What fascinates me most about supply chain is the ecosystem it thrives in. It reminds me of the saltwater mangroves native to South Florida where thousands of living creatures coexist while contributing their part to make the ecosystem a success. While success or failure in many industries rests solely with the enterprise itself, those involved in the design, creation, production, transportation and sale of physical goods are highly dependent on their partners up and down the chain.
Supply chain was global before globalization, operating from one end of the world to the other. Practitioners have to navigate not only their own internal departmental silos but also those of their trading partners. I have attended many a Retail Value Chain Federation event and watched with astonishment how various entities work, interact and collaborate with multiple trading partners outside their own organizations as seamlessly as they do within their own.
Wilhjelm Says... |
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| With relatively little effort you can leverage reliable, proven technologies and begin feeding your ecosystem with the mission critical data it needs to flourish and to prosper. |
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Feeding the Ecosystem
As with most ecosystems, oxygen is a requirement for survival. For supply chains, that oxygen is actionable data. Today the flow of data is equally as important – some would argue more important – than the flow of goods. With visibility and actionable data, the able-minded practitioner will make decisions that can match supply with demand, consolidate loads, reduce variability, pinpoint constraints, reduce inventory investments, and facilitate flow between trading partners.
Without the data, subjective decisions rule the day, leading to inefficiencies along the entire supply chain, most notably expensive safety stock. While it’s a safe bet that many a retailer has the merchandise somewhere in their supply chain, it’s often not clear where it can be purchased. The same can be said for the data that would facilitate the flow of information. Like the missing inventory in the supply chain, the retailer typically has the necessary data available somewhere, but it's often buried in a departmental silo. The value of the data just needs to be realized, harvested, and shared.
Your Contribution
What data do you share with your trading partners to facilitate flow along the supply chain? If you are a retailer, do you make it easy for your vendor partners to understand when they are performing to expectations laid out in your vendor requirements or when they aren’t? Do your vendors have automatic access to supporting documentation automatically – on-demand – or do they have to tie up your staff to receive their shipping errors and photo documentation?
If you are a supplier, do you send accurate and timely ASNs to your retailers so that they are able to plan their labor, ensure inventory accuracy, and efficiently receive your shipments? Or is every carton the retailer opens up an adventure?
With today’s technology, even a limited effort to enhance the quality of retailer-vendor communication can yield big results. I recently spoke to the supplier of a major retailer who told me that his organization went from an F to an A on their scorecard simply because the retailer began providing specific location information about trouble shipments.
Both retailers and vendors benefit from a greater sell-through, and as more retailers adopt performance-based compliance, suppliers also win with reduced chargebacks. I think it’s safe to assume that as with most mutually symbiotic relationships, the more you give, the more you receive.
Do I Have to Participate?
For too long, far too many organizations have regarded the sharing of actionable data as an added cost with no discernable value. Not coincidentally, many of these same organizations have corporate cultures that discourage collaboration and clear interdepartmental communications.
Retailers who send remittance notices merely titled “$250 compliance deduction” aren’t effectively communicating. Vendors who consider chargebacks a “cost of doing business” are happy to sit in the back of the room at the retailer’s summit with their F scorecard, are going to have an increasingly difficult time keeping pace with the competition The SMB organization that neglects to hold their suppliers accountable for fear of not being shipped anymore can expect continued poor shipping performance until their expectations are clearly communicated.
It’s time to decide whether you are part of the ecosystem or separate from it. There is no in between. Wal-Mart, Target and Kroger continue to press their suppliers for performance improvements while other chains sit idly by, hoping and wishing that their supplier’s performance won’t diminish. History tells us it’s best to understand the rules of the game and play accordingly.
Going Forward
New supply chain technologies are emerging, and it’s an exciting time to be a part of this industry; however as my colleague Greg Holder noted in February’s column, there is no need to wait for hyper-advanced technologies to become not fully baked – and to come down in cost. With relatively little effort you can leverage reliable, proven technologies and begin feeding your ecosystem with the mission critical data it needs to flourish and to prosper.
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