Supply Chain Challenges Are Just an Excuse
By Lisa Anderson
The supply chain has become an excuse. Although there has certainly been a slew of supply chain challenges that carry on with baby formula shortages, rail backlogs, computer chip issues, hurricane-induced delays, fertilizer scarcity and China’s zero-COVID policy delays, the supply chain should no longer be the excuse. Only the proactive will thrive in the years to come.
Start with the simple. Assess your end-to-end supply chain. Focus on your strengths and identify what must be shored up quickly, or should you completely change your supply chain strategy to better support your target customers’ needs? Why invest money in the bottom 20% of your customers or products that utilize precious resources that should be invested to take market share in what will be the largest opportunity since the Great Depression to solidify your position in your industry?
Instead, identify your target customers and ideal future state customers. Determine which products and services will meet their needs this year, next year and five years from now. Quickly assess a directionally correct path forward, and incorporate these findings into your SIOP (Sales, Inventory, Operations Planning, also known as S&OP) process. Your SIOP process will provide clarity on changes in customer demand patterns, the potential misalignment of demand and supply, decisions required (such as pricing and the reallocation of capacity) and manufacturing and supply chain adjustments needed to support your growth and profitability goals.
If you are heavily reliant on manufacturing in other countries, it is time to reevaluate. How confident are you that you will be able to support your key customers? Most likely, you should assess reshoring, nearshoring, friendly-shoring, expanding capacity or simply finding new partners closer to your customers. You must gain control over your ability to execute to support your customer’s needs.
Collaborate with your supply chain partners. Partner with customers in unique and creative ways for win-win solutions. For example, when working as VP of Operations for a mid-market manufacturer, we partnered with our number two customer to share demand information, coordinate agreements to share warehouse space and build collaborative truckloads. Rethink how to partner with customers and suppliers.
Evaluate your use of technology. Although more than 90 percent of clients can better leverage their ERP system and related technologies to a greater degree to drive customer service, on-time-in-full (OTIF), profitability and working capital improvements, it is no longer enough. Upgrading to a modern ERP system with advanced data analytics and business intelligence capabilities has become the new baseline to automate, digitize, predict and provide a superior customer experience. It is likely you’ll need to think bigger with artificial intelligence (AI), the internet of things (IoT), additive manufacturing and digital twins.
Stop using the supply chain as an excuse and start acting. There is no doubt the world is disrupted and will not realign on its own. Only the resilient and strong will survive, but most importantly, only the proactive and forward-thinking will thrive. Get ahead of the supply chain disruptions, or better yet, be disruptive and solidify your market position and EBITDA strength.
Lisa Anderson is the founder and president of LMA Consulting Group Inc., a consulting firm that specializes in manufacturing strategy and end-to-end supply chain transformation that maximizes the customer experience and enables profitable, scalable, dramatic business growth. She’s released several eBooks which can be found at www.lma-consultinggroup.com/lma-books/.
