Supply Chain Leaders: Do you have the conductor to deliver transformation?

The complexity of today’s fashion retail environment with Omni-channel requirements and rising customer expectations is creating more complexity for the supply chain. I recently read an industry report that suggested the success rate for transformational business initiatives is only 30% and 70% fail to realize their full objectives. As an increasing number of retail and brand suppliers are considering how they become more customer-centric in their supply chain, they will be facing the challenge of a transformational initiative.

 

Traditionally, too many companies have run their supply chain in silos. They refer to their supply chain as an end to end process, but in practice still manage and incent individual functions. To be fair, the change for a supply chain to be demand driven is difficult in most companies. There is a leadership muscle required that simply hasn’t been developed in the traditional supply chain organization.

 

Moving to a demand driven or customer centric supply chain requires that adroit leadership can orchestrate across several internal functions, as well as, aligning external partners to create an optimized situation. I can outline the difficulty as I recap an initiative I directed at a leading apparel company that transformed their logistics network and product flow to align with customer demand.

 

The situation was that sufficient inventory was in the pipeline but wasn’t in the right place at the right time to match an order. Customer fill rates were lagging and money was being left on the table. The company was utilizing a regional distribution model but would hold central inventory at port warehousing to allow fulfillment centers to pull in the inventory as demand and safety stock levels would dictate. The issue (due to systems constraints and complexity) is that port inventory couldn’t be allocated to fill a customer order. The decision was made to begin to dynamically match order requirements to inventory as it was received at the port and then push to the appropriate regional location. This would correctly position orders in the pipeline to be in the right place to fill replenishment orders.

 

Sounds simple enough. However, the complexity was as follows.

 

  • - Software - Significant changes both internally to planning and allocation systems and the WMS, and externally at transload to support new load sequence schemes.
  • - Decommission 3PL’s – Inventory is no longer stored at centralized port locations, so product had to be migrated and 3 PL’s ramped down.
  • - Real Estate – New depot locations were established at fulfillment center locations to handle the inventory moved from port. Property had to be located, leased, and physical changes made to the warehouse utilizing contractors.
  • - Operational Processes – New operating processes had to be developed and employees trained at transload, the depot, at fulfillment centers and with the central inventory management team.
  • - Union negotiations, communications and awareness throughout the organization

 

There are many moving parts and all of this activity had to be managed to go live on a specific date.

 

In many supply chain organizations, there are really good functional managers who manage the warehouse, or transportation or trade and compliance. However, the ability to manage a large change initiative leading both internal and external resources against a tight deadline requires a different skill set. Supply Chain leaders today need new capabilities on their staffs to execute cross functional demand driven efforts. The need is for an orchestra leader. A leader with the functional expertise, and the change management capability to juggle internal/external IT, cross functional business partners and external providers to get everyone in concert. A customer-centric supply chain can be sweet music to your increasingly demanding customer, with the right product in the right place at the right time. Have you developed the capability to handle the performance?

 

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