What is Supply Chain Gap Analysis? 6 Steps to Success
When analyzing methods of cost-savings for a restaurant group, a supply chain gap analysis can provide invaluable data around methods to negotiate better relationships with partners. But what is a supply chain gap analysis, and how can it be effectively leveraged to deliver results?
A gap simply implies a space between two things, a missing piece that breaks continuity. Similarly, a supply chain gap refers to the difference between your current supply chain performance and what you would like your performance to be in the future. For example, your vendor for your paper goods - straws, napkins, small cups - currently delivers your order in seven days from order entry. But for the same size order, you would like to take delivery in five days, resulting in a gap of two days between current and desired performance.
By analyzing your current situation in several critical areas of your business, assigning desired performance levels, and determining the gaps, you can then find the reasons for the gaps and research ways to close those gaps. Let’s take a closer look at a supply chain gap analysis for a restaurant.
Supply Chain Gap Analysis, in Six Steps
Some of the biggest mistakes in food service contracting are those made around an inability to negotiate contracts with your vendors. Restaurants depend on relationships to procure food and supplies
1. Choose Areas for Analysis
First, identify those areas you want to analyze. Are you ready to look at all areas of your supply chain or are you interested in focusing on one or two areas of weakness? You may feel your distributor is not delivering orders 100% complete, but you have not evaluated the reported order fill-rates from the distributor. What goal did you have in mind for the distributor’s performance?
2. Set Goals for the Future
For each area, determine the ideal performance goals you would like to achieve in the future. For example, you may not be getting the best prices on goods from your current contractors or receiving them in a timely manner. Alternatively, you might be looking to scale your business, and are seeking better deals in the future as you draw more from their business.
3. Analyze Your Current State of Business
After choosing the areas for analysis and setting goals for future performance, you must determine the current state of business. Regarding the example above, consider a restaurant chain that is looking to expand their number of physical locations. This group would want to look at their current contracts that are in place, and see how these can be leveraged to produce better rates.
4. Compare Your Current State of Business to Your Goal
Calculate the difference between the current state and your ideal goal for the future. Continuing our example, if a restaurant has several locations across one city or region and are looking to expand into another, how will they provide uniform consistency and quality among these areas? Should they consider new contracts in another area? Will this affect the flavor of their menu items?
5. Analyze the Gaps
Look at possible causes for the gaps. Does more than one factor contribute to the difference? In our example regarding an expanding restaurant chain, will using existing contracts contribute to higher costs that may impact profits for that region? Will new contracts provide better rates with a consistent product?
6. Plan a Response, and Execute
Determine what must change to eliminate gaps. You may find several possible solutions for removing gaps; each solution brings its own costs and benefits. After you have evaluated the possible actions to reduce or eliminate the gap in each area of analysis, develop a plan to adopt the improvements, and execute. Once this has been implemented, repeat the process as needed.
Tips for Supply Chain Gap Analysis
· Be realistic about the areas you are analyzing and the goals you are setting. Are these goals achievable? If achieving the desired goal involves hiring several additional staff or making a large-scale capital investment, are you prepared to strive for that goal?
· Be able to measure the current performance of each focus area. Set measurable goals, too. You may set a goal of delivering more flavorful food, but how will you measure that achievement?
· Be willing to work with your vendors or, if necessary, find new vendors to close gaps in supply chain goals.
· Be open to including your staff in developing a plan to close the gaps. They can also help you assess the current situation and recommend solutions for achieving goals.
Performing an effective supply chain gap analysis takes time. Finding the right framework to identify problems and analyze them may take the help of a third-party consultant who has both expertise and objectivity to do a productive analysis.
Not sure where to start? Contact Purchasing Partners today. Our team of experienced supply chain professionals can assist you in performing a supply chain gap analysis of your establishment and in developing an effective and achievable plan to reach your goals.