February 16, 2017
“Nobody wants to buy sour milk,” is how Apple’s Tim Cook puts it.
He was hired specifically to hone the supply chain at the tech giant and advanced to CEO after playing an integral role in transforming Apple into the most profitable company in the world.
The best product is not enough, you must also be able to get it into the hands of your customer quickly and efficiently.
There’s an increasing awareness that a customer-centric approach is vital.
You need to establish customer intimacy, providing a wide choice of flexible services that fulfil your customer’s needs.
You must also strive for operational excellence in terms of consistency and cost. Your supply chain is central to your success.
Taming the Complexity
The problem is that supply chains are complex, with many moving parts that can be difficult to integrate.
Most large companies have multiple ERP (Enterprise Resource Planning) systems, that must be integrated with other systems for warehouse management, transport management, customs management, and more.
They’re also dealing with a multitude of suppliers and manufacturers around the globe.
In a PWC survey of 209 global companies, 95% agreed that discrepancies between supply chain entities have increased in the past three years; 94% felt that changes in the extended supply chain network configuration occur more frequently, and 74% agreed that the number of entities in the supply chain has increased.
The supply chain landscape is evolving and it is increasingly tough to maintain oversight, exert control, and ensure that customers get the best experience possible.
That’s where orchestration comes in. SCO (supply chain orchestration) enables you to make informed, conscious choices about how to serve your customers better.
For that to happen, you need to address four key areas.
1. Order Optimization
Planning optimal work flows for each and every order requires rich configurational functionality.
You should be able to plug in the customer requirements, capacity and material availability, and determine the best set of services in terms of timing, cost and other business priorities.
A cloud-based platform can tie together your disparate set of systems and provide oversight and accessibility for decision makers from any location or device.
2. Order Execution
Once the order has been planned it needs to be executed and that will often involve multiple parties.
A good SCO system will release orders immediately, create the necessary documentation, send notifications, and track status to keep everyone informed.
If things go wrong, it should inform stakeholders, but also take corrective actions to recover.
Maintaining visibility and control during the order execution is vital to sustain high standards for your customers.
3. Cost Calculation
Without detailed costings, it’s impossible to optimize your supply chain and find the most efficient routes to your customers.
You must be able to calculate the costs of every single action, whether it’s outsourced activities by multiple parties, or the internal allocated cost for each customer order.
To ensure healthy margins, you need real-time insights and tight control over all your costs.
4. Analytical Intelligence
A structural performance visualization is an essential tool for understanding your supply chain.
How well are your customers being served? How are your partners performing? What are your real-world costs and how do they compare to your original projections?
This information arms you with the insight you need to improve things. As you collect more data, you can employ predictive analytics to gain an even greater operational edge.
Customer Chain Control
With a solid SCO system in place, e-commerce merchants can offer a wider choice of products and services.
They can tap into a wider network of operators and carriers to offer more delivery options.
This enables them to fulfil each order at the required quality and speed for the lowest cost. It’s not just for e-commerce, though.
The same system can offer enormous benefits on the supply side and be used to create optimal reverse flows for repairs and upgrades.
Successful SCO is based on the right blend of elements for end-to-end oversight and control, but at root it’s driven by a desire to put the customer first.
This isn’t simply about finding the cheapest suppliers, or filling trucks and warehouses, it’s about exceeding customer expectations with a supply chain that’s tailored to their needs.
About the Author
Martin Verwijmeren is co-founder and Chief Executive Officer of MP Objects (MPO), a provider of cloud-based supply chain solutions with offices in Boston, Rotterdam, Tokyo and Hyderabad. He was previously vice president of IT for CEVA Logistics. He has a PhD in distributed systems for integral inventory management from Eindhoven University of Technology.
View: Mindmap on Supply Chain Orchestration
As global markets are rapidly opening up, customers increasingly dictate new requirements with respect to supply chain services. This new Customer Chain Control forces retailers-wholesalers, brand owners and logistics service providers to perfectly orchestrate the processes across parties and systems in the supply chain. Software as a Service for supply chain orchestration provides real-time control over planning and execution resulting in true orchestration. This creates a great new customer experience in terms of customer intimacy and operational excellence.