Article summary: Supply chains are constantly evolving. Here are 6 moves you should be making now.

 

Canadians are famous for their patience, but everyone has a limit. Just ask retailer Target what happened in 2015.

That’s when Target, which launched 133 Canadian stores just two years earlier, abruptly closed up shop and limped back south across the border, dragging a 2-billion-dollar loss with it. There were plenty of problems—high prices and store locations among them—but what decisively torpedoed Target Canada were bare shelves. 

Target Canada’s supply chain was broken, and the company couldn’t fix it. Distribution centers had no visibility into individual stores’ inventory, so shelf-stockers had to hope the right mix of shirts, shoes, and sandwich meats were in daily deliveries. Since that seldom happened, Target’s reputation with customers took a beating, the company sustained a budget-busting loss, and more than 17,000 Canadians lost their jobs.

A high price to pay for a lack of supply chain transparency. 

“Target’s missteps will be dissected in business schools forever,” says Jon Thompson, author of The Dashboard Effect. “But here’s what isn’t being studied enough: countless other companies are making other supply chain data mistakes. The consequences just haven’t caught up with them…yet.”

Data and Your Supply Chain

Thompson is focusing less on the past than the future—your future. 

“Without constantly-refreshed, actionable data, supply chains are just waiting to break,” says Thompson. “And as SCM (Supply Chain Management) moves forward, we need to become more strategically data-driven, more agile in responding to what’s on the horizon.” 

Here are 6 forward-thinking strategies for using data to stay ahead of the SCM curve:

  1. Enhance Supply Chain Collaboration
  2. Increase Agility—By Getting the Basics Right
  3. Consider Going Circular
  4. Data-Track Sustainability and Environmental Impact
  5. Elevate SCM Organizationally
  6. Stress Test Your Supply Chain for Resiliency

Strategy# 1: Enhance Supply Chain Collaboration

Sharing information with supply chain partners increases visibility of threats and reduces risks. “Sharing appropriate data provides accountability on key performance indicators and provides an early alert when benchmarks aren’t met,” says Thompson.

Blockchain technology leads to greater transparency, but having too much data coming at you can be as debilitating as having too little. That’s why a dashboard highlighting the most critical data imbedded in a process is crucial. Deep data about every component and transaction in a complicated build can become a distraction—what’s needed is visibility into the most important data points and determining if everyone can deliver when expected.  

A case in point: Boeing proudly boasted it would set production records when it announced its new Dreamliner aircraft, and Boeing was right…just not in the way it imagined. Supply chain glitches added years to the initial timeline and some small parts, such as fasteners, had to be purchased at Home Depot. 

Had Boeing’s supply chain had real-time warning that some vendors couldn’t honor ship dates, alternative sourcing could have been secured in advance.

Strategic Takeaway: Connect with supply chain partners to ensure you have uninterrupted data regarding their ability to fulfill commitments. 

Strategy #2: Increase Agility—By Getting the Basics Right 

A truly agile supply chain can adapt to any shift in circumstances, from currency fluctuations to political upheaval, from material shortages to distant tsunamis, from rising labor costs to pandemics locking down factories and idling trucking fleets. 

That sort of agility doesn’t exist. And, if it did, you can’t afford it—there are too many surprises for you to buy workarounds for them all. And since agility and making money are both important the question becomes this: If you can’t become more agile everywhere in your supply chain, where should you focus your efforts? 

“Start by finding where you’re making assumptions,” says Thompson, noting that assumptions often turn into problems later. What data do you most need to turn those assumptions into the best possible decisions? Who needs to know that data and how will you keep it accurate? In short, set yourself up to make the best possible decisions quickly when something goes sideways. 

And that’s what dashboards do best.

Thompson suggests supply chain managers decide what key performance data they most need in an emergency. Inventory and pipeline flow are obvious candidates, and depending on your business production downtime, capacity utilization, rates of return, lead generation and conversion, or transportation logistics might be critical.

