From reactive to proactive supply chains

Enterprises are facing an uncertain future as they struggle to adapt under significant industry pressures. CEOs see disruption coming from many directions, including changes in regulation, competition, customer behaviors and distribution channels.

In typical supply chains, pressure stems primarily from the omni-channel consumer, who can switch provider with a simple push of a button on their app.  However, constraints can also be related to government and industry regulations, IT SLAs and real-time logistics.

All is well when everything goes well! However, in this complex environment, unfortunately, things do go wrong. Orders are stuck, trucks arrive late to warehouse, wrong amount of widget delivered, payments sent or received late, etc. This gives rise to missed SLAs, missed delivery deadlines, and inventory getting too high, with direct impact to business such as higher operating costs, revenue loss, and customer churn due to lower customer experience.

In such situations, we are most often reactive, after-the-fact, learning from our customers that something is wrong. Then it is too late:

  • Brand loyalty damage has already occurred
  • Days sales outstanding are already damaging the cash flow
  • Out-of-stock situations are already creating customer churn and loss of revenues
  • High safety stocks are already freezing working capital

Why become proactive? 

There are three main reasons why it is no longer possible to react after the fact:

why-be-proactive

The new factor now is that digital economy is creating higher demand uncertainty and volatility, and higher consumer expectations. Omnichannel consumers can buy anything, anytime, anywhere. They can change providers and they can even change channels within a single provider. This is making it ever more difficult to forecast demand. They have grown to expect a consistent and seamless shopping experience, regardless of whether they are connecting with a retailer via store, website, catalog, mobile phone, or social media, or even buying directly from the manufacturer.

Companies that cannot meet these expectations are losing customers as a result.

We observe that the new trend in supply chain management is shifting focus :

  • Instead of making forecasts more accurate – > be in control of volatility
  • Instead of hardwiring planification – > ensure end-to-end visibility
  • Instead of optimizing costs constantly – > accelerate the flows

All this requires you to be in command and control more than ever before.

You will need to make the right choice of technology that empowers the right set of people across the organization, and monitors the right processes across the application silos and ecosystem.

How to become proactive ?

To transform your organization from reactive to proactive, you need to empower individuals to proactively focus on what is most important for achieving their operational objectives. That means equipping each person with tools that enable 1) real-time E2E visibility; 2) analytics; and 3) actionable intelligence, so that they can proactively resolve issues that may otherwise block achievement of operational objectives.

E2E visibility is achieved by tracking and tracing transactions and files through all business steps and silos (inbound and outbound) in real time. E2E visibility typically answers the question, “Where is my file?” for IT production support staff and, “Where is my order?” for supply chain operations and customer services personnel.

Analytics serve two purposes:

They provide situational awareness by analyzing and correlating data within a defined operational context to make a specific group of people recognize a situation that requires their attention. This capability reduces the latency between when information is available and when a decision is made. For instance, alerting supply chain operations that ASNs do not reconcile with purchase orders before SLAs are missed; or that a lower than usual number of orders is currently processed and may indicate problems with the e-commerce infrastructure or with a 3PL.

They provide predictive insight to assess the risk of missing time-based events such as customer order delivery deadlines and SLAs.

Actionable intelligence is information tailored to each individual’s need, delivered at the correct time, and with the proper context to take immediate action. The response could be an individual acting on information displayed on a dashboard or received from an email alert, or an action that is triggered automatically. For instance, suppose a purchase order is accepted late after an SLA violation, which would normally require an expedited fulfillment process and a rescheduling of distribution center operations. An automated action could save time by identifying such SLA violations and automatically triggering the fulfillment process workflow.


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