Small Company Supply Chain Challenges

Smaller companies face the same issues as bigger companies.  This applies probably as much or more to the supply chain as any otter function.  They have to process orders, ensure quality, solve problems, expedite inbounds and outbounds, and this must all be done at the least possible cost.  We have written about the multi-criteria optimization problem that is the Supply Chain.  The complexity and trade-offs apply to both $50 billion multi-national corporations and $5 million companies with one office, plant, and warehouse location.

Large corporations have top notch talent but have to coordinate many people and locations.  Some know exactly what needs to be done to manage large, complex, global supply chains.  It is a gargantuan effort to align everyone in the organization.  Thankfully, there are incredible, powerful, tools like ERP systems, Six Sigma, and Lean Manufacturing and Logistics.

Their smaller cousins have lesser educated and perhaps even home grown talent.  They have access to the same tools but the tools, like Six Sigma, are often too complicated and bureaucratic for small companies.  ERP systems can also be very complicated to implement in small companies requiring more training and data management than smaller companies have the appetite for.

There are advantages that small companies have over large companies.  Small companies are, as mentioned above, usually in one location.  They also have less layers of management.  So, it is easier to have decision maker and implementors meet face-to-face to attack problems and work on improvements.  They can meet more frequently and for shorter times.  Thus, they have the potential to be much more nimble and improve faster.

How can small companies move more nimbly and improve faster?  They need to better utilize their ERP.  They need to use Six Sigma to both solve problems and for process improvement.  They need to implement and master Lean Manufacturing and Logistics.

ERP, Six Sigma, and Lean will all help.  But, and it is a big but, they cannot be utilized and implemented in the same was that they would be in large companies.  We have learned that small companies need Lite versions.  The intent of Lean and Six Sigma must be packaged in a way that fits the personnel and organization structure of small companies.

Small companies simply cannot afford departments dedicated to Lean, Six Sigma or ERP management.  The A3 method is much better than Six Sigma for small companies.  We are working on Lean Lite and have implemented parts of it with clients.

As for ERP, small companies have to be very careful about which solution they choose and what they will implement.  They definitely need someone to guide them through this from concept through stabilization.  There should be a strategic plan of what should be implemented in phases.  The kinds of questions that need to be addressed include:

1. Should MRP be implemented?
2. Demand Planning?
3. What level of Sales and Operations Planning should be considered.
4. Warehouse management?
5. Six Sigma?
6. Quality Management?
7. Data management has to be designed into the implementation.