As we approach the end of 2011, and start to look towards 2012, I have been thinking a lot about where the supply chain organization will need to focus to be a more successful partner to their business. Over the last couple of years, IDC Manufacturing Insights has framed each year with an overall theme for the supply chain: In 2010, it was the notion that manufacturing companies would begin the process of fundamentally rethinking their supply chain structures, evolving from a fixed-cost-driven
In retrospect, both of these themes have proven to be useful in framing the things that supply chain organizations need to be focusing on, and where transformation has needed to take place. As we develop the supply chain predictions research report for 2012, the central theme will reflect a progression, 2010 through 2012.
Yet, as I reflected on where supply chain organizations will focus for 2012, and where they have been post recession, I found myself thinking more and more about the notion of 'what do I stand for'; and whether, perhaps, companies haven't lost sight of that key question - both in the struggle of the marketplace, and the performance of their company in the marketplace.
In my many years in the manufacturing industry supply chain, we would wrestle with the notion of what does our supply chain stand for, and are we making the right kinds of investments to ensure success. At the core, there are really only three choices:
- Are we a product-focused organization, with the overriding goal to produce the highest quality products possible to the marketplace (and to the consumer)? If that is our differentiation, then investments in technologies to support PLM, visibility and traceability ought to be prioritized.
- Are we a cost-focused organization, with the overriding goal to produce competitive products at the lowest possible cost? If that is our differentiation, then investments in technologies to support manufacturing execution and logistics and distribution ought to be prioritized.
- Are we a service-focused organization, with the overriding goal to deliver the highest service levels in the marketplace? If that is our differentiation, then investments in technologies to support forecasting, responsiveness and customer service ought to be prioritized.
The reality, of course, is that successful supply chain organizations must show competency in all three areas; but, I would argue, there should be clarity about which is the 'first principle'. In conversations that I have with manufacturing supply chain organizations, this is often not the case - indeed, different people will frequently have divergent opinions within a single organization.
Exacerbating this need for clarity of focus is the unique opportunity faced by the manufacturing industry in 2012 to redefine the relationship with the consumer based on the rapid evolution of mobility and social networking tools. At both IDC Manufacturing and Retail insights, we have written a lot about the changing power structure over time between manufacturers, retailers and consumers - that the latter now 'rule the roost' - and what that might mean for 2012 and beyond. While many manufacturers are dabbling in direct-to-consumer initiatives, the majority of companies see this preferably as a brand-based relationship rather than a commercial one (i.e. 'I want to have a direct relationship with my consumers, but continue to physically sell my products through retail outlets'). At IDC Manufacturing Insights, we see a narrow window of opportunity for manufacturers to establish this kind of relationship, with a significant early adopter advantage, but the message must be clear and consistent - and the supply chain must be clear about 'what do I stand for'.
What do you think? Does your company's supply chain have clarity of purpose; is it really important? Let us know your opinion.