The Optimal Supply Chain

Supply Chain Performance is generally thought of a loop between suppliers [vendors] and the sales unit of the organisation. From that point, goods are supplied to retailers using the sales channel. Sitting in between these two entities, and somewhat out to the side is the marketing department.

This is the general operational design of most companies, with each business unit [supply, marketing and sales] operating independently to meet their own performance goals, but in tandem with each other.

The optimal supply chain, however starts at the retailer face, runs backwards through the sales department to the marketing unit, and from there to the suppliers. This is in complete reverse to most ‘perceptions’ of supply chain, so let me explain further.

The Customer Connection

The customer demand does not start in marketing forecasting. It starts with the customer. There are generally only two interfaces between the customer and the supply chain:

Sales Provider – this may be a retailer or in the case of B2B sales, a corporate sales account manager.

Customer Support – to either follow up on sales delivery or after sales service support.
These are the two customer interfaces at which critical customer information and product feedback is relayed by the customer.

Demand Planning

An efficient demand planning system captures both sales data from all sales channels and customer feedback information into the demand planning process on a continuous basis. Demand planning is managed by the marketing department. Using this ‘market’ data, it aligns it with corporate goals and supply data to calculate the expected sales in forthcoming sales periods and monitors the progress of the product lifecycle in the product portfolio. This information, presented using advanced visualisation tools such as product performance dashboards allows the marketing team to quickly adapt promotional efforts to meet sales performance goals. It is important that representatives of all sales channels and from customer support are part of the demand planning team. This provides a cross-functional transparency to ensure that sales channels are able to respond to the impact of promotional demand, and that customer support is aware of any changes in the market dynamics that may affect demand for their services.

Supply

The demand planning system must also connect as closely as possible to the suppliers and warehousing partners. They are able to provide critical information on product manufacture, delivery, stock turn rates and return on assets.

Summary

Hence 'Supply' is not an isolated function, it is a closely linked chain that operates in a cyclical manner, continuously changing at many points, each change impacting the performance of other links in the chain. The only way to achieve an optimal supply chain is to ensure that all links in the chain work in unison and operate as a single value stream.

Coded Vision Consulting can assist companies to gain more visibility into the supply chain value stream, and optimise its performance using: process alignment, demand planning systems and business intelligence, thereby improving performance management.