The only constant thing is change, according to Lora Cecere, founder of Supply Chain Insights.
This was Cecere’s key takeaway following the latest Supply Chain Insights Global Summit, the conference she founded more than five years ago. The effects of change do – of course – need to be mitigated. I attended the summit on behalf of I-Plan and took away the following insights about de-risking supply chains.
Agility in supply chains is more vital than ever
Christine Wentworth, VP of Agricultural Procurement at McCain Foods believes innovation is key in addressing major shortages of supply (specifically in McCain’s case, when it came to a global shortage of onions). McCain now has to focus on the management of a more variable crop input in order to make its famed onion rings through a much closer management of their agricultural chain. Catastrophic shortages in supply is a problem that is not going to go away. Indeed, the potential impact of endangered food has been widely reported for many years. Solutions range from the need for end-to-end supply chain technology right through to decreasing reliance on certain imports. It is clear that there are no single silver bullets and that agility and data are more vital than ever for the resilience of a supply chain. McCain has had to move fast to mitigate losses – and the only way it does that is by having complete access to supplier data to plan its next moves.
Outcome-driven supply management demands more of us
As Lora Cecere says, “traditional supply chains focused on selling products” but the future is about outcomes. For the automotive industry, she says, “it is a shift from selling cars to providing rides.” Similarly, US bed maker Sleep Number is focusing on delivering a good night’s sleep – not shifting product. This echoes findings published in the MIT Sloan Management Review. In Outcome-Driven Supply Chains, its authors argue that managers are increasingly recognising that the benefits of traditional supply chains – driven solely by cost – are no longer fit for purpose in a modern marketplace. No longer can cost be a company’s competitive advantage – they must, instead, look to outcomes. Successful supply chains must be tailored to the end-user and “will succeed only if they understand the needs of key customers and drive to maintain alignment between the supply chain’s design and its customers’ changing needs and desires”. These more “sophisticated” supply chains get ahead by focusing on six areas of outcomes: Cost (made up of cost, delivery and quality), responsiveness, security, sustainability, resilience and innovation. The outcomes do not exist in isolation – some can be blended into others – reducing waste, for example, can serve to reduce cost and keep the chain sustainable. Modern supply chains are more complex than ever. It makes sense then, that this new breed of supply chain demands robust management and planning software – taking supply chain management much further than traditional Sales and Operations Planning (S&OP). Businesses need to look at technology that comfortably manages ‘What If’ scenario planning and Integrated Business Planning. The latter aligns S&OP with the operational, financial and executive functions of a global organisation, engaging all key stakeholders.
Close collaboration demands more of your technology
Cecere writes: “To build the end-to-end value chain requires ownership of the entire supply chain. This starts with knowing the customer and the supplier”. To go one step further, close collaboration between customers and suppliers is heavily reliant on technology that is able to make sense of the data shared in a supply chain.
Historically, manufacturers relied on customers to provide data and manage their own inventory but in more modern supply chains this relationship has been turned on its head – and to great effect.
Vendor Managed Inventory sees the supplier making the planning and distribution decisions on behalf of the customer. This means that supply-driven chains won’t just work for oil, gas and other products that can’t be stored for long periods – but a whole range of stock. If a manufacturer has access to key customer data such as point of sale information, they can manage their customer’s inventory – not only providing excellent service but, increasingly, keeping a supply chain sustainable. In practice, we could see more and more manufacturers placing orders on their customer’s behalf, taking quite a few headaches out of the process.
I-Plan’s software was developed to make sense of complex data and take the risk out of supply chains for global manufacturing companies. For more information on the solutions available to you, including Vendor Managed Inventory, click here.
