For the second consecutive year, the anticipated boom during the holiday peak season feels more like a minor hiccup for numerous manufacturers and their retail customers.
This shift in dynamics puts a higher focus on Sales and Operations Execution (S&OE) to navigate the immediate future and address the new wave of challenges arising from the actual demand and supply. These real-world supply chain issues are often more complex and unpredictable than initially planned in the S&OP, as articulated by Gartner.
On a positive note, a growing contingent of manufacturers are leveraging real-time data insights and enhanced connectivity within their ecosystems to efficiently navigate through a season that’s not meeting expectations. Below are some tried-and-true practices adopted by forward-thinking manufacturers to reduce service costs and protect their profit margins as demand wavers.
With a slight increase in available capacity, shippers are narrowing down their list of primary carriers. My conversations with Chief Supply Chain Officers (CSCOs) have revealed a low tolerance for carriers with inconsistent on-time delivery records or those lacking real-time shipment tracking capabilities. Data indicates that carriers emphasizing transparency and tracking are witnessing a surge in shipment volumes, while others are experiencing a downturn.
There’s a meticulous analysis in determining order priorities. While it’s common to load inventory onto trucks or containers to maximize shipment volume, not all products require immediate delivery. Efficiently managing this balance is crucial for optimizing inventory levels and delivery costs, usually requiring data integration from various systems.
Manufacturers adopting real-time visibility tools are demonstrating greater agility compared to those relying on traditional spreadsheet analysis, which involves downloading data from multiple systems and manually parsing it for trends. The time-consuming process of collecting, downloading, sorting, and analyzing data often leads to reliance on outdated information, making it ineffective for timely decision-making and keeping organizations in corrective action instead of strategy enablement.
S&OE is not solely about logistics or delivery; it encompasses order fulfillment and inventory maintenance. Successful orchestration and optimization of these processes require access to accurate and reliable real-time data from various systems. It’s also imperative to equip teams with the necessary tools and incentivize them to collaborate, ensuring alignment in Key Performance Indicators (KPIs) across different teams to avoid conflicting priorities — which helps achieve the mandate of breaking down silos, getting teams to use the same source of data across their workflows.
Having a well-thought-out backup plan is vital. With the inevitability of excess inventory and the challenge of finding warehousing space, coupled with the unpredictability of natural disasters and other disruptions, scenario planning becomes an indispensable defensive strategy. Being able to look at historical data and forecasting while tying your network to real-time alerts can help teams act quickly when a disruption is detected.
Understanding the true drivers of demand and lead times is essential for manufacturers aiming for agility and effective execution. This understanding necessitates extending data sharing beyond the organization’s boundaries. For instance, manufacturers can significantly enhance their operations by monitoring the inflow of raw materials. Without this insight, unexpected supplier issues can halt production. However, with real-time visibility, manufacturers can proactively source alternative products, rearrange manufacturing schedules, or make other necessary adjustments.
While it’s impossible for manufacturers to anticipate every potential issue, they can certainly enhance their agility to respond effectively to unforeseen disruptions. The growing trend of data sharing within and across manufacturing entities is a positive sign for an industry that was once hesitant to disclose information. Ultimately, sharing data allows the entire community to collaboratively address challenges or capitalize on opportunities, creating a win-win situation for all involved.
Want to learn how you can break down silos with a single source of truth for data-driven decisions across your entire supply chain? We’d love to hear from you.