Ask any supply chain executive if they would like to have better, more insightful, supply chain visibility and I can guarantee the answer will be YES. Visibility initiatives can be focused on any aspect of the supply chain from supplier compliance to customer demand sensing. Many companies are investing in “end to end” supply chain visibility capabilities using Control Tower applications to monitor and control specific operational movements and activities. Clearly, these investments can yield huge benefits in increasing efficiencies, reducing costs, mitigating risks and ultimately ensuring the ability to fulfill customer orders.
However, there is another form of visibility that can add “disruptive” competitive advantage. This visibility is associated with the performance of every supply chain asset in contributing to the generation of profit. Naturally, the goal of any visibility investment is to ultimately support improvements measured on a P&L statement. But how many companies do not recognize that there are deeper layers of visibility that can provide far more detailed insights with regard to profit performance contributions?
Let me give you an example. A specific company has 110,000 customer delivery locations selling through wholesalers, distributors and directly to the customer. Historically, the company has managed customer product offerings using standard cost and revenue calculations. However, they found it difficult to get to actionable insights that could improve on the “one size fits all” order fulfillment strategy by channel. The company undertook an initiative to gain accurate profit performance information for every product sold to every customer. The end result, just under 3,000 customer locations provided over 80% of their operating profit. Empowered with this type of clear, strategic and actionable visibility, the executives immediately pursued answers regarding the root cause for such a dramatic performance variance. Once the drivers for poor profit performance were understood, smart segmentation strategies were developed and implemented to significantly improve margin contributions.
Bottom line, supply chain operating visibility is a game changer. More insightful, actionable and timely information on supplier performance, movements of containers, multiple postions of inventory, etc. allow for a more proactive management of all supply chain operations. However, operating visibility can drive competitive and “disruptive” improvements in profit at a level that creates actionable insights answering the profit performance questions of “how, what, when, where and why”.
I would love to hear your comments.
All the best,
Richard