“Those can all be measured and tracked,” says Thompson. “And if it’s information you need in an emergency, it’s information you need to avoid those emergencies, too.” 

Strategic Takeaway: Since you can’t become agile in everything, focus effort where it matters most: set yourself up to make quick, informed decisions when emergencies arise.    

Strategy #3: Consider Going Circular

In the past, supply chains were linear: gather raw materials, make products, sell them, and send scrap to the dump. No longer. According to a 2020 Gartner survey, slightly more than half of supply chain managers are looking for ways to refurbish, resale, or reprocess products as raw materials. Which means customers become a vital link in the supply chain. 

An example: In 2019, fashion clothier H&M Group collected 29,005 tons of textiles—equivalent to about 145 million T-shirts. Clothing that can be worn again is sold as second-hand. Other textiles are turned into new products such as cleaning cloths or recycled into texture fibers to live a second life as insulation. 

Not every product makes sense to reclaim from consumers. But if refurbishing or reprocessing will have a positive effect on your bottom line, extend your supply chain to include the end-users of your products. In addition to helping ensure a supply of raw materials, you’ll do something positive for the planet by keeping material out of landfills.  

To encourage customers to return resources…

  • Make reclamation part of your story, one more way you’re socially responsible
  • Form partnerships with distributors who sell your goods. 
  • Offer discounts or other incentives in exchange for donations.
  • Tout the environmental benefits of returning resources for reprocessing and, like H&M, provide easily understood data to support your claims.

Strategic Takeaway: Extend your supply chain to include consumers, if they can provide raw materials for re-use or refurbishment.  

Strategy #4: Data-Track Sustainability and Environmental Impact 

You’ll be asked, so be ready to report how you’re addressing sustainability and environmental impact. And don’t think simple assurances will suffice; you’ll need data to support your claims. 

IBM’s Institute for Business Value reports that eighty percent of consumers view sustainability as important, and nearly sixty percent are willing to change their shopping habits to reduce environmental impact. Younger consumers especially expect environmental concerns to be front and center in your business processes, and they’ll happily research if your values align with theirs. And now that The Business Roundtable, an association of leading corporate CEOs, has declared one purpose of corporations is to protect the environment by “embracing sustainable practices across our businesses,” more businesses are sliding under the sustainability microscope.

“Sustainability and environmental impact always involve the supply chain,” says Thompson. “That’s true whether you’re running a restaurant buying locally or a $50 million corporation reducing your carbon footprint and increasing use of renewable energy.” 

Strategic Takeaway: If you’re not yet tracking your efforts in sustainability and environmental impact, start now, advises Thompson. Be ready when a business reporter or your board of directors asks for information. 

Strategy #5: Elevate SCM Organizationally

A dozen editors and designers sat debating package design for their publishing house’s new curriculum release. Ideas were growing ever more elaborate—and expensive—when a supply chain staffer, a woman invited to the meeting by accident, stood and walked out of the conference room. 

She returned carrying an oversized tin of caramel corn sent by a vendor as a holiday gift. She pried off the lid, poured out the contents, and set the empty tin on the conference table. It’s sturdy, she said, easily sourced, and could be as colorful as the designers liked. Packing the curriculum inside was quick and easy, saving assembly time. Shipping was relatively inexpensive, and retailers would find the can easy to stock on shelves. 

Then, munching a handful of caramel corn, she strolled back to her desk, having just saved her company millions of dollars. 

The point: Siloing product development and supply-chain planning leads to expensive mistakes. The time to include supply chain insights is up front—not after decisions are made.  

Jeff Stiles, Vice President of Supply Chaim Management Product Marketing at Oracle, writes, “Our research shows that when done right, integrating design and supply-chain planning process can lead to 10-20% faster time to market, 10-20% greater product revenue, and 10-25% reduced scrap and rework expenses.” 

Strategic Takeaway: Get supply chain pros involved in projects earlier rather than later. 

