Supply Chain Visibility, Connectivity is an Imperative
Bob Forshay,CPIM, CSCP, CLTD, CLM, CSCA, CSCM, CSCTA
SupplyChainPro2Know at Mastermind Group, LLC - Consulting, Training & Education/Certification
THE MOST important thing for streamlining supply chain performance, managing costs and profitability is connecting the supply chain partners. And it's often the most difficult.
We all have heard of the BullWhip Effect. But, how well are we able to mitigate this monster? More easily talked about than accomplished. How many times have you discussed the forecasting challenges, too little detail, too late? How many times have you wished you had more information, timely, and accurate that would have driven a different purchasing decision, if it were better information sooner? How often have you heard from a supplier or customer, they are not able, willing, or ready to share such information? All these things are core to a significant opportunity to drive improvements to your bottom line.
Do you have the right SC partners? Are they on board with sharing of data? If not, you may want to revisit your choice in partners. The ROI is gigantic. Are they capable? If not you may need to make some strategic investments in how they manage data and provide access to the core information needed. Do they have a solid data management protocol, scrubbing data for accuracy, timeliness and a cleansing process to assure no dupes, errors, etc? Another area for process improvement activity.
In my trainings, we often discuss collaboration in SCM where we recognize the need to reduce the effects of the BullWhip. One important area all of us are experiencing daily is retail grocery. Where as much as 40% of sales come from fresh produce. And yet how much waste is found here, short shelf life and food that does not sell. An excellent example of how to drive significant improvements is found in collaboration coupled with technology. See this short video clip about optimizing fresh produce supply management in retail grocery. Very interesting as one example.
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After you watch this short video, then consider how this systems approach can leverage your supply chain inventory management processes just by increasing the visibility with your partners, real data, real time. Reduce the BullWhip Effect.
Then think about how your local grocery is taking this to the next step. Why do you think your local supermarket is promoting online ordering? When you buy groceries today, your retailer sees what you buy as you check out at the cash register. The retailer is tracking this and forecasting using historical purchasing patterns. Having real time data on demand before the customer is in the store would be even better. Online ordering is giving your grocer advance signal to demand. And... you are paying a premium for this convenience too! They get better insight about how much lettuce you want before you arrive at the store. That helps the store, AND the upstream distribution network by sharing this real time data! With all the distribution network now "seeing" the flow or product is happening, the local store and the distribution network can operate with lower overall inventory, yet enjoy fresher produce, replenished as needed instead of based on forecast alone. That is HUGE leverage! Costs fall, service levels rise, profits rise and quality improves. Everyone wins in this scenario.
And the stores know they can take this even further. IOT is here. Internet of things. Technology already exists today where the "SMART" appliances in your home can tie to the internet to share data. Energy usage. Lighting and temp control. Next Gen refrigerators will soon be communicating to/from your local grocery store to place replenishment orders for the next lettuce and tomato refill!
Let me know if you want to learn more about improving your supply chain processes.
Bob Forshay, SupplyChainPro2Know