When supply chain professionals think of the links in their supply chain, they generally stop at the last stop for their product that’s within their control. But the game is changing; tomorrow’s (and today’s) supply chain extends well beyond the realm of your immediate control, all the way into the hands of your consumers.
In the past, it used to be enough to just have enough of the product you are selling already produced. Then, you had to have it in the right spot. Today, that is just the cost of entry. A modern supply chain cannot even be considered competitive if the baseline is anything other than right product, right place and right time, with consistency. But the world is changing and the links beyond your direct control are now your responsibility. Whether or not it is your responsibility, it is now your responsibility.
So how do you compete effectively in a world that expects instant response? It might mean breaking a few long standing habits to shift your supply chain focus from inside your company to outside the four walls of your immediate control and all points beyond.
Supply Chain Singularity
No longer is there an end to the supply chain. In industries where safety is paramount, like pharmaceuticals or foods, you are responsible for your product for the entire length of the supply chain. Some companies have reacted with technology like RFID, and others need to open up their walls and drive more collaboration. However, the benefits go way beyond safety. The more visibility you have, the better you are able to serve your customers. If your organization can see all the way from your first supplier to your final consumer, you are able to react much faster than you would otherwise. If you can see actual sales, you can recognize trends and react to a change in demand as it is happening. That means anticipating the reorder point, rather than waiting for it. The same can happen from integrating with your supplier. Product supply issue can be avoided if you have awareness of component or packaging supply issues early enough to adjust your plan or find another source of supply for your manufacturing plants. All industries can benefit from more collaboration, but doing so means working closely with all of your partners, because you’re all in this together.
Yes, you can email excel spreadsheets back and forth, and they probably have decent information deep within them. However, in today’s modern IT architecture, there are tools that make the information transfer seamless. In the near future, there will be more connectivity not less. That should not be earth shattering to anyone who has a smart phone. But it is a huge shift in the way big businesses operate. This is the next generation of EDI interfaces. Not batched jobs, or custom files, but a common standard of real time integration is the business standard of the future. It will be an expectation that to be an effective business partner, you must be ready, willing and able to share data and connect to your suppliers and customers. SAP and others have taken a small step into the pool with Ariba and SNC, but that area of functionality will be sure to accelerate dramatically in the near future. The key will no longer be what you know about your own supply chain, but what you know about your partners and what they know about you.
It’s cliché to say that your metrics need to be customer focused. But that is all the more important to realize that the only point of view that matters is the END customer’s in this interconnected supply chain. The best metrics will extend beyond your control. And when measuring these factors, it’s important to realize that it’s ALL under your control. Yes, it feels good to be right. You may have had your product on a truck at the right time, but if it’s not on the shelf when the customer is walking by, it’s your problem. The interconnected supply chain means that everyone has an ownership stake, whether or not it is under your direct control. The focus of the metric gathering and reporting cannot be blame; it has to be problem solving. Everyone, from supplier to end customer, is in this together, and as a result, you all need to work as one team. Sure, at some point, every point will drop the ball, but the successful supply chains will be the ones that can target the error, and collaborate to avoid it in the future.
This world is coming. The technology to enable it is on the cusp of becoming mainstream. In SAP’s ecosystem, it’s been on the peripheral for a while. Efforts such as inventory collaboration hub (ICH), supplier network collaboration (SNC) and portals have been around. But their utility, and the processes that enable them are about to reach a tipping point. It’s time to get ready.