Strategy #6: Stress Test Your Supply Chain for Resiliency 

Every mountain climber knows the time to make sure a rope will hold is before you need it to. The same is true for your supply chain. 

In its 31st Annual State of Logistics Report® the Council of Supply Chain Management Professionals notes that single-source, just-in-time supply chains applauded before the COVID-19 pandemic struck may need to be rethought. A more resilient supply chain is needed moving forward.

To determine the resilience of your existing supply chain, create several hypothetical situations—a spike in demand, new regulations requiring different packaging, the need to source off-shore—and work through how you’d respond to restore operations and meet customer expectations. 

McKinsey & Company suggests that, when manufacturing supply chain vulnerabilities are revealed, a response usually involves taking one or more of these actions: securing supplies, agile manufacturing, diversifying manufacturing locations, optimizing design, and optimizing financials.  A health care organization’s response to disruption will differ from a tire manufacturer’s response, but a response will be required—and now is the time to discover what it should be. 

Don’t overlook data. That’s the advice of Steven Bowen, Chairman and CEO of Maine Pointe. Writing in Supply Chain Management Review, Bowen suggests mining data you’re already collecting, so you can use it to make decisions. Technology makes it possible to know nearly everything about your vendors and processes, but it’s easy to get lost in the information overload. Technology won’t tell you what’s most important to know, something a stress test will quickly highlight. 

Strategic Takeaway: Now is the time to take steps to make your supply chain more resilient. A stress test uncovers opportunities to make adjustments.     

 

Distribution HQ View Demo | Blue Margin


Three Key Thoughts:

“Since you can’t become more agile in all things, do it where it matters most: set yourself up to make quick, informed decisions when emergencies arise.”   

“Get supply chain pros involved in projects earlier rather than later.”

“Now is the time to take steps to make your supply chain more resilient. A stress test uncovers opportunities to make adjustments.”    


For Further Reading: 

How Data Optimization Increases Distribution Performance

Distribution HQ


Sources:

“Meet the 2020 consumers driving change.” IBM Corporation. June 2020. 

“Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans.’” Business Roundtable. Published online August 19, 2017.

“CSCMP Annual State of Logistics Report.”  The Council of Supply Chain Management Professionals. June, 2020. 

“Why now is the time to stress-test your industrial supply chain.” McKinsey & Company. July 27, 2020  

Links

IBM SUSTAINABILITY - https://www.ibm.com/downloads/cas/EXK4XKX8

BUSINESS ROUNDTABLE - https://opportunity.businessroundtable.org/ourcommitment/

LOGISTICS REPORT - State of Logistics 2020 (cscmp.org)

MCKINSEY & COMPANY - Why now is the time to stress-test your industrial supply chain | McKinsey

References

Target Canada $2 billion loss: Target to shut 133 Canada stores to stem massive losses | Business | pantagraph.com

Target Canada supply chain issues: Target closing in Canada: These pictures show why it failed. (slate.com)

Canadians Lost Jobs: https://financialpost.com/news/retail-marketing/target-canadas-17000-laid-off-workers-face-grim-job-prospects-labour-experts-say

Boeing incident described: https://www.raconteur.net/supply-chain/10-supply-chain-disasters/

Gartner Survey: https://www.gartner.com/en/newsroom/press-releases/2020-09-22-gartner-survey-finds-more-than-half-of-supply-chain-professionals-expect-a-greater-focus-on-circular-economy-strategies-over-the-next-2-years

H&M INFO:  https://hmgroup.com/sustainability/circular-and-climate-positive/recycling/

Jeff Styles - https://www.linkedin.com/in/jscottstiles/

https://www.supplychainbrain.com/blogs/1-think-tank/post/30958-six-top-supply-chain-strategies-for-2020

Steven Bowen: https://www.mainepointe.com/steven-bowen

Mikal Keefer

Written by Mikal Keefer

Mikal Keefer is a writer based in Colorado. He worked for nearly 20 years at the University of Cincinnati Medical Center.