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Forget the platitudes, and move forward with fresh solutions
Have the right people. Have the right processes. Have the right technology. Make your supply chain a competitive weapon.
How often have you heard those clichés at supply chain conferences? Of course any company needs the right people, processes, and technology to manage its supply chain—it goes without saying. And who wouldn't want to use their supply chain to gain an advantage over competitors?
Here's another exhortation you've probably heard many times before: Look to your supply chain to free up working capital. Although that maxim is frequently heard, it won't be easy to turn that recommendation into reality. Economies across the globe are lackluster at best. Although we can hope that economic performance will be better in 2014, we're more likely to see continued slow growth. Any marginal growth, though, could be halted or even reversed by a political upheaval or a natural disaster.
And what about this tired truism: Supply chain managers will continue to face increased demands for higher levels of customer service while simultaneously having to control costs. No surprise there.
Instead of focusing on the same old ideas, isn't it time to look for new solutions? Here are two novel courses of action that have brought measurable benefits to companies that have adopted them, yet they don't get a lot of attention (yet) at educational conferences:
Segment your supply chain. Because every customer does not generate the same revenues or profits, companies should tailor their supply chain services to each customer's contribution level. One of the most popular articles on our website, "Supply Chain Segmentation: 10 steps to greater profits," explains the "hows and whys" of this concept. Most companies have shied away from segmentation because of the significant amount of work involved. But as margins get squeezed, they really can't put this exercise off if they want to stay profitable.
Set up a "control tower." In a recent issue of CSCMP's Supply Chain Quarterly, I detailed how Agilent Technologies established a supply chain control tower to manage its supply base and reduce risk. A control tower is an information hub that links a company to its suppliers and gives it the visibility and modeling ability it needs to quickly react to events as they unfold, and then to mitigate their impact. Although there's a cost to setting up a control tower, it's easier to do now because of the availability of cloud-based software. There's simply no better way to manage risk.
If supply chain executives want to move beyond bromides to successfully deal with today's business challenges, they'll have to look for creative solutions. Segmentation and control towers are two approaches that fall into that category.
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