Today's winning supply chain management requires more than simple data snapshots
Timothy D. Garcia, Apptricity's founder, president and CEO, writes article about managing today's complex supply chains.
In days gone by, it was enough for retail executives to have visibility in their supply chains. Today, all you get from mere visibility is a front-row seat to watch as the competition passes you by.
Managing a winning supply chain today requires a far greater level of sophistication and intelligence.
Companies that can turn over inventory up to 15 times a year – that's what elite enterprises do, according to PWC's 2013 Global Supply Chain Management System Survey – have not only deeper supply-chain transparency than the competition. They also have the agility to act on the information in real time and in more granular ways.
Supply chain managers today are like the supervisors who run NASA's Mission Control. When you boil it down, their job is simple – get the astronauts up to space and back down to earth as safely as possible. And, yes, having visibility into the millions of moving elements of a space mission is critical to that task.
But without the ability to see how millions of variables and triple-redundant systems intersect and interact, Mission Control would be little more than a well-informed spectator when things went wrong.
The same is true for retailers and their supply chains. To be successful, they need more than simple snapshots of the supply chain as they move from source to warehouse to customer. They need what we at Apptricity call command visibility.
Retail companies with command visibility enjoy a major competitive advantage over those that stubbornly have stuck with outmoded supply chain management technologies or that have failed to take full advantage of their existing system’s capabilities.
Those elite companies have:
- Full transparency – While many companies struggle to capture, track and analyze all of their organizational data – supplier lead times, transportation and warehouse operations data, marketing and sales numbers and point-of-sale stats, among other data – top performers have a handle on hundreds of data points generated within their own company as well as that of their suppliers. That degree of data transparency allows retailers to drill down on issues that can and often do drive cost creep, declining quality or both.
- Improved Supply Chain Dexterity. In the rush to produce or procure goods made more cheaply in other countries, plenty of North American and European retailers have sacrificed dexterity. Long supply chains by their very nature reduce retailers’ dexterity. There’s no easy fix, but maintaining multiple sources of supply and having the agility to tap those alternate supplies provides price negotiation leverage and reduces corporate risk. Shortening supply chains can increase corporate dexterity in some cases by creating alternate transportation paths and lower costs.
- Micro-Efficiency. The traditional approach in which a manufacturer waits to amass a huge supply of goods before shipping them all to a retailer in one big order is not the most efficient method. This is especially true if there’s a wide range of products with varied price points included in the order. It may not make sense to rush a small delivery of low price/low margin items. But getting a small batch of higher-priced/higher margin products to the retailer quickly can push that retailer several steps ahead of the competition in sales, profit margin and brand image.
None of those three things is possible without the use of a state-of-the-art supply chain management solution, one that seamlessly integrates data on assets, transportation, warehousing and even invoicing and employee expenses.
Properly configured and automated, all the information will line up so the entire supply chain is visible, from the top down. And you, as a retail supply chain manager, will be far more than a spectator as products move from supplier to customer. You’ll be empowered to make smart decisions that ultimately lead to a healthier profit margin.