Trend 6 — Collaboration Between Stakeholders in the Extended Supply Chain
As supply chains continue to develop and mature there has been a move toward more intense collaboration between customers and suppliers. The level of collaboration goes beyond linking information systems to fully integrating business processes and organization structures across companies that comprise the full value chain. The ultimate goal of collaboration is to increase visibility throughout the value chain in an effort to make better management decisions and to ultimately decrease value chain costs. With the right tools, processes and organizational structure in place collaboration provides key people throughout the value chain with the information needed to make business-critical decisions with the best available information.
Great recent examples of collaboration have been seen in the expansion of sales and operations planning processes that include upstream and downstream value chain partners as regular participants. S&OP processes help maintain a well-coordinated and valid, current operating plan in support of customer demand, a business plan and a strategy. The improved resulting operating plan provides the management of each partner with a complete picture of forecasted demand, supply capacity, corresponding financial information with financial implications and allows them to make informed, critical decisions.
Companies that expand the usage of sales and operations planning have greater visibility across their owner enterprise and respective value chain, gain the agility necessary to improve the PLM process, improve promotional planning, minimize unnecessary buildups of inventory, increase revenue predictability and execute customer service expectations.
The S&OP activity enables information systems to connect the value chain participants around key demand information, such as customer forecasts, and around key supply information, such as supplier inventories and capacities.
Another recent example of collaboration is seen in the increased focus around RFID. Value chain leaders are looking at functional areas to better integrate the supply chains of their partners with themselves and RFID can serve as a means to quickly and efficiently ensure that critical product information is communicated as products flow thru the value chain and ultimately to the consumer.
Recent estimates show that major retailers can lose 3 to 4 percent of revenue per year due to shelf stock-outs, while inventory is available somewhere in the value chain. Better coordination of store-level product availability would have a significant impact to the entire value chain for these retailers. Additionally, better visibility of retailer product availability can reduce overall logistics costs as products move through the value chain to fulfill safe stock levels and ultimately consumer demand.
The Role of Technology in Supporting these Trends
As supply chain networks have become more complex the need for greater and improved supply chain technology solutions has become critical. Enterprise resource planning (ERP) and best-of-breed supply chain management (SCM) solution providers have made significant investments in developing solutions to address the needs of manufacturing and distribution companies in areas, such as:
- Network and Inventory Optimization
- Product Lifecycle Management
- Sales and Operations Planning
- Manufacturing Optimization
- Logistics Optimization
- Business Intelligence
These technologies have enabled the supply chain information worker to innovate, drive cost reductions, improve service and meet customer expectations better than ever. In order to have sustainable improvement in supply chain performance a business must have the right balance of investments in organization, processes and technology. Lack of investment and focus in any one of these areas will reduce a company's ability to achieve fundamental, sustainable improvement.