The days when supply chain design and strategy were mainly focused on achieving the lowest possible cost of products and the most efficient distribution to stores is long gone. The new model emerging is not entirely driven by enterprise technology or supply chain innovations, but by the supply chains' customers. Becoming more agile, resilient, and customer-centric has become a critical strategy.
Today's supply chain is sailing toward a digitally driven future. Sellers need to make their supply chains more agile, resilient, and customer-centric, according to a Retail Systems Research whitepaper published by InformationWeek, a sister site (registration required).
Building customer-centric supply chains
The concept-to customer approach to supply chain management can broaden the view of companies' supply chains for improved business performance, according to an Infor whitepaper published by Supply Times (registration required).Infor defines that approach as “taking the broadest possible view of the variables impacting business.”
In other words, it's thinking of today's supply chain as multifaceted and multidimensional — something that could be summarized as the three-dimensional supply chain . That supply chain includes:
- Internal dimensions : This is the supply chain you control. It includes manufacturing, distribution, retail capacity, and the time and costs devoted to sourcing, producing, and distributing products. Most SCM initiatives focus on improving the performance in those particular areas.
- External dimensions : This is the supply chain you don't control — government regulations, trading partner mandates, environmental requirements, etc. Macroeconomic factors such as fuel price spikes, worker strikes, and shipping delays due to customs noncompliance, port congestion, or natural disasters can add stress on manufacturers' supply chains, logistics providers, and retailers. Delays that can occur on your suppliers' side or in your customers' supply chains definitely add some pressure, as well. Here is where supply chain visibility and responding to changes in real-time come into play.
- Customer dimension : This is where you have influence, but you can't have total control. Here, the concept-to-customer approach help in making decisions based on a customer-centric view of the supply chain. “For a manufacturer, the customer dimension incorporates what the ultimate consumer needs, not just what the next company downstream in the supply chain needs,” Infor said in its paper. “For the retailer, it means looking upstream in the supply chain to influence the actions of manufacturers and logistics companies so consumer expectation for more availability, more choice, and faster response can be met.”
The importance of leveraging concept-to-customer supply chain management
Infor has identified eight supply chain strategies to help organizations build anticipation and resilience into their supply chains to implement the concept-to-consumer approach successfully.
- Dynamically adjust the network : Assess your supply chain network multiple times a year.
- Take a global view of demand : Evaluate customer demand on a global (or, at least, regional) level.
- Work the supply network : Dynamically make decisions about all the factors needed to deliver products to your customers.
- Boost asset productivity : Adopt an advanced planning solution designed to help manufacturers, logistics providers, and retailers beyond the limits of traditional planning.
- Expand your visibility : Extending your visibility up and down the supply chain will create resiliency that will help your organization adapt quickly to the forces of the external and customer dimensions. Adopt supply chain visibility solutions and technologies such as RFID to facilitate real-time visibility of inventory.
- Know what happens, when it happens : The sooner you know when and where there has been a catastrophic breakdown in manufacturing, the faster you can reroute products through the supply chain. Event management technologies speed up problem detection and help the organization take fast corrective action.
- Design to deliver : Frequently, product lifecycle management is used to get product designs right from the beginning in an attempt to reduce the incidence of failure and time to market. Introducing a third-party logistics provider into the supply chain process benefits both manufacturers and customers.
- Track performance for continuous improvement : Tracking how well — or not — challenges from the three dimensions across your organization are being addressed helps sustain the concept-to-customer supply chain approach.
Understanding concept-to-customer benefits
Implementing some or all of these strategies offers a variety of business benefits, from reducing operational efficiencies to allowing organizations to improve profitability, customer service, competitive stance, and organizational growth.