In today’s Blog, we will discuss the 7 R’s of supply Chain. We will define the terms, review the tactical view and then discuss the strategic implications. The main idea is that this framework allows leaders to consider the tactical and strategic characteristics their supply using 7 straightforward concepts. The 7 rights of Supply Chain, also known as the 7 R’s, are a basic underlying principle of Supply Chain.
First – quick definitions:
- Right Product – did you ship the right thing?
- Right quantity – so how many bananas do you want? 2 bananas or 2 truckloads of bananas?
- Right condition – Quality. Quality. Quality.
- Right Place – to the right place?
- Right time – this one is interesting in logistics circles – how do you define ‘on time’? Is early late? Is late defined as plus or minus a minute, an hour, a day? Every customer and every shipper has a different definition.
- Right Customer – is the product sold to the proper customer? It may seem that the right place is synonymous with the right customer, but there are many times when the ‘sold to party’ is different than the ‘ship to party’
- Right Price – is the commercial invoice correct?
Each of these ‘rights’ and the following questions help to outline the tactical realities of supply chain. Do you have efficient and effective systems to convert a customer order to an actual shipment that gets these 7 questions right. The next question is “how right” do you have to be? Pharma is different from Farm products. If we get a medication that is the wrong pill, or the wrong number of pills, that could be life threatening. If a shipment of drugs is late, by even an hour, there could be life threatening impacts.
Farm products – agriculture – operates on a different level. How many soybeans do you want? Shipment delays are common, and generally weather dependent. All of the questions apply , but are defined differently, based on the specific circumstances of your product and industry.
As a general rule, the 7 R’s are thought of as tactical execution – did you ship the right product to the right customer at the right price… etc. However, we can also think about these 7 R’s as strategic questions. Is the product line focused on the growth areas of the market? Are you marketing in the right geographies?
- Right Product – is your product matched to market needs? Do you have different models to support entry level and ‘professional’ level users?
- Right Place – are you marketing in the right geographies? Is your distribution network matched to the locations of suppliers and customers?
- Right Price – is the price such that there is appropriate profit?
- Right Customer – What is the target market? B to B, B to C or a mix?
- Right condition – Quality. What is the right level of quality? Pharma is different than Farm. Are you providing a expensive amount of quality that customers do not want to pay for? Does it make sense to have different levels of quality, and therefore different prices?
- Right time – how does the customer define ‘on time’ delivery? Are some customers defining ‘on time’ differently than others? Is the B To B market different than the B to C market?
- Right quantity – what are the ordering habits of the customer base? Can customers be enticed to buy multiples?
The 7 rights of supply chain provide an easy guide to help leaders think through the strategic and tactical elements of the supply chain. Leaders can think of these elements as the basis of tactical execution – perhaps creating a score card. Leaders can also use the same elements to consider the strategic impact of the supply chain to the company’s mission and vision.
As you can see, the 7 rights are a deceivingly simple framework. These 7 elements provide a robust tool to analyze and manage your supply chain. The questions can easily be adapted for Pharma, Farm and everything in between.