Deloitte on air last night re the importance of supply chains

06 July 2011 23:14
Understanding supply chain management: Clinton Houston - supply chain strategy expert, Deloitte 

‘A company’s supply chain could be the only differentiator of their product.’
HILTON TARRANT: Supply chain logistics and procurement are becoming ever more critical to businesses in this globalised interconnected world. Clinton Houston, supply chain strategy expert at Deloitte, joins us now. Clinton, for the man on the street, simply, what is supply chain management?

CLINTON HOUSTON: Well, quite simply it's the planning and execution, management of all the activities involved in sourcing and procurement, manufacturing and assembly, warehousing and storage and distribution. I guess in essence it's the management and coordination of all the functional silos that could span across suppliers, service providers, your own operations and of course your customers.

HILTON TARRANT: So pretty much getting something from somewhere, or getting a whole bunch of things from a whole bunch of places and making sure they are at the right place at the right time.

CLINTON HOUSTON: Exactly. It's the balancing act between supply and demand across that chain.

HILTON TARRANT: Why is it important to business today, Clinton?

CLINTON HOUSTON: It's important because with commoditising of goods and services, a company’s supply chain could be the only differentiator of their product. So in the past companies used to aim to minimise their operating costs through long production runs, big batches. Now companies are seeking to meet customer demand as soon as possible, and this can normally only be achieved through a significant increase in stockholding or potentially through shortening those production runs and having smaller batch sizes and highly flexible operations and logistics.

HILTON TARRANT: I guess one of the areas where this is becoming top of mind is in the retail sector, given Walmart’s entry. What they bring to the market is a very optimised supply chain, a very effective supply chain, and a supply chain that gets onto shelves at possibly the lowest cost globally.

CLINTON HOUSTON: Absolutely. And all the other big retailers in the country are scrambling to ensure they are at least staying on par with Walmart’s significant global capability.

HILTON TARRANT: Clinton, are there any industries or sectors that are perhaps more reliant on an effective supply chain than others?

CLINTON HOUSTON: No, not really. These days the term “supply chain” spans across multiple industries and each and every industry area, whether it's financial services or consumer business or manufacturing, all are trying to focus on ensuring their supply chain is as efficient as possible.