Designing a supply chain from the shelf back
If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!
Great article here at the Financial Times talking about the need to design supply chains from the shelf back. The article cites some great statistics on the negative brand and revenue implications of not having product on the shelf and then talks about strategies to design a supply chain from the shelf back. Of note, the article states “designing the supply chain from the shelf back requires flexibility and responsiveness, which is at odds with the need to reduce cost.” This is a challenge I’ve spoken about before (see here and here as examples) where companies have everyone aligned with internal metrics that drive cost reductions at the expense of external metrics that drive customer satisfaction and revenue growth.
Companies need to become more demand-driven today to deal with the increasing competition and demand volatility, the shortening product lifecycles and the elongated supply chains that have created delays and more opportunities for things to go wrong. In the quest to become more demand-driven, you need to start designing supply chains from the customer - or shelf - back. The first business reality you must face in doing this is realizing and embracing the reality that you can’t plan the customer - so you need to build in processes to respond quickly to the more accurate and current understanding of true demand that such initiatives will bring.
The article does a nice job of netting out three distinct recommendations for action and then explaining them in more detail. They are: “One, make the supply chain a key part of your business strategy, focused on delivering top line growth. Two, integrate supply chain management with sales and marketing. Three, build joint business plans with your supply chain partners.” Good advice.
