Diagnostic your supply chain
Supply Chain Diagnostic – Simple & Effective Method
Define the scope (don’t skip this)
- Before analyzing anything, answer three questions:
- Which products / families? (Top 20% that generate 80% of revenue)
- Which geography? (Plant, warehouse, region)
- Which time horizon? (Last 6–12 months)
A vague scope = useless diagnosis.
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Map the end-to-end supply chain
Create a simple flow, not a complex tool:
Suppliers → Inbound → Production → Warehousing → Distribution → Customer
For each step, list:
- Who owns it
- Lead time
- Constraints
- Pain points
If you can’t draw it on one page, it’s too complex.
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Diagnose using 5 critical dimensions
A. Demand & Forecasting
Ask:
- How is demand forecasted? (data vs intuition)
- Forecast accuracy (% error)?
- How often is it updated?
- Promotions / seasonality considered?
Red flags 
- Sales overrides forecasts constantly
- Large forecast errors (>30%)
- No rolling forecast
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B. Inventory Health
- Measure:
- Inventory turnover
- Days of inventory on hand (DOH)
- Obsolete / slow-moving stock %
- Stock-out frequency
Red flags
- High inventory + frequent shortages
- “Safety stock everywhere”
- No ABC classification
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C. Lead Times & Variability
- Track:
- Supplier lead time (planned vs actual)
- Internal production lead time
- Variability (not just averages!)
Red flags
- Lead times not measured
- Huge variability accepted as “normal”
- Expedite orders common
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- D. Supplier Performance
- Evaluate:
- On-time delivery (OTD)
- Quality defects
- Single-source risks
- Contract vs reality
Red flags
- No supplier scorecard
- Too many “strategic” suppliers
- Firefighting instead of management
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E. Execution & Governance
- Check:
- Clear ownership of decisions?
- S&OP or equivalent?
- KPIs aligned across teams?
- IT tools actually used?
Red flags
- Silos (sales vs operations)
- Excel everywhere, truth nowhere
- Decisions made too late
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Identify bottlenecks (this is where value is)
- Ask at each step:
- What limits flow?
- Where does work wait?
- What causes rework?
- Use simple metrics:
- Throughput
- Queue time
- Rework rate
- Fixing one bottleneck often gives 80% of gains.
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Quantify pain in business terms
- Translate issues into money:
- Excess inventory → cash tied up
- Stock-outs → lost sales
- Expedites → extra costs
- Long lead times → lost flexibility
- If you can’t quantify → it won’t be fixed.
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Prioritize improvement actions
- Rank actions by:
- Impact (€)
- Effort
- Risk
- Focus on:
- Reducing variability
- Shortening lead times
- Improving decision cadence
Don’t optimize everything
Fix the biggest constraints first
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Typical quick wins (seen in most companies)- ABC inventory segmentation
- Supplier lead-time reliability tracking
- Simple rolling forecast (monthly)
- Clear ownership of stock decisions
- Limit product complexity
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- Summary – The Diagnostic in One Sentence
- Map the flow, measure variability, identify bottlenecks, and translate problems into money.
The following tools will help to diagnostic your supply chain strategy.
This diagram presents the main functional pillars of supply chain management, structured into four key domains.
Physical Distribution focuses on how products or services are physically delivered to customers. It includes lead time management, transportation coordination, and warehouse operations to ensure availability and efficiency.
Operational Planning covers the planning and coordination activities required to support the supply chain. This includes production demand planning, resource allocation, trade compliance, customs management, and inventory control.
Customer Service represents the interface between the supply chain and the customer. It emphasizes responsiveness to customer orders and effective product return management to maintain customer satisfaction.
Performance Management ensures continuous improvement across the supply chain through supplier onboarding and audits, value stream mapping, cost reduction initiatives, and product obsolescence management.
Together, these pillars ensure an efficient, reliable, and cost-effective supply chain.
This pyramid illustrates the alignment between strategic intent and operational execution within an organization.
Vision defines the long-term direction, such as delivering products faster to customers.
Ambition translates the vision into measurable targets, for example increasing productivity by a defined percentage.
Mission identifies the functions, teams, or customers that will contribute to achieving the ambition.
Budget determines the investments required to support suppliers, projects, or operational improvements.
Performance Monitoring ensures that appropriate controls and KPIs are in place to track progress and measure results.
This diagram represents the end-to-end Order-to-Cash (O2C) process, highlighting key steps, responsibilities, and lead times.
The process starts with Before Sales, where customer acquisition, demand anticipation, and supplier readiness are assessed.
It then moves to Order Processing, focusing on order validation, triggering operations, and procurement lead times.
Next, Stock Management ensures product availability, inventory turnover, and risk management based on part criticality and supplier constraints.
Delivery and Transport cover shipment readiness, supplier notifications, tracking, transport responsibility, and compliance checks.
The process continues with Invoicing, managing invoice issuance after shipment, followed by Payment Accountability, where customer payments are tracked, followed up, and reconciled.
The full flow provides visibility on timing, bottlenecks, and improvement opportunities across the entire cash cycle.
