Innovate your supply chain network continuously!
Eindhoven, Netherlands – Companies continuously innovate…and so should the underlying supply chain (SC). Continuous innovation of your supply chain network must become a structural item on the company’s management agenda.
The scene
As a supply chain executive, you are most likely confronted with ever more demanding customers who are able to order anytime and anywhere and require flexibility and freedom of choice to receive their products when and where they want.
Sales and marketing want faster new product introductions. Your distribution centers need to handle more return-flows as a result of e-commerce buying behavior. In operations, you are faced with increasing regulatory and trade compliance requirements and pressure on sustainability. And last but not least, new businesses need to be integrated or existing ones need to be carved-out.
Next to that, cost structures are constantly under pressure due to volatile fuel prices, lower transport density, scarcity of raw materials and higher wages in low-cost countries. Furthermore big data, internet of things and other technological innovations influence the way companies will do business now and in the future.
The need
The traditional industrial driven (sequential) network will shift towards a more customer centric (hybrid/open) network in which many companies are claiming a position in the value chain, providing physical and/or transactional services to support the flawless flow of physical goods and information.
The ability to adapt your supply chain and supporting network and infrastructure to changing customer behavior, economic circumstances and technological developments will become the critical success factor in delivering your products and services at the right speed, quality and cost in a sustainable way.
This can only happen if your company is able to act and adapt to this hybrid network structure, using platforms to share and obtain data and where the supply chain function is able to connect, collaborate and co-create with customers and suppliers. Collaborative models will shift from a traditional vendor/customer relationship towards a full partnership model. Integration of IT-systems and platforms to share and obtain big data in order to monitor and control end-to-end operations will become essential.
The change
Traditionally, once every 5–10 years companies review supply chain strategy and supporting industrial and distribution network setup. This needs to change. The ‘one size fits all at all times supply chain’ will cease to exist.
You need to understand the impact of certain supply chain design choices on the key cost drivers to make the right decision on your future network. Supply chain cost modeling can support this decision process by generating a financial communication model for the design and optimization of products, production systems, and supply chains. Based on the evaluation of the selected scenarios, an underpinned recommendation can be given to maximize profit while increasing SC performance.
Frequent calibration of your customer service offering and your current network to find the right balance between speed and flexibility (time to market) on the one hand versus efficient and effective operations (cost to make and serve) on the other is a must to create a competitive advantage.
Happy to hear your view, leave me a message below
Marc Schipper
Director Supply Chain Management, Managing Consultant
Industry consulting, Philips Engineering Solutions
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