3. Measure

At this stage the measurements of performance can be taken. In your planning in stage 2 you will have set out how they will be taken, the frequency, and by whom. It is of course important to have metrics that are easy to collect. Consider how collection could potentially be automated.

4. Report

Design a way in which to report the metrics that provides valuable information to decision makers. Keep in the forefront of your mind that metrics are gathered to enable positive change within the supply chain.

5. Review

This step is one of continuous improvement and recognises that metrics as initially designed may not be appropriate or indeed provide the management information that it was thought they would. Therefore the validity and usefulness of metrics should be reviewed regularly and altered as appropriate.

In Summary

Performance of the supply chain can make or break an organisation. Therefore measuring its performance is critically important to not only be aware of any issues, but also to identify areas for improvement. Want to improve your supply chain & logistics know-how? Why not consider professional training to take your skill set to the next level!

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Supply Chain Salaries in the UAE

By Morgan International Staff Writers

For those working in supply chain already, or interested in pursuing a career in it, the details of the Cooper Fitch 2018 salary guide for the UAE is likely to be very interesting. At a macro level, they have estimated GDP growth of approximately 3.4% which is based on IMF forecasts. They are optimistic about slight salary improvements across the board. However, what about supply chain specifically?

Growth in the manufacturing sector as a result of foreign direct investment has increased demand for supply chain professionals in the UAE. With the influx of FDI also comes increasing supply chain complexity due to globalisation – therefore making the nature of the roles more interesting. Unsurprisingly it also means that organisations are seeking candidates that have demonstrable experience of managing many layers within a global supply chain. This is a distinct departure from prior years when local and regional experience was more in demand.

In terms of the availability of talent, there is not a supply chain shortage. However employers are very clear in their requirement for category and direct industry experience. Unsurprisingly as businesses push for competitive pricing from suppliers, an understanding of bids, negotiation, contracts and tenders is desired. Furthermore, employers typically prefer candidates who have the ability to speak and read Arabic.

Salary increases within the procurement community are expected to be 2-3%. Let’s now take a closer look at salary levels across supply chain roles in the UAE.

All of the salaries listed below are for candidates with 0-3 years’ experience and are in AED.

  • Supply Chain Manager                      22,000-32,500
  • Supply Chain Director                       35,000-40,000
  • Supply Planning Manager               20,000-24,000
  • Materials Manager                               15,000-21,000
  • Category Manager                                19,000-24,000
  • Buyer                                                           6,000-12,000
  • Procurement Manager                      22,000-30,000
  • Procurement Director                      35,000-42,000
  • Contracts Manager                              23,000-29,000
  • Logistics Manager                                15,000-19,000

 In Summary

The outlook is strong for supply chain professionals working in the UAE. For those just starting their careers it is worthwhile to seek roles which will provide experience of complex global supply chains, with plenty of opportunity for running tender processes and negotiating commercials with suppliers.