Ensuring your network IS your competitive advantage may be determined by three “-abilities”: visibility, adaptability, and flexibility. Regardless if you are a retailer, manufacturer, or wholesaler, these important characteristics will allow you to outpace competition when it comes to providing world-class customer service with a cost-efficient supply chain.
Continuous VISIBILITY to your supply chain’s key performance indicators will ensure that you will be the first to know if something is out of kilter. Isn’t this better than having a key customer or your boss bring irregularities to your attention? Monitoring network metrics related to indicators such as freight spend, supplier reliability, stock-outs, labor efficiencies, and delivery schedule adherence should be reported on a continuous basis. However, to state the obvious, it is necessary to capture the underlying execution data in order to track the metrics. I have lost count of how many times a client has told us that their data is “clean and readily available,” only to wait several weeks and endure multiple iterations of data submission to get a valid dataset. Putting effort into maintaining a data warehouse that can be efficiently queried will pay dividends in your quest for supply chain visibility.
ADAPTABILITY is defined as “the quality of being able to adjust to new conditions,” something that has become especially important in recent months. Supply chains have seen shifting sales channels, new customer demand profiles, reduced order lead-times, and customers looking to reduce inventory. These “new conditions” are driving changes upstream in supply chains. What used to be full pallet may now be case and layer pick in distribution centers. Customers who used to be content with two- to three-day lead-times are now expecting same-day shipping, and in some cases same-day delivery. Having the ability to adapt to changing conditions while still providing superior customer service at an efficient price is crucial to outpacing competition.
As supply chain managers, you never want to be the bottleneck restricting product flow from source to customer. Supply chains must have FLEXIBILITY to react to volatility. Volatility driven by both internal and external factors has become the norm. Customer demand, in terms of both quantity and items demanded, can shift quickly. Acquisitions and divestitures occur frequently, and often with limited time to adjust distribution networks. While it may come at a cost, flexibility can be achieved by having good working relationships with suppliers, 3PL providers, and freight partners. The need to adjust near-term plans, whether it be the need for additional storage or revised projected truck needs for customer delivery, can be made less painful through strong partnerships. Operating your distribution network with some excess capacity will also become an advantage when it becomes necessary to react to volatility.
Having the “-ability” as supply chain managers to quickly identify when your network is out of kilter through KPI monitoring, while being able to adapt and flex to customer needs, will go a long way to limit sleepless nights. We could refer to these abilities collectively as “respond-ability.” The ability to efficiently respond to internal and external irregularities that are destined to occur without affecting your ability to provide cost-conscious superior customer service.
— Dave Wheeler, St. Onge Company