Supply chain triangle is Alignment. It seems simple, but in practice there are few supply chains that consistently align themselves with that most important element, the end customer. In most companies this alignment gap is a result of good intentions, usually based around solving the challenges of cost, quality and inventory. But along the way, service to the customer suffers. Late deliveries, out of stock and lost sales are the symptoms, swiftly followed by the sound of customers heading towards the competition. How do you avoid this?
The solution lies in designing and optimising your supply chain for the customers you serve, through fully understanding what they need from your product and service. It sounds deceptively straight-forward, but most supply chains are designed around the ‘things’ in the supply-chain. Some organisations will concentrate on optimising warehouse utilisation and truck capacity, and at others they are focused on the manufacturing facility productivity. Another organisation may be driven by their enterprise resource planning systems. On top of these physical structures, we layer on any number of different process optimisation tools to make these ‘things’ as productive and efficient as possible. The net result is often a highly cost-effective supply chain that is inflexible to customer needs.
In contrast, companies with Triple-A supply chains have re-designed them around their customers. They recognise that their customers may require
for different products, and can offer a variety of service options with differing replenishment times and inventory levels to support them. Crucially, the piece that makes the biggest difference is that everyone involved in the supply chain is organised around meeting customer expectations, and they know which behaviours to use to achieve them. This includes suppliers, trading partners, logistics providers and manufacturers, as well as their own associates. Their reward systems are also based on customer service, so that bonuses are paid on meeting the targets, and costs are incurred if they do not. These companies revolve around incentivising the people in the supply chain to deliver service to their customers.