Supply Chain Management

As an emerging trend over last year or so, retailers are warming up to the idea of store level collaboration with the suppliers. Supplier collaboration can enable retailers to improve the three most important store level metrics - availability, cycle times, and cost. When the retailers start sharing the POS and inventory data to the vendors in a near real time view and define business processes to support action on the data, that allows the supply chain managers at both ends collaborate to make decisions.

Suppliers are the most obvious beneficiaries from the data sharing. They get a demand signal from the consumption point allowing them to manage the positioning of inventory within their supply network. Demand signal aggregation services, nowadays provided as hosted or on demand, allow suppliers to fine tune the signals for consumption by their planning systems. Apart from the business planning and inventory optimization benefits, the store demand data allows the promotion managers to have enhanced control over promotion processes. They are able to measure Promotion efficiency and micro manage the promotion spend.

Immediate benefits that accrue for the retailers from such collaboration are- Improved forecasts, higher availability in store shelves and reduced inventory in stores as well as DCs.
There are a lot of mutual benefits like greater efficiency in VMI replenishment process, better capability to manage spikes in demand, role based visibility across the supply chain. As an added bonus thrown in, with the available data the retailer and suppliers can measure supply chain metrics for responsiveness of the supply network.

The road certainly is not without challenges.  Retailer reluctance to part with their data, disparate data definitions and non availability of optimal models/platforms for data sharing pose challenges to such initiatives. Here are some recommendations to meet the challenges:

1. Building the infrastructure – co- investing in platforms for data sharing between retailers and suppliers. For some retailers this also means upgrading their POS system. As mentioned earlier, demand signal aggregation and analytics services are now available in market. Investing in robust order and inventory synchronization platform could be the starting point for the journey.
2. Consistent Data definition – This means adopting a Enterprise Data Management initiative to refine their internal data management processes to achieve internal and external data consistency and greater process integration.
3. Create a roadmap for cross-trading partner value-creating collaborative initiatives.
4. Focus on shared priorities and setting up objective approach to measure progress and track results.

Future of Retailer-Supplier relationship is certainly set to evolve into a symbiotic partnership. Will this downturn provide impetus to hurry the impending makeover?

Posted by Amarpal Sanghera at 5:51 AM | Permalink | Comments (0) | TrackBacks (0)

This is based on my recent project experience with one of the leading networking companies in US, which is running its strategic supply chain performance improvement initiative globally. Usually, companies tend to implement such initiatives as a pilot for a select few customers and markets and once the pilot is run for a certain period of time, it is rolled out to other areas incorporating learnings from the pilot phase. The rolling out of such strategic initiatives to all the markets globally is imperative to achieve the desired financial benefits, finally leading to revenue and profit growth.  The key is the global execution that becomes a real challenge in a global scenario, especially when it demands a significant amount of investment in terms of time, cost, talent and effort from teams located regionally.

The usual reaction could be to hire and train resources locally that might work in the near term but it has its own set of challenges. The leading organizations look for opportunities outside and do the cost-benefit analysis of various approaches before selecting the right approach for its own set of constraints and requirements. One of the unique approaches is to partner with a service provider such as Infosys to roll out its initiative in other markets. This is similar to a typical “outsourcing and offshoring” model but it is different and unique. It is different because the drivers are not just cost and quality of execution but accelerating the earnings by deploying the initiative faster in other markets. And, it is unique since it is not just restricted to transactional activities but goes beyond it to include some of the semi-core supply chain activities. This approach helps the client in out-tasking the components that help them in scaling the strategic initiative, while at the same time retaining the core components and executive decision making. The service providers must have the desired capability to support the client in scaling up and deploying these initiatives in the desired markets and geographies.  

This calls for a detailed assessment of client’s current initiatives and do a deep dive in evaluating sizeable chunks or activities that can be logically grouped as components. These components can be further analyzed on a variety of parameters such as its strategic importance (core vs non-core), dependency on location (region specific), risk and infrastructure needs. Once the out-tasked components are identified, the service provider can go ahead and deploy them in a phased manner.

I think this is an excellent example of how companies can exploit partner competency by out-tasking some of its supply chain components without compromising on the quality of execution, and thus deriving revenues at a faster pace.

This has been my first such unique experience. Comments and viewpoints are welcome. If anyone has a similar experience before, please do share your learnings.

Posted by Aatish Goel at 5:50 AM | Permalink | Comments (2) | TrackBacks (0)

Posted by Tridip Chakraborthy at 1:39 AM | Permalink | Comments (3) | TrackBacks (0)