If you’re among the many businesses relying on supply chain logistics to bring your product or products to the people, you’ve probably noticed the significant change to supply chain dynamics over the past year. Faced with unpredictable consumer behavior, political chaos and a life-changing pandemic, companies around the world have been forced to navigate an increasingly volatile supply chain in order to compete in today’s global market. Yes, it’s safe to say that the days of a predictable, rigid supply chain appear to be in our rearview mirror. And with the constant evolution of all of the above, it doesn’t seem likely to become less volatile in the near future.
Rigid Supply Chain Management
The traditional approach to supply chain management (SCM) featured an on-premises approach, in which sellers/suppliers manufactured products they believed consumers would buy and distributed those products through channel partners, who then proceeded to sell the products to consumers. The consumer purchased the products through a single entity, such as a retail outlet or via a sales contact at the manufacturer. This integrated approach encompasses all the elements of the supply chain process – designing, sourcing, manufacturing and delivery. And although, it might seem as though rigid SCM would provide more control of the supply chain to a business. However, constantly changing consumer expectations, global logistics challenges, advances in technology and a number of other factors render a fixed SCM model somewhat obsolete. The need for a dynamic supply chain model that brings more flexibility and more importantly – adaptability, allows the company to react to changes quickly with multi-channel fulfillment, increased visibility, and the ability to meet fluctuations in demand.
Dynamic Supply Chain
A dynamic supply chain model favors an approach that views a supply chain as an adaptable ecosystem of processes, people, capital assets, technology and data. Focusing on flexibility where it matters and driving an agile operational methodology enables the company to react to challenges and also take advantage of opportunities driven by evolving consumer trends. And in unpredictable markets, dynamic supply chains can meet the specific needs of each customer channel. For example: If a product is highly sensitive to media trends, creating a highly adaptable manufacturing and distribution network for the beginning of the product lifecycle and a more cost-effective method for the end of the lifecycle might make sense. Or if a customer segment is cost sensitive, the supply chain for that product must effectively root out every last bit of waste and reduce excess costs.
How to Get There
It starts by evaluating, defining and segmenting the supply chains within your organization based on product, customer and location. From there, you should ask yourself a series of questions –
- Are your production and delivery processes and capabilities aligned with your product design and development processes?
- Do you have a system that transforms key insights into actionable intelligence? Where does technology fit in to your supply chain equation?
- How does your company respond to a rapid change in demand? What processes need to be put in place to meet those demands?
- What operational strategies need to be adjusted to allow adaptability? Identify impediments to the process and implement course corrections.
- Develop a roadmap to a dynamic supply chain. Building a successful, dynamic supply chain isn’t going to happen overnight. Establishing one without risks to your business, means establishing a step by step plan that builds upon existing capabilities, evaluates costs and identifies tangible results.
Ultimately, a dynamic supply chain model should allow a company to develop and sustain multiple supply chains with operational agility that enables a rapid response to market conditions, competitive threats, and opportunities. As a result, unpredictability will no longer be a hurdle to your business success.