An often overlooked secret to success is to be a front-runner in identifying and leveraging emerging trends. Since I work with manufacturers and distributors from small to large and local to global, it behooves me to pay attention to what is in common among my best clients. Undoubtedly, those who jump on the “right” opportunities leave the competition in the dust.
Supply chain has been gaining momentum in executive suites around the globe. According to PwC’s Global Supply Chain Survey (2013), when organizations focus on supply chain excellence, they can achieve 70%* higher performance. Thus, paying attention to the emerging supply chain trends can be not only interesting but also can result in increased business performance. The top few include: 1) Demand driven. 2) The Amazon effect. 3) Collaboration remains cornerstone. 4) Leverage supply chain technology. 5) The skills gap.
- Demand Driven: Over the last few years, demand driven supply chains have been gaining popularity. But what does it really mean? I’ve found the essence to be simple – start with your customers’ demand.
Throughout my 20+ year career as a global business consultant and as a VP of Operations & Supply Chain, I’ve been responsible for, involved with or partnering with clients to improve demand and supply planning results, and so this topic happens to be in my sweet spot. Undoubtedly, demand driven supply chains are the wave of the future.
It can start off as simple as thinking through historical forecasts and expand in complexity and collaboration from there. The best companies are providing demand data from deeper in their supply chain and working on collaborative planning programs such as auto replenishment, vendor managed inventory and collaborative ordering programs. It doesn’t have to be complex – start by picking up the phone to talk with your customers.
- The Amazon effect: I spoke on a panel earlier this year entitled the Amazon effect, and it has become a term thrown around in conversations. Amazon’s plans are to have a distribution center within 5 miles of most major U.S. cities – a game changer! And, didn’t we just hear that Amazon and the US Postal service have teamed up to deliver on Sundays! They are taking service and e-commerce to the next level.
Customers expect to be able to shop 24/7 and gain exceptional service along the way. Manufacturers and distributors better get on the bus before it passes them by! How can we set up our warehouses to handle bulk, piece parts, etc.? What technology do we need to ensure full integration so that we can achieve shortened lead times? If there is one item in common among all the executives I work with, it’s that no one has time. We must take time out of the equation, just like Amazon is doing.
- Collaboration remains cornerstone: An often overlooked secret to success is to collaborate. Start in your company – do you partner with other functions in your organization? Simple programs like S&OP (sales and operations planning) create a process of collaboration and yield substantial results. How about internal best practices?
Beyond internal opportunities, we have the ones most discussed at manufacturing and distribution conferences – supply chain collaboration programs. Imagine what can be achieved by partnering with customers and suppliers. I’ve seen collaborative R&D programs yield margin improvement and increased sales; collaborative planning programs yield substantial cash flow increases in combination with efficiency improvements; and the list goes on.
- Leverage supply chain technology: Although one of my service lines is to help clients select the optimal system that aligns with their business objectives, I am not a fan of technology for technology’s sake. I often see clients get tied up in a maze of complication while accomplishing nothing – or worse, service declines which is the kiss of death.
On the other hand, the clients who carefully select the appropriate technology to support their business objectives and leverage the core functionality to dramatically improve results are able to leapfrog the rest. Technology is an enabler. For example, consider the following popular technologies which can achieve significant leverage if utilized strategically – e-commerce, CRM software (customer relationship management), advanced planning systems, warehouse management systems and supporting technology etc.
- The skills gap: My APICS (the leading professional association for supply chain and operations management) chapter recently hosted a symposium on the skills gap as it is prevalent with the manufacturing and distribution companies in the area. As supply chains have become complex (extended in length while considering items such as risk, technology etc.), it has become harder and harder to find top talent.
Especially as the skills gap worsens as folks continue to leave jobs for greener pastures for the first time since the recession and as the baby boomer generation begins to retire, those companies who are ahead of this critical issue will thrive.
Observing supply chain trends is important but it is bedrock to success to develop strategies and plans to utilize this information in a way that will help your business succeed. Do you have a team in place to think about how to leverage the top supply chain trends?