Will Lovatt, VP sales, EMEA, LLamasoft
With companies across all sectors facing a constant and rapidly changing pace they must continuously be looking at ways to reinvigorate and improve the efficiency of their supply chains. However, the complex and often volatile nature of the modern supply chain coupled with the fact that it likely spans multiple continents means that these organisations likely face more difficulty determining the impact of any changes and greater risks should they misread.
Additionally, there are countless factors contributing both negatively and positively to the supply chain including fluctuations in commodity prices, shifts in demand, disruptions to transport and supply, the growth of omni-channel retailing, new regulations, natural disasters and even political upheavals.
Consider for example, how the supply chain must cope with 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
Supermarkets also now engage in ‘streaming’ where they periodically look at specific categories of products such as we all observe with retailers managing Xmas 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 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 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 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% 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.
