29 May 2019
Times are tough – but hasn’t that been the case for the last decade? From the financial crash sparking an economic meltdown, to Brexit casting a seemingly never-ending shadow over the future of Europe, it would seem that volatility is now the norm rather than the exception. For businesses, this unpredictability means supply chains must be ready to respond rapidly to constantly changing market conditions, or they risk falling behind their competitors.
How? Through an optimised go-to-market strategy, complete with end-to-end supply chain optimisation. In this blog, we reveal why it’s a mistake to undervalue your supply chain, and why supply chain needs an invitation to the decision-making table.
From the top to the bottom, (and back again)
Organisations often focus on just optimising the front-end of the supply chain – improving forecast and planning accuracy, or reducing inventory etc. They fail to realise that to truly reap the benefits of transformation, the entire supply chain needs to be reviewed and optimised. This may mean a full restructure to effectively serve the front-end, from the consumer all the way back through to the suppliers' suppliers.
Making an organisation fit for the future requires a radical overhaul. Historically, supply chain has typically languished further down in the organisational hierarchy, reporting to operations, rather than operations being part of supply chain. Its role has been limited to delivering the right quantities at the right time, at the lowest cost - not anymore. The best in business elevate supply chain to the senior executive team, realising that it’s capable of so much more than just supply and demand balancing. Their success isn’t just measured in low inventory costs; it’s measured in driving the optimisation of sales.
Ultimately, you can’t save your way to prosperity. Turning profits of pennies into profits of pounds, or cents into euros and dollars is rooted in increased revenues and margin growth; although there is certainly merit in streamlining processes, that’s not where the big bucks are made. Cost reductions are usually supply chain orientated – surplus inventory, exorbitant shipping costs or inefficient processes – so supply chain has traditionally been limited in its opportunities to proactively pursue bigger profits.
Take the example of one Oliver Wight customer – a leading sportswear manufacturer. It introduced a ‘click & collect’ option for online orders in one of its regions, expecting 10-20 orders a week. But keen consumers propelled those figures to over 1,000 a week. Clearly, convenience is king and supply chain thus made a big contribution to the bottom line.
Agility, flexibility and transparency
To boost sales, it really is as obvious (and as challenging) as ensuring the supply chain is structured in? a way that can anticipate and fulfil both what the customer wants now, and what they will want in the future. This can only be achieved by properly integrating supply chain into the wider organisational framework, and subsequently facilitating agility, flexibility and a quick response.
By offering supply chain a seat at the leadership table, organisations create true cross-organisational transparency, with all members of the leadership team given access to the necessary insights to optimise the whole business. With an equal voice and equal accountability, supply chain becomes truly invested into the business and will begin to seek out opportunities to actively generate revenue.
This blog was based on an extract from our white paper, “The Role of Supply Chain in the 21st century”. Download the full paper for FREE here.
Associate, Oliver Wight EAME
Birgit has developed real expertise in both innovation and supply chain management in a career that spans two decades working for major FMCG companies, Unilever, Kraft and Wrigley (Mars). Birgit believes personal engagement at all levels of an organisation is key to success.
Oliver Wight EAME Partner
A consultant for over 29 years, Liam provides practical change management to companies implementing Business Excellence processes. Specialising in Sales and Operations Planning, Integrated Business Planning, Demand Management, Product Management and Supply Management, Liam is an innovator in many of these processes.