Supply chain management: Time to broaden your outlook

Jane Thomson, MD of Softworx, an EOH company and distributor of Infor in sub-Saharan Africa, says businesses are today being impacted by a whole new set of factors from the far reaches of their supply chain.

Infor has analysed these forces and the impact they are having on manufacturers, logistics providers, and retailers, and developed a new way for companies to view their supply chains - they call it the "concept-to-customer" approach.

In its simplest terms, the concept-to-customer approach to supply chain management can be defined as taking the broadest possible view of the variables impacting a business, says Thomson.

"It's a tacit acknowledgement that today's typical supply chain is multifaceted and multidimensional and requires companies to see it that way. Based on our analysis of supply chain management trends, we believe companies are best served by viewing their supply chains in terms of three dimensions: internal, external, and customer."

Internal dimension includes manufacturing, distribution, and the time and costs that go into sourcing, producing, and distributing products. Forward-thinking companies recognise that this dimension also encompasses product design and the network they use to get these to customers.

External factors, like government regulations and environmental requirements, drive complexity into the supply chain and dictate where and how a product is produced, how it is stored, which trading partners it is shipped to, and how information about it is communicated.

The customer dimension is generally a combination of business characteristics over which a company has influence, but not total control. While companies have no direct control over the purchase of their products, they have ways to influence purchase decisions, through leveraging product life cycle management processes and promotional strategies, for example.

To foster concept-to-customer thinking, Infor has identified eight supply chain strategies that enable organisations to take the actions necessary to build anticipation and resilience into their supply chains:

1. Dynamically adjust your network
Often, companies don't sit down and design networks; they inherit them as a result of acquisitions or they evolve them over time as they expand their operations. In addition, the effects of external pressures can be mitigated if networks are regularly assessed for effectiveness in meeting requirements.

2. Take a global view of demand
By taking a global view, your company can create an environment that delivers the most complete picture of customer demand on your business and intelligently detects trends and changes at the regional, product, channel, and customer levels. Deploying a collaborative demand-planning solution is a proven first step in providing the foundation for integrated business planning. It delivers a global view of demand, gives your company the visibility to sense and react quickly to changes in customer buying patterns, and sets the parameters for the inventory, production, sourcing, and distribution plans that follow.

3. Work the supply network
Effectively working your supply network necessitates making a number of strategic decisions. Today, supply chain leaders can take advantage of optimisation technologies to make these decisions based on a holistic picture of demand mix and supply capacity factors. By taking this approach, you can increase the likelihood that you will choose the best option in terms of customer service and total cost of supply.

4. Boost asset productivity
Advanced planning solutions take manufacturers, logistics providers, and retailers beyond the confines of traditional planning and into fast, responsive, problem-solving engines that are cognisant of constraints from the internal dimension. These capabilities routinely provide greater visibility and control over capacities, materials, labour, and task sequencing to ensure that you make the most of your capital investments.

5. Expand your visibility
Technologies such as RFID can facilitate real-time visibility of inventory, regardless of where it is and improve your ability to predict and plan for product arrival. Demand visibility solutions can help manufacturers see what retailers are selling so they can adjust their production to optimise business results and, in doing so, accommodate more requirements from the customer dimension. Conversely, retailers can implement solutions that provide visibility further up the supply chain, so they can understand when product will be delivered to their stores and even further back to what is being produced.

6. Know what happens, when it happens
To minimise the effect of an external event or maximise the opportunity of a new customer demand, you need to know about it as early as possible. Event management technologies can help companies sense what is happening both inside and outside the organisation and increase the speed with which problems are detected and corrective action taken. As companies strive to deploy concept-to-customer supply chains, event management technologies will be an important tool to deliver the responsiveness they need.

7. Design to deliver
Because supply chain leaders know that up to 70% of new product introductions fail, product life cycle management is increasingly being incorporated into supply chain thinking in two ways. Firstly, it being used to get product designs right the first time so the incidence of failure and time to market can be reduced. Secondly, some manufacturers have recognised that introducing a third-party logistics provider into the supply chain process can be beneficial to both manufacturers and customers. This approach is more flexible and takes cost out of the manufacturing process.

8. Track performance for continuous improvement
To sustain the concept-to-customer supply chain approach, it is necessary to measure and track how well your company is addressing challenges from all three dimensions across your business and against your key performance indicators. There are a number of analytics and performance management solutions available that can streamline the way information is collected, analysed, shared with supply chain partners, and reported to government agencies.

"By implementing these strategies, companies can derive tangible business benefits from the concept-to-customer approach. Concept-to-customer thinking leads to improved decision-making because you have more complete, more accurate, and timelier knowledge of all the factors influencing your business. In addition, this type of thinking improves visibility and your ability to anticipate and respond to both risk and opportunity in the management of your supply chain," Thomson concludes.