10 Signs of Supply Chain Transformation from CSCMP Edge 2017 (Part 2)

Posted by Martin Verwijmeren on Oct 4, 2017 11:28:26 AM

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In part 1 of this post (read here), we spoke about key trends facing supply chain leaders in terms of customer focus, end-to-end supply chain visibility, rising customer requirements, operations still being a core issue and asking the right questions.

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Here are five more insights we saw during the CSCMP Edge conference.

6. The Perfect Order is not just OTIF

The Perfect Order is something near and dear to my heart since this is something we look to provide to MP Objects customers with supply chain orchestration. But the definition of the Perfect Order is changing rapidly especially with understanding the impact of our supply chain performance on our customer relationships and in turn, business performance and success.

OTIF is still the industry standard in determining delivery performance and ensuring that our lead and delivery times are consistently improving and meeting service levels. Many organizations are still struggling to provide high percentage of OTIF orders with the rising customer demands associated with the Amazon Effect and the increasing variability in how they need to deliver these orders. So OTIF is the baseline for The Perfect Order and how to deliver OTIF at the least amount of cost is becoming an increasingly complex task for each and every customer.

However, we are also seeing organizations innovate in how they determine the Perfect Order past just delivering on-time, in-full at an effective cost. Monsanto’s Marty Mohry shared his definition of the perfect order, which has expanded past just OTIF after they met the level of efficiency to ensure that was covered. His definition included other key issues in the customer experience for Monsanto’s customers including full transparency into availability of goods (due to shifting crop yields) and payment for goods with varying credit issues in different countries they serve. To be a Perfect Order, all of these criteria in addition to OTIF need to be in place to determine Perfect Order percentage, although he did say the formula differed based on importance of criteria by region.

So the question to ask your organization is what is your perfect order and what needs to be fulfilled in order to provide it? And how do you measure the consistency in which you deliver it?

7. Omni-channel really is an Inventory Problem across Multiple Parties

One of the best analogies of the conference from Brian Wilson was The Beruca Salt economy that we live in where “We Want It Now” is becoming the new standard. And with that also comes convenience and that is really where omni-channel discussion starts. End customers truly want the convenience to buy, receive and return products in the way they see fit.

That might be purchase online and pick up in store, buy in store and get delivered to the home, return a purchase online via the store and any combination of the following. While conceptually this seems simple, this throws a ton of supply chain complexity into how we set up our processes and ultimately satisfy our customers especially with many of the rigid supply chain processes we have for e-commerce, retail order fulfillment and returns.

But on top of it all, inventory was the biggest cost concern among the group I spoke with during the Omni-channel: Not Just a Retail Problem session. With the way our supply chain technologies and processes are structured today, flexibility in how we leverage our inventory is lacking and dynamic use is often not possible. This leaves our supply chain with increased safety stock across the separate processes we have to fulfill orders to customers in our e-commerce and retail channels. This not only affects the cost of holding but also affects obsolescence and potentially missed opportunities for sales due to stock-outs when inventory is low for certain channels.

We heard a lot about companies looking to more dynamically source inventory across their parties and supply chain network by breaking down the walls of their rigid supply chains and treating all customers agilely with their supply chain resources. This is usually done with supply chain orchestration in being able to have real-time visibility into inventory across all your internal and external parties including warehouses, supplier / manufacturing, in-transit and in-store and being able to leverage that inventory when it makes the most sense to satisfy a customer order. The ability to have full control of overall supply chain inventory is a core function for market leaders.

Now, what’s important is that this is not just a B2C problem as B2C impacts with omni-channel pass down to their B2B supplier partners. We’re seeing increased demands on shipping directly from the supplier to the end customer, just-in-time manufacturing for immediate orders and greater supply chain visibility into inventory and capacity of these supplier partners. All of these requirements are adding significant complexity to how B2B companies operate from a supply chain perspective.

8. Talent Shortages Across the End-to-end Supply Chain

The next generation of talent in the supply chain was of great concern for every organization at the event. With increased requirements, technology alone is not going to solve all our problems; we also need the next generation of leaders to drive supply chain transformation forward.

I also had conversations with many logistics professionals on the concerns around truck drivers. JB Hunt mentioned that they expect that we need over 100,000 new truck drivers to meet overall demand and there is a lot of concern on where these will come from. With all talk of autonomous vehicles helping to replace some of these drivers, Missy Cummings among others to note that we shouldn’t expect autonomous vehicles on a mass scale any time soon (due to technology and legislation gaps) so how will this capacity be filled and how will our supply chains be affected if it’s not filled? This is a question for many in the industry.

9. Buzzwords Make Buying Technology Incredibly Difficult

Walking the expo hall during the conference definitely opened my eyes to the technology innovation that is happening in supply chain. But it also showed me the need to better explain the meaning behind the buzzwords used by most vendors, MP Objects included :)

The two terms that are thrown around without context in most cases are supply chain visibility and control tower. It’s obvious that no two solutions are the same.

For Supply Chain Visibility, typically you see visibility be an inclusion with every solution, just like you see with metrics and analytics. Typically, visibility fits into two main buckets: long-term planning vs. real-time execution planning.

A few questions to ask about Supply Chain Visibility:

  • Is it an Analytics Tool or an Execution Tool?
  • Can I take action on the visibility from my
  • Does it provide just transportation track & trace or end-to-end visibility?
  • Is it focused on long-term planning or real-time execution?
  • Does it enable you to track granular steps across the end-to-end supply chain?

For Control Tower, you see the term utilized across a few different providers including TMS, WMS, ERP and Supply Chain Orchestration providers. The key with Control Towers is understanding what they control in your supply chain and the type of visibility and execution you want your planning team to have when using it. The questions to ask include:

  • What supply chain processes does the control tower oversea? End-to-end supply chain or just siloed functions?
  • How does the control tower handle multiple parties in the supply chain such as suppliers and 3PLs?
  • Does it offer real-time re-planning based on exceptions alerts?

We recently did a checklist on questions to ask providers about their Control Towers. You can download the Control Tower checklist here.

10. It’s a Good Time to Be in Supply Chain

For all the talk of challenges and struggles with innovating and transforming our supply chains and supporting the business, there also comes an opportunity to help influence and drive the future direction of our businesses. Nearly every supply chain professional I met at the conference was looking to lead positive change in their organization, think and implement better ways of executing supply chain processes and in nearly every case, help to improve the ultimate customer experience through this transformation.

With digitization and technology, we have at our disposal the tools to truly transform how we do business and how we build relationships with our customers with enhanced and consistent experiences. The supply chain is as important as it’s ever been and will only continue to become the foundation for business competitive advantage and success.

 

Hope you enjoyed this year’s conference!

Topics: Supply Chain Visibility, Supply Chain Complexity, Control Tower, Omnichannel, Inventory Management, Supply Chain Agility

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