House in Order
Supply Chain and Logistics Association of Australia chairman David Doherty offers some sound advice on supply chain management.
What is the biggest challenge facing supply chain management (SCM)?
We are now experiencing turbulent business and economic conditions that are causing great concern for many. Times are tough and in my view they are going to get a hell of a lot tougher yet. Unprecedented fuel and energy prices, environmental and sustainability panic, global credit chaos, high interest rates, signs of declining demand, slowing in economic growth, indications of ongoing significant job losses coupled with skills shortages, reductions in household discretionary spending ,and general malaise are causing heartache.
Rapid globalization of supply chains and technologies developments are impacting g on capacity of Australian businesses to compete on playing field. The fashion industry is not immune. The biggest challenge is to be innovative and courageous in implementing fundamentals, reforming and optimizing supply chains, in skills development.
2. How is this different to five years ago?
Five years ago the economy was steaming along and businesses to an extent became complacent. Greed and profligate spending emerged as acceptable business behavior. An undue ”she will be right mate” attitude masked the need to develop skills, reform and optimize, and create a real vision for future SCM. On the back of Chinese “opportunities” Australia seemed to be somewhat insulated from the building global competitive pressures.
3. What is the most common mistake Australian businesses make in SCM?
Many businesses still consider functional excellence (e.g. Purchasing, Warehousing, Distribution, etc) to be an indicator that SCM is working effectively for them. Silos are alive and well in many organisations. Those same organisations having failed to implement effective internal collaborations between their own silos often look to create supply chain relationships with external suppliers, service providers and such. The lesson is get your own house in order first.
A second key issue is the rampant expectation that buying a software package or some other technology will cerate effective supply chains. Forget it! Sound business structures must be built before speculative investment in technologies.
5. What make an efficient supply chain?
I think “effective” is a much better word than “efficient”. In my view a simple basis for effective SCM is built on the six “V’s”. Vision, Visibility, Value, Vulnerability, Velocity and Viability.
SCM is aimed at creating ands sustaining seamless flows of materials, goods, services, products, and financials (cash) from point of origin to point of use.
It is important to keep in mind that every organisation will have multiple supply chains. Each chain will have its own characteristics, relationship parameters, and information sharing arrangements. Generally there is no single supply chain in a business. An absolute non negotiable is to choose supply chain partners with a similar orientation to you own organisation.
6. What makes SCM all the more challenging for fashion businesses?
Although not unique the fashion industry undoubtedly has some underlying characteristics that elicit special consideration when pursuing supply chain excellence. Design, innovation, and creativity confidentiality may be perceived as barriers to effective implementation of SCM. It takes some courage to find a new way of doing business that upsets some of the traditional attitudes. ”Collabotition” is an appropriate axiom. That is collaborate where you can and compete where you have to.
Quick Tip
Freight forwarder Dean World Cargo details the politics of hand carried samples. Many buyers and designers continue to personally bring back samples from their overseas buying trips. Whilst individuals are allowed to bring in up to a value of AU$900 of overseas purchased items for personal consumption, all commercial samples are subject to the payment of Duty and GST.
As a result, a formal Customs Entry must be lodged with the Australian Customs Service. This can be done ahead of arrival, usually with a forwarder receiving receipt details from each buyer in advance, and the Customs Entry will be awaiting the buyer’s arrival for immediate clearance. Alternatively, Customs will issue each individual with a receipt for the hand carried goods, and once a forwarded receive the commodity and value details, will process an Entry and have the cleared goods delivered out.
By David Doherty