With the increasing number of product choices, buying channels and information, today’s supply chains are more complex than ever before. In addition, these factors are also causing buying behaviors to become less predictable. As a result, supply chains need to find a way to be more agile and recognize and respond to changes in consumer trends in real-time. This can be achieved by leveraging the digital supply chain grid to establish a demand-driven supply chain.
Building the grid
Today, the data and technology is available to help manufacturers and their suppliers, retailers and distributors break down data silos that have traditionally been a road block to an agile supply chain. With sophisticated, cloud-based supply chain management (SCM) solutions, businesses can create a centralized data repository that provides users with a consolidated data view.
Using the power of cloud-based technology, these SCM solutions allow all parties to access and use the same information and the same metrics to plan. For example, an electronics manufacturer can connect with its retail distributors and obtain visibility at the store-level. Based on which products are selling, the manufacturer can produce goods and replenish them accordingly – avoiding out-of-stocks as well as surplus inventories. Moreover, the manufacturer can drill down through this information to identify trends across sales territories and even individual stores to proactively prevent future losses.
Gaining a holistic view
Using a cloud-based SCM solution gives businesses the tools and data needed to not only optimize processes within its own four walls, but throughout the supply chain. Integrated and aligned metrics allow users to measure performance and guarantee the effectiveness of each entity (the local optimum).
At the same time, SCM solutions allow users to measure the performance of all companies within a supply chain as a whole, helping to confirm the success of the global optimum. Going back to the previous example, the manufacturer and its retailers can use a cloud-based system to gauge their individual effectiveness, as well as to look at the “big picture” to ensure they are generating positive results for the entire supply chain.
Reaping the benefits
By leveraging the digital supply chain grid, manufacturers, distributors and retailers can break away from outdated orthodoxies and achieve true supply chain collaboration. As everyone works with consistent data and Key Performance Indicators (KPIs), they can more easily operate under a demand-driven, pull-based model.
When the supply chain is based on actual consumption, the benefits will begin to roll in. Companies can reduce out-of-stocks at the store level, while decreasing excess inventory and overstocks. Manufacturers will replenish only the products that are actually selling, thereby minimizing cash flow deficits and lost sales. The end results are increased sales, improved customer service, a more agile supply chain, and greater profitability for everyone involved.