Supply Chain Trends: What's In, What's Out

As business dynamics continue to intensify, manufacturers are faced with the implications of growing global competition, shortened product lifestyles, distributed/outsourced operations and volatile demand – all of which make the supply chain increasingly integral to a company’s success.

Supply chain professionals are always evaluating possible inefficiencies and shortcomings of their supply networks to improve their ability to deliver to the customer. This is especially true in today's fast-paced, highly competitive environment where supply chain performance can provide manufacturers with a necessary edge.

As business dynamics continue to intensify, manufacturers are faced with the implications of growing global competition, shortened product lifestyles, distributed/outsourced operations and volatile demand – all of which make the supply chain increasingly integral to a company’s success. So, while there is an escalating acknowledgement and appreciation for the role of supply chain management, many would argue that the job itself has never been more difficult.

While the challenges are many, leaders in the space are distinguishing between “what’s out and what’s in” - what used to work versus what manufacturers need to do moving forward to remain at the forefront of supply chain innovation and enablement.

Demand Driven Supply Chains

OUT: Forecasting Demand                                             IN: Responding to Demand

Aligning supply and demand in today’s complex and dynamic manufacturing environment can be challenging at best. Many companies spend an inordinate amount of time and resources in an attempt to better predict demand. Yet, in spite of the significant investment, static forecasts are often out of date within hours of creation, making some question the real value of traditional planning tools as it relates to near-term demand volatility. Today, a key capability for manufacturers is to be able to rapidly respond to what is happening at that moment.

As such, manufacturers need to transition from a supply chain driven strictly by forecasts to a demand-driven one. Companies are looking to establish a Response Management competency, whereby action teams throughout the supply chain are empowered with the right visibility and tools to quickly and effectively respond to demand changes as they happen - leading to such benefits as more accurate order promising, lead time reductions, and lower inventory levels and risk.


OUT: Static Visibility                                                      
IN: Actionable Visibility

According to a survey by the Aberdeen Group, the most important challenge facing supply chain professionals is supply chain visibility—as reported by nearly 80 percent of respondents.   However, achieving visibility only solves a portion of the fundamental problem.

Many of the “visibility” solutions touted in the marketplace only offer limited access to a subset of data.  With separate, fixed views of information that cannot be integrated or manipulated, this type of visibility is far too passive.

Visibility must be holistic and supported by appropriate decision-making tools that can help turn information into action. Providing information does little good without the capability to do something with it. Information, in this context is only powerful when it can be:

• consolidated for a multi-enterprise view across the complete supply network;
• analyzed by front-line staff using real-time manufacturing and supply chain analytics and data modeling for “what-if” scenario simulations; and
• shared and collaborated on with parties internal or external to the organization.

Collaboration And Coordination

OUT: Single-Silo Decision Making                                      
IN: Collaborative Decision Making

As manufacturing becomes more complex in light of distributed operations, outsourced manufacturing and a multitude of partners around the globe, effective collaboration becomes a strategic imperative. Collaboration is routinely thought of at the transaction level – but collaboration amongst people is key to a responsive supply network.  In such an environment, one person’s actions will impact countless others both within and outside the organization. Given this reality, decisions cannot be made in isolation.

Without collaboration, there will be a poor balance of opinion and limited insight into the impact of proposed actions, resulting in biased or uninformed decisions.  In an outsourcing relationship in particular, this can be of particular concern as brand owners can make a decision with little or no awareness of the impact on its contract manufacturing (CM) partner, and no idea if and how it can be executed, and most importantly, at what cost. 

When effective and efficient collaboration can be established, all parties can explore the options, wrestle with the trade-offs and develop a shared understanding and mutual commitment to the resolution.  Collaborative decision making can empower the brand owner and CM partner relationship and drive the ideal behavior quickly.

Responsiveness As A Competitive Differentiator

OUT: Competing on Product and Price                                 
IN: Competing on Responsiveness

There is a leveling of sorts happening in the industry given the transparency across the growing global competition that offers little leeway for companies to differentiate themselves solely on the traditional aspects of product and price.  In an industry characterized by cutthroat competition and impatient, fickle customers, a company’s success is dependant on its ability to meet the aggressive wants of their customers before the competition.  Today’s customer expects the products they want when they want it, and will choose a competitive offering if it meets this need. This commands a responsive supply chain. 

By establishing a strong Response Management competency, organizations are armed with a key competitive differentiator. Having the process and technology in place that can demonstrate a company’s ability to offer superior responsiveness (and therefore superior operations performance and customer service) to changes in demand, supply and product is an extremely compelling value proposition given today’s marketplace.

Higher Consideration For Software ROI And TCO

OUT: Perpetual Software Licenses                            
IN: Subscription of On-demand Software
 Long gone are the IT spending heydays. Today’s mantra? "Make do with less.”  With much of the focus on keeping ERP running, IT departments have little interest exploring uncharted IT projects that require large dollars and precious resources they simply do not have. 

A paradigm shift is underway that is changing the way companies acquire, deploy and use software, so companies can continue to benefit from solutions that can serve a unique purpose and offer capabilities beyond what’s available in-house. The future is all about Software-as-a-Service (SaaS).

Unlike traditional enterprise applications, SaaS or on-demand services require no user-owned or managed infrastructure (software or hardware), reducing risks and costs by eliminating the need for up-front capital investments and ongoing IT resources for maintenance and management.  In addition, with a simpler deployment process that requires less time and resources, customers are able to realize a compelling time to value.

On-demand services are accessible from a web browser making it instantly available to unlimited employees and partners around the globe, which is imperative for today’s extended supply network and near impossible to deliver with

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