A high level plan for Start ups and new companies to develop a Supply Chain team from start until 200M USD Revenue in 5 Phases. Parts can be used for bigger organizations in transition. Based on cross industry experience and input and discussion with Silicin Valley Start ups.

1. From Start up to 200M Revenue
Bill Kohnen

2. Overall Strategy for Supply
Chain
 Develop a flexible supply chain to support
growth.
 Delivery of materials and services at a
globally competitive total costs to
operations and external customers.
 Minimize investment in inventory.
 Leverage supplier’s expertise and
resources.
 Meet all regulatory, ISO, and customer
requirements

3. Core Elements of Supply Chain
 Customer Service
 Detailed interface to and support of
customer after sale
 Planning
 Planning for operations demand
 MRP
 Inventory Planning

4. Core Elements of Supply Chain
 Purchasing
 Strategic – Analysis, Sourcing, Negotiation, Contract
Development, Management of key suppliers and
commodities
 Tactical-Release of orders, action MRP
requirements, direct interface operations
 Supplier Quality Management – Supplier Audits,
Material Review, Supplier Rating, maintain
department specifications, Review ‘flow down”
requirements from customers for supply chain.
 Purchasing Engineering – New Product and
Technology interface, Management of Procurement
materials technical specifications, technical supplier
material and service qualifications.

5. Core Elements of Supply Chain
 Inventory Management
 Physical Inventory
 Detailed interface and scheduling with
operations
 Receiving, Shipping, Distribution
 Physical Receipt of goods
 Actual shipments of product
 Compliance

6. Core Elements of Supply Chain
 Service and Support
 Spare Parts Logistics, Planning and
Management
 Field Service
 Warranty Support

7. Start
 Supply Chain Director establishes initial
policies and manages Strategic
Sourcing requirements.
 Establish Executive Level Sourcing Team
to review major sourcing decisions COO,
Finance, CTO, Supply Chain Director

8. Start
 Immediate review of existing suppliers
and supply chain process
 Establish actionable plan for meeting
gaps in current and future needs
 Address concerns with existing suppliers
 Identify and evaluate new sources for
service and materials
 Support operations strategy and plans

9. Phase 1
 Customer service/Planning role for interface of high
level requirements
 Hire Buyer Planner to review requirements and
release orders
 Hire inventory person to manage inventory and do
receiving and interface with shipping companies
 Have shipping company provide resource for
compliance and shipping support.
 Team with Engineering and Quality for roles of
Supplier Quality and Purchasing Engineering
 For service and support utilize planner and inventory
person with shipping supplier.

10. Phase 2
 Hire Planning Manager – key task formalize
details of Sales and Operations Planning
System and Develop MRP System
 Hire Strategic Purchasing/Commodity
Manager
 Hire Supplier Quality/Purchasing Engineer
 Evaluate need to separate receiving and
inventory functions.
 Review with operations needs to expand
inventory support with employees or external
support. Potentially hire inventory supervisor.

11. Phase 3
 Review need for dedicated Service
support role. (Buyer/Planner)
 Evaluate need to add additional
Purchasing support. Commodity
Manager or tactical Buyer/Planner. If
sourcing in Asia perhaps outsource
portion of tactical Buying.
 Potential for Manager role for Inventory,
Shipping and Distribution.

12. Phase 4
 Further separation of duties as work
level in areas grows. For example
separate Supplier Quality Management
and Supplier Engineering Roles.
 Supervisors in detailed functional areas.

13. Phase 5
 Not end state but when organization
reaches $200M revenue.
 Traditional organization
Supply Chain
VP
Service
Purchasing Materials Logistics Planning
Spares
Director Manager Manager Director
Director

14. Other guiding thoughts
 Staffing levels guided by industry
benchmarks: for example for
Purchasing Arizona State CAPS
Research shows one Buyer for $15M
spend on average.
 Continuous training of staff
 Create rotation of assignments and
cross functional development within
organization and operations.

15. Other guiding thoughts
 Always work to leverage resources of
suppliers and service providers.
 Flexibility and responsiveness are key
drivers.
 Most important – the goal of the Supply
Chain Organization is to support
Operations and the business as a whole –
not to optimize supply chain practices.