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Archive for March, 2012

Demand Responsive Operations – A Critical Capability for Uncertain times

Chronic macroeconomic uncertainty (since 2008) has affected global supply chains of large and small product companies in the following ways-

i) Increased demand volatility (huge, unpredictable swings)

ii) Hyper-sensitivity to Operational costs

iii) Inclination to hoard cash/ other liquid assets (even inventory)

Apple’s huge inventory of cash (about $97 Billion, as of  quarter-end 2011), underscores how the traditional wisdom – ‘saving for a rainy day’ – takes on a whole new meaning in uncertain times.

Thriving in Uncertainty – Key elements

Taking stock.. of response

Uncertain times open up a window of opportunity for companies. Smaller companies with strong product offerings that are competitive in price/performance can see sales solidify, even increase. How? Industry research [see note1] and our own work reveal companies are focused on building-out a key capability – End-to-End Responsiveness to Customer/Channel demand.

What does this mean? This is what a typical customer of a responsive company experiences:

“When we change demand, they act on it right away. I hear back from them quickly (within minutes) on what’s the impact – on availability and cost? Its quite accurate ..They present me with options. It’s great! I can make smarter decisions.. wish others did the same”.

This is much easier said than done. For Product companies that do not have a large-company’s purchasing power, to excel at ‘Responsiveness’ some key elements need be in place –

i) End-to-End Supply Chain visibility & execution

ii) Measurable Metrics to get an accurate & speedy picture of Total Supply Chain Response & Cost

Responsive Ops– What it is not? What it can be?

This doesn’t require huge investments in consulting or in expensive systems. What is required, to start off, is recognition at the leadership level that it’s a critical competency which needs to be mastered. Left unaddressed, it can become a huge problem.

Explaining a recent disappointing quarter – Meg Whitman, HP’s CEO, summarized the challenges this way – While HP is “world class” in buying components, “I’m not sure I’d say we were world class in terms of how we think end to end about supply chain.”

While this may seem applicable for large companies under duress, it is not. Far from it, this should make smaller, ambitious companies with innovative products galvanize their best resources to focus on this competency – End-to-End Supply Chain Responsiveness to Channel Demand. Reading closely the quote from Ms. Whitman implies – Purchasing power isn’t everything. End-to-End Supply Chain Responsiveness can be a singular disruptive competency that smaller companies can wield!

Has ‘Faster response’ or ‘End to End Supply Chain’ come up in internal discussions as an “issue”? In what context? Would you like to receive a Case Study on this topic?Learn more? Please let me know or leave a comment.

[note 1] UPS 2011 Changes in the (Supply) Chain Survey

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