The pandemic has catalyzed transformations in supply chain operations. Beyond relying on their supply chain ecosystem to get goods or services to customers, businesses are now realizing how critical supply chain operations are to increasing customer satisfaction, uncovering new opportunities to reach buyers and consumers and reducing risk when disruption is par for the course.
Where historically business leaders viewed the supply chain as an opportunity to drive cost savings, which led to the rise of practices like just-in-time manufacturing, there is now a clear connection between an agile, shock-resistant supply chain and a company’s revenue potential.
But, shifting from a cost-savings mindset to a focus on growth and opportunity can be tricky, especially at a time when businesses are grappling with unprecedented levels of volatility, from supply shortages and rising import rates to the impact of natural disasters across logistics and inventory.
While it may require some trial-and-error, in my experience, there are a few key ways to help optimize supply chain operations to create more value in your organization.
· Leverage stronger data to boost efficiency. Creating a more efficient supply chain is critical to unlocking opportunities for added profit, but you need strong data to get there. Are you utilizing all your production capacity? Have you eliminated downtime of installations? Can you rely on logistics in certain regions, during certain peak times? Prioritize predictive signals as well as first and third-party data from across your ecosystem, so that you have line of sight into what’s happening now and what might happen in the future. By democratizing data, you can reduce lead times, make more accurate predictions about capacity and production and help your sales organization execute deals quickly during key seasons.
· Anticipate and actively manage demand. Taking a more active approach to demand management can help create strong forecasts, but it can also help prioritize orders or opportunities that have a higher potential to deliver value to the business.
· Always have a back-up plan. In addition to forecasting, scenario planning capabilities can help you feel more prepared to deal with unexpected shifts or disruptions without risking revenue. Build scenarios for several possible downturns – long, short, deep, shallow – so that when disruption occurs, you can quickly pick the scenario that makes the most sense and adjust your long-range plan accordingly. Instead of having to start from scratch, spending days building out new forecasts or plans, you can pivot quickly without requiring extended downtime or wasted resources.
It’s true that supply chain risk is linked directly to business risk, but there is opportunity for business leaders to also associate supply chain value with business value. Taking the time to transform key aspects of your supply chain operations – from data gathering and demand planning to scenario modeling and S&OP – will help create a more efficient and resilient supply chain that can not only drive down costs, but serve as a lever for continued growth and increased profitability, even in a volatile environment.