It is a brave new world in supply chain management (SCM). Traditional definitions and processes are now viewed in a new light. For example, storage and delivery networks—historically (and often times erroneously) viewed as cost centers—are now viewed as strategic assets to fuel differentiation and drive growth. Manufacturing plants are increasingly being reshored. That means, in the global flow of goods, the point of production is moving closer to the point of consumption both geographically and logically. Consumers continue to embrace multi-channel shopping and buying. All of these changes bring positive opportunities for any operations or supply chain manager.
Of course, with new opportunities come new challenges. In order to fully capitalize on these opportunities, supply chain managers must explore new strategies, increasingly powered by automation and mechanization. Success will require first utilizing the imagination required to re-engineer operations; and then moving forward with the confidence to realize that vision by utilizing the full set of technologies and tools now available.
New environment, demands and opportunities
We witnessed change incrementally for some time now, with technology evolving to meet new needs. Recently, however, this technology evolution became more rapid. The ability to know with precision the location, identity and condition of assets and materials in the supply chain in real time creates new opportunities for speedy, agile and efficient operations. This new capability has been called pervasive or extreme real time. And when properly leveraged, it can be transformative in any significant supply chain operation.
In this new environment, everything operates in real time. Data flows upstream and downstream from the storefront to the warehouse and back into the supply chain. Accuracy is at a premium—protecting both business profitability and the end-user experience. Replenishing the store can now happen as frequently as necessary with the right line items in whatever quantities are actually required.
Manufacturing facilities can better track assets and forecast deliveries with greater accuracy. The warehouse and distribution system can now be as simple or sophisticated as required; and can be adjusted with greater ability to respond to market demands or segmented and customized for a particular set of goods. Fulfillment is no longer a perfunctory task—it is the core of business strategy.
For example, in retail environments, consumers have more power than before to find the right product at the right price. As such, retailers must strive to create a more personalized experience for each shopper—ensuring availability of the right product at the right time and increasingly also in the right place. Thus, fulfillment and delivery are just as important as price considerations for these consumers.
Inventory in the storefront, wholesaler facility or manufacturing plant needs to be supported by a strong, organized warehouse and supply chain with data tying everything together. Maintaining accurate inventory in the store was considered difficult, expensive to sustain and was often comprehensively reconciled only quarterly. Location-level inventory accuracy in the warehouse, however, has long been seen as foundational to effective and efficient operations. These two environments continue to consolidate as procurement and fulfillment paths cross between them—and the line separating their traditional roles in the supply chain blurs.
Four steps to a new fulfillment strategy
The challenge might seem large but the potential payoff is worth it. Strategic advisors with a strong legacy of working within and providing solutions for warehouses and distribution centers can help smooth the path. The process of optimizing operations to meet these changing market demands can be accomplished in four fundamental steps.