Supply chain infrastructure is the backbone of a distribution business. Keep these three guidelines in mind when planning and coordinating investments in your infrastructure:
1. View supply chain assets - facilities, equipment and information technology - as a unified infrastructure.Don’t make the mistake of clouding your judgment by segregating these assets and dividing authority between departments.
For example, facilities and equipment typically fall under the domain of the operations department, who ultimately report to the COO. Meanwhile, information technology decisions are very often made under the watch of the CFO. This strategy is flawed since the overall performance of an integrated supply chain depends on the combined performance of these assets. Think of it as a complex but single infrastructure.
2. Always have a 7-year rolling plan for supply chain infrastructure.
Understand the capacity limitations of your infrastructure and what is needed for it to support an ever-changing marketplace.
Understand that technology evolves rapidly and innovation in this area can impact both facility and equipment needs.
Before proceeding with a change in one part of your infrastructure, you should anticipate what effect it will have on the other links in the chain.
3. Make sure you budget for annual capital expenditures that serve the long-term plan for your company’s infrastructure.
Supply chain infrastructure requires ongoing, annual investments to maintain its viability. One challenge may be that demands for capital investments at your company are spread across many functional departments. This decentralized approach makes it difficult, if not impossible, to see them as a whole.
Capital is precious and demands for it will come from all areas of your business. Make sure that supply chain infrastructure is neither starved nor stuffed. Maintain a healthy balance to ensure you are not over- or under-investing.
Do any of these situations sounds familiar? Curious about better approaches? Download LIDD’s eBook Infrastructure: Supply Chain’s Missing Link to learn more about infrastructure choices affect your supply chain’s performance.
