What’s in your supply chain?

Driving operational efficiencies and facilitating growth are baseline analytics-driven priorities for top performing companies today.[i]   Top performers know the fastest value realization project for big data is in their supply chain.

Healthcare, technology, energy, retail, financial services and even governments that aren’t continuously leveraging analytics to optimize their supply chains are at risk of being disrupted.  Often times, supply chain inefficiencies come with rapid growth, acquisitions, new products or services, and can cost an organization their very existence.    Before organizations can harvest data for insightful analytics, they need to ensure numbers, governance and metrics are aligned to support their mission.
 
AN OFFICER’S EXPERIENCE
      After 20 years of managing global supply chain activities for the US Navy, Mike was ready to join the civilian world where he dreamed that supply chain inefficiencies would be vanquished.  He took an assignment for a major tech company known for pioneering modern supply chain management. Mike thought, “wow, so much will I learn!”  Those thoughts swiftly evaporated. How had such a large corporation founded on creating THE modern supply chain model become an inefficient beast?  While rapid growth, acquisitions, new products or services contributed; numbers, governance and metrics were at the core of inefficiency, placing billions of dollars at risk.
 
NSN VS. PART NUMBER
            In the Navy Mike used National Stock Numbers (NSN) to identify materials.[i] By using a common NSN system the Department of Defense is able to manage over 17 million part numbers across all military services. Other federal agencies as well as NATO allies rely on the NSN system.  Besides explaining supply sources, it accurately defines the material; the platform it belongs to, the country of origin, and manufacturer information to name a few attributes.  Operating globally, while deployed overseas, the NSN system made it efficient to manage materials. They call it moving iron mountains.
         The NSN is made up of two numbers, Federal Supply Classification Group (FSCG) and National Item Identification Number (NIIN).

FSCG is a four-digit code that classifies material category, ranging from ammunition to kitchen supplies, avionics, etc. This provides supply managers a quick way to know what category the material is, who manages that category and any special handling the material requires. The NIIN is comprised of a 2-digit National Codification Bureau Code (NCB) and 7-digit Part Number.  The NCB identifies country that is responsible for maintaining the NIIN.  The remaining 7-digit numbers are the part number that contains all the information on the material, nomenclature, manufactures, manufacturer PNs, specifications, etc. NSNs can be further expanded by prefixes and suffixes.   
     
       So what happened in the civilian world?  At the tech firm, part numbers were random alphanumeric figures without a structure.  A part number meant nothing until it could be cross-referenced in disparate engineering databases to discover basic information available, easily ascertained in an NSN schema.
 
GOVERNANCE
         At the tech firm, marketing came up with a great idea to sell a product to the US government.  Problem was, the product did not meet the Trade Agreement Act (TAA). In order to meet TAA compliance, the supplier would have to move final assembly to a TAA compliant country. Problems arose when the sales department was unable to change part numbers in the sales database in time to meet the market date. The only way the third-party logistics providers would be able to know which part numbers were TAA compliant was by a “Made in Country-X” label.  Not a foolproof enough method to guaranty that non-TAA would not make its way to US government customers, putting billions of dollars of revenue at risk.  Later, Brazilian and Chinese sales teams faced similar issues, placing billions of dollars at risk. With an NSN like schema, the tech company would have been able to move material around globe to support customer requirements.   
 
METRICS SUPPORT THE MISSION
       In that high tech company, every meeting was a battle to meet individual metrics; sales metrics versus marketing versus engineering. The Military puts everyone on the same mission, and makes everyone accountable to supporting the same mission; winning the war.  As a naval supply officer, Mike’s metrics focused on moving iron mountains so the troops could win the war.  Iron mountains are munitions, food, weapons, fuel and spare parts; 17 million parts.  The best way to move iron mountains is with uniformly administered part numbering system, supporting governance and aligned metrics.
 
      In today’s hypercompetitive disruptive economy, top performing organizations are using advanced analytics to find new ways to optimize supply chains so they can connect, collaborate and compete more effectively.  At the core of their supply chains are numbers, governance and metrics.
 
What’s in your supply chain?
 
Is your supply chain designed to benefit from the advanced data analytics necessary to disrupt markets?
 
Ascendiosa can help.
 
Michael Dube runs Supply Chain Optimization for Ascendiosa.  Mike is also a retired Naval Supply Officer with over 18 years of supply chain expertise and a U. S. Naval Academy graduate with a Naval Postgraduate MBA concentration in Supply Chain Management.

[1] 2015 State of Analytics, Salesforce.com, page 11.  https://www.salesforce.com/blog/2015/10/new-research-2015-state-analytics.html October, 2015.
[1] The National Stock Number, The Gear that Keeps the Supply Chain Running”, Published 12/2013,  http://www.dlis.dla.mil/PDFs/NSN.pdf  October, 2015.