Supply Chain Processes – Evolution or Revolution?
In the past, supply chain was about filling orders and getting products to where they needed to be. It was a reactive process, one that provided supply in response to known demand. Performance was not based on how flexible the supply chain was to changes in demand, let alone providing input and feedback to the business as a whole. Supply chain was made up of production lines, trucks, warehouses, pallets, pick/packing, and packing slips - nothing more.
Fast–forward to today, and supply chain is a sophisticated and strategic function. Far from being isolated out at the landing dock, supply chain professionals work closely with the whole business. It is more proactive than reactive, always looking ahead, forecasting, and optimising safety stock. The bigger the global market becomes, the greater the emphasis on fast, consistent product and service availability. This close tie between supply chain and corporate performance provides them with the right circumstances to be a competitive advantage.
The opportunity for the supply chain to grow and increase its influence is significant and underway. For example, supply chain analysts traditionally used to look at forecasts or financials without much of an ability to affect either one. The advancement of skills and technology has completely changed both expectations and possibilities for what analysts can accomplish. Supply chain has evolved from an internally facing, accounting type function to a one that includes newer roles such as customer demand planning and data analytics. As a result of these changes, the field of supply chain is drawing a new and highly capable pool of talent. People from consultancy and finance/economics are moving into supply chain leadership roles in part because of the strategic, multi-national, and problem solving opportunities now associated with the field.
Through technology, data analytics are also enabling a new approach to supply chain management. Supply chain still looks at key KPIs, but they go that one step further and study trends as well as forecast and data accuracy. If everything is incorporated into one, central database, then the flow of information – and therefore goods - should be a lot smoother. If it is not, then there will be hiccups along the way and the company will have to go back and do a root cause analysis and solve the problem. The goal today is to make the whole supply chain as problem-free as possible: no news from the supply chain in businesses is good news. That way the company can predict when the goods are going to get to where they are going, issues are highlighted and handled before they arise, and the customer sees the supply chain as a solution in its own right.
If we look at customer demand planning it is no longer just about demand figures – it is also about the customer. Over the last few years, supply chain teams have had more direct contact with customers. Supply chain might ask, "What do you need? Tell us about your constraints and we will tell you about ours so we can meet in the middle." Because of these conversations, supply chain is able to work collaboratively with customers rather than establishing a forecast from historical data while sitting alone in an office. Supply chain is able to join together multiple perspectives on each business opportunity. This creates a more accurate picture in near real time, one that enables a responsive flow of products to the consumer and a steady stream of data back to the company.
In most cases, people don’t give a second thought to the supply chain unless the product they are looking for isn’t on the shelf or in the warehouse. That is the minimum expectation for the supply chain. With the combination of increased opportunity, expanded talent, and improved technology, supply chain can now advise their customers as to new or better products or help them manage their own consumption patterns - both of which create value for the end consumer and build brand loyalty.
As impressive as this evolutionary journey has been, it is not over. The opportunities for supply chain to positively impact the business and contribute to customer satisfaction are limitless. As supply chain talent continues to increase and diversify, and as the technology they use continues to advance, they will become more integral to operational health in every industry and region of the world.
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