SupplyChainDigest has an article here citing research from IDC’s Manufacturing Insights that discusses a potential disconnect between business objectives and supply chain priorities. The article debates the research findings that a disconnect exists.
I sent a comment in regarding the article, that I’ve posted below.
** My comment **
I’m not terribly surprised by the findings. First, the supply chain function in most companies is goaled and oriented around cost reductions – it’s been that way for quite some time. If we look at the fulfillment (which tends to be more demand-centric in its thinking and orientation) and supply chain (which tends to be more supply-centric) functions in most organizations, we find that they both share a common desire to impact both top-line (revenue, customer satisfaction) and bottom-line (costs, margin, inventory) oriented metrics. However, the emphasis varies greatly – with the fulfillment functions placing the greater emphasis on top-line metrics and the supply chain functions emphasizing the bottom-line metrics.
As you pointed out, far too few companies are leveraging their supply chains to drive top-line growth. You also hit on a key to doing so as noted in the survey – responding to change. In today’s market, an essential determinant of market success on both top and bottom-line metrics is the organizations ability to respond to change. This is a unique area to impact both sets of metrics simultaneously. Responding more quickly to change increases customer satisfaction and drives revenue growth while responding more efficiently and effectively to those same changes can drive breakthroughs in operating performance that drive bottom-line metrics.
If you focus on the response to change and the impact it has on both top and bottom-line metrics, you see that the research actually shows a strong correlation between business objectives and supply chain priorities.
Posted in Best practices, Response Management
There’s a post here at the site uyriputyeruit talking about supply chain collaboration. I added a comment at the site, but thought I would post it here also.
*** my comment below ***
Good post – and agreed. In today’s highly distributed supply networks, collaboration amongst people is essential.
With so many things changing – demand, supply, product – every day and at an increasingly rapid and frequent pace, your ability to respond to the unexpected increasingly determines your success with customers and in the marketplace.
Historically, collaboration has focused predominantly on system-to-system collaboration where transactions are automatically shared between two parties. While there’s certainly value in that, the more urgent need is to respond to the situations where the transactiosn represent a problem (for example, a transaction goes out indicating a need for an additional 100 products by Friday, and a transaction comes back saying only 50 can be delivered). Now what?
This is where people come in – to make the right tradeoffs and compromises to respond to the unexpected. An, when the supply network is distributed and made up of multiple parties, it’s going to require multi-enterprise collaboration to coordinate an effective response.
Today’s realities are placing an increasing emphasis on people-centered collaboration to respond to change.
Posted in Best practices, Response Management, Supply chain collaboration
AMR has just posted information on how frequently companies execute their Sales & Operations Planning (S&OP) processes.
AMR has also talked about the fact that to execute this process correctly, companies need to invest in tools that provide rapid scenario analysis and foster collaboration across all of the groups involved. The ability to quickly understand the alignment issues between demand and supply in the context of collaborative scenarios is key to enabling the compromises inherent in this process.
Equally important is the need to ensure that the company is well armed to deal with the exceptions that occur daily and outside of this planning process. With the pace of change accelerating in all dimensions, the ability to respond to the unexpected and ensure continuous alignment between demand and supply is essential. Companies need to seek a profitable demand response in a timely fashion to proactively deal with these events.
Posted in Best practices, Demand management, Response Management
When we first started to talk to people about the need for Response Management solutions a couple of years ago, the common refrain was that “we have planning.” I think people had been conditioned to think that solid planning was the only thing necessary to ensure great execution.
But over the years, I think more and more people are coming to the realization that you can’t plan your way out of all problems. In fact, increasingly, there are a host of problems you just can’t plan your way out of. Increasingly volatile demand, shortening product lifecycles and the globalization of supply chains have meant more changes are popping up every day. And many of these unexpected events are high enough in business risk and complexity that they require human judgment to determine the appropriate tradeoffs and course corrections to make.
This situation happens all of the time in our daily lives, so it’s not surprising that it should be happening within the context of manufacturing and supply chains. Take today’s modern, most sophisticated airplanes. They are pretty much run by computers and every aspect of their trip is meticulously planned out in advance. Yet, you would never think of not having a pilot on board. That’s because there are a variety of problems that could creep up that you can’t plan your way out of – they are high in complexity and risk and require human judgment to figure out the right tradeoffs and course corrections to make given the circumstances.
It’s no different in today’s supply networks. Having a solid plan in place is critical to the long-term viability of the company, but increasingly it’s your ability to respond to the unexpected quickly and accurately that’s going to determine your position in the market.
Posted in Response Management