How Do Supply Chain Leaders See It Now?

Just out online today, published July 19, Supply Chain Management Review posted several observations about the demand and supply challenges. Second quarter in a row posting decline in demand, following record high (catching up) demand since COVID tossed a big wrench in our collective spokes, 7% decline for the quarter. And prices are up 11% during this same period? What do supply chain leaders think about this? https://bit.ly/3b5oars

Christian Lanng, CEO and co-founder at Tradeshift. “Some of these problems are transitory, but the bigger issues, including labor shortages, geopolitical tension, and energy transition, are structural and risk becoming entrenched unless businesses take decisive action now.”

Said Lanng, “but many of the same problems supply chains face today will still be there a year from now. How long can a business hold its breath before it runs out of air?”

The answer is not about how long can you tread water or hold your breath. It is always about how can we come away from this more resilient, more sustainable when the next "thing" stirs the pot?

The fundamentals still apply. Focus on product rationalization! Trim the fat to make your product offerings a bit more "standard". Airlines are not all flying to all the locations they did 2 years ago. But the flights they have are more full. Cash flow, and customer service require laser like focus to keep your business on track. Implement a robust S&OP process that keeps everyone on ONE Single Plan of Record, every month with a critical eye on performance. Remember to work on strategic relationships to build out more agility, flexibility which will in the end reduce your dependency on that all elusive perfect forecast. Two things that drive profits and customer satisfaction, (market share) are LEAD TIME and LOT SIZE that will make your business more sustainable. Find ways to do what you do with shorter lead times and more frequent delivery. Winners, top 10% performing firms, make this a higher priority than lowest unit cost on the PO from your supplier. The savings in inventory will pay for a lot of improvements that will be made along the way.

Four major benefits of proper S&OP implementation;

1.     Better transparency between functional departments, more clarity, better alignment to meet strategic objectives.

2.     More informed decision making, critical factor to build consensus, act cohesively with proactive planning for gaps that appear on the radar.

3.     Better forecasting, more tuned into current market dynamics, risks, alternate plans needed.

4.     Streamlined processes that improve the customer experience.

Bob Forshay, SupplyChainPro2Know.com