There is a persistent need for companies, across all sectors, to be constantly devising new ways to incrementally improve or even completely remodel how they handle their supply chain, says Will Lovatt, VP of sales, EMEA at LLamasoft. In this quest to remain competitive, many of these same businesses have found themselves in an increasingly difficult position. Operating with a highly complex and often volatile supply chain has made implementing change much more risky, while measuring the impact of any changes has become more difficult as well.
The modern supply chain, which often spans across several continents, can change much more quickly than was possible in the past. Fluctuations in demand, the rise of omni-channel retail, shifts in commodity prices, disruptions to supply and transport, natural disasters, new regulations and even political upheavals all have an impact.
Consider for example, how the supply chain must cope with the growing popularity of omni-channel retail. Where once there was a simplicity of picking whole packages of items in a warehouse and dispatching them to retailers, now it is a question of picking individual items to make up baskets, potentially from locations that were never designed to perform that role at all.
Supermarkets also now engage in “streaming” where they periodically look at specific categories of products, such as we all observe with retailers managing Christmas season chocolates, and decide how they are going to be stocked, flowed or bulk moved through the supply chain to support seasonal promotions.
The difficulty for those managing this ever more complex supply chain is coping with an increasingly dynamic change across all the various internal and external factors.
One of the best ways for an enterprise to keep pace with this incessant fluidity and build-up of pressure at different points, is to create a centre of excellence that pools its talents and technology, using multiple sources of data to continually remodel and redesign the supply chain for maximum efficiency.
Meeting diverse and immediate challenges head-on requires a working model at which a business can throw every conceivable change, using a powerful platform to create what-if scenarios giving a more real-time, live view of supply chain design.
It is no longer enough to see design as a series of one-off models or forecasts from which a couple of changes may result before the change project is put to one side until next year. Sustaining competitive advantage is a matter of continually reviewing design to reduce costs and risks to ensure the highest levels of service are always facilitated as efficiently as possible.
A centre of excellence will constantly monitor of all the factors and data affecting the supply chain from one end to the other. It requires smart use of data from various different sources, which is all pulled together and used to create a set of different scenarios.
This could, for example, focus on what to do if the business acquires a new customer and grows by X per cent, meaning a regional distribution centre can no longer cope with the volumes being generated, requiring some new investment.
Data is the real-time driver, but for a centre of excellence to function at its full potential it is vital to have the right set of people conducting the redesign work and providing their results as a service to the rest of the business. It is also important to ensure they have first-rate leadership.
A wide range of abilities is important so that the centre is not driven by supply chain staff alone, but also by finance and sales or promotions personnel. Studies show that on average, centres of excellence with staff that have experience of the business were 25 per cent more efficient with time and cost-saving measures.
Aside from optimising the quality of design and scenario produced, this broad base of participation avoids the major pitfalls of local or departmental bias. It also makes it more likely that the work produced feeds into sales and operations planning, which is about ensuring coherent plans across multiple silos of operations.
Although many businesses pay lip service to continuous improvement through supply chain design, the reality is often that it remains a tactical tool. But businesses stuck with this approach will see their costs rise and efficiency decline while competitors edge ahead.
If organisations are not to go backwards, each must create its own centre of excellence for continuous supply chain improvement.