This is the 3rd in the 3-part Strategic series.
For part 1 go HERE. For part 2 go HERE.
Intense pressure to trim costs and improve inventory velocity has led many
to outsource supply chain functions and operations. However, outsourcing functions does not translate into outsourcing responsibility or, ultimately,
the accountability to the consumer. The potential cost of unsatisfactory consumer experiences is immense damage to customer loyalty and the corporate brand.
Risks and complexity have increased as supply chains have become more global. This requires companies to manage much
more deliberately across the broad scope of the extended multi-tiered supply chains. Therefore, orchestration is essential -
across multiple functions, multiple systems, multiple process points, and multiple custodians of the product as it moves
through the chain.
Elements driving orchestration:
The fundamental drive to increase outsourcing of every minutia of the organization and yet co-mingling of sub processes
(see 2010 Supply Chain Priorities report), increases risk on many dimensions.
Each stage of the supply chain has to yield defined value for each segment of the market while earning profit for each player in the chain. This requires continuously more effective asset utilization, more labor productivity, and more effective alignment to each channel and segment. It also requires more effective
customer care, better
Web Online Retailer - 2010
1. Increase audience and traffic
2. Convert audience to sales
3. Coordinate demand and fulfillment
4. Mine customer data for new offerings
5. Cost effectively manage fulfillment of global customers
marketing and protection of the brand to preserve profit, and protection from counterfeits.
In optimizing and orchestrating, pinpoint accuracy is a must. Mistakes are costly because they result in mark downs, lower sales, and returns. Retailers must get these issues right: the right customer/ right product and assortment planning. The manufacturers must get these issues right: product design, forecast and fulfillment accuracy. And getting it right must become an obsession.
Look at capabilities such as the visibility solutions that drive Chain of Custody that is produced as
products pass through the many links in the
1. Understand the unique channel attributes - end-to-end
2. Understand my customers' uniqueness to each channel
3. Understand the cross-channel customer
4. Create customer-centricity demand
5. Demand and merchandise and assortment planning by channel
6. Improve and optimize store operations
7. Optimize the logistics network
global supply chain. These solutions provide traceability,
compliance, and product integrity in many markets.
Performance management must go beyond the traditional forecast models. You must have a seamless view of the end-to-end financial performance and cash management throughout the supply chain: i.e. margin, profits, and pricing.
To achieve these improvements, while simultaneously discovering and catering to new customers, segments, and markets, companies must integrate and mine the diverse sources of information from across the chain to make wiser tactical and strategic decisions. In addition, increased process flexibility and responsive/adaptive information technology become more and more important.
Orchestrating and optimizing requires:
In this second decade of the 21st Century, as virtualization and diversity of supply markets become the norm, technology has to be relied upon to manage these multiple relationships and multidimensional processes, in order to create a cohesive supply chain. This increasingly complex universe requires a new look at the technological underpinnings of your supply chain. We will explore this aspect within this series, and in our Demand Management Technology report series, which will be published in Q2.
· Customer-centricity and services based on dynamic global consumer market segments.
· Breaking the silos - process integration is most enabled by integrated technology.
· Enhancing brand management strategies aligned with today's media and social interaction networks.
· Developing relationship-based business models - true integration and collaboration.
· Driving supply chains for corporate performance - not just cost, but growth and customer delight, with increasing margins.
· And Technology!
Supply chain management is driving the global economy. Supply chain professionals are seeking success in their roles. The buzzword-laden world of synchronizing the supply chain, which is the Holy Grail of what we all talk about in the supply chain, is becoming just background noise for the professional. But financial and market success, and customer loyalty, must come first.
Ultimately, true success in supply chain is based on cross-enterprise execution. This is difficult and complex, but can be enabled by the right foundation.
Read the other two parts of this three-part Demand Management STRATEGIC series:
Demand Management has never been more important. From Demand Creation to Marketing Automation, Demand Forecasting, Merchandising and Assortment Planning, Collaboration with suppliers, and managing S&O...
by Ann Grackin
Multichannel marketing, Multichannel retail, Pricing and Promotions, are challenging both retailers and brand companies.
Web retailing is entering a new phase. So is a store format, which must employ ...
by Ann Grackin
We look forward to your comments, questions and contributions to this series.
To view other articles from this issue of the brief, click here.