Top 5 Signs Your Supply Chain is Dysfunctional

Lack of upstream and downstream visibility and lack 

of control are reoccurring issues mainly because every 

supply chain uses the same basic technology - one 

designed to manage the activity behind the four walls 

of the enterprise. By Greg Brady

September 12, 2014

As I discussed in my last post, “From Vertical to Virtual Integration”, over the past 25 years or so, supply chains have become far more complex and dispersed, and technology has
struggled to keep up.

Lack of upstream and downstream visibility and lack of control are
reoccurring complaints that I hear from companies across industries,
including Retail, CPG, Automotive, Logistics, Hi-Tech, and the Military.

The fact is, every supply chain faces these problems because every supply
chain uses the same basic technology—one designed to manage the
activity behind the four walls of the enterprise.

So, with that said, here are four signs that your supply chain, 
regardless of industry, is dysfunctional:

1. You Are Not Focused On The End Customer
It doesn’t matter what role you play—whether a manufacturer, raw material
supplier, co-packer, or 4PL—if the end customer does not buy the product,
then you and no one else in the supply chain wins. CPG companies may
measure themselves by DC service levels, but when was the last time you
bought your groceries from a DC? Similarly, the military focuses on
“wholesale and retail processes”, yet to the American soldier this is
irrelevant; he/she really only cares about getting the supplies needed to
stay alive. What matters is understanding the end customer in real time,
and providing the right product, at the right time, at the right price.

2. You Are Running Multiple Forecasts
Standard practice for traditional supply chains is to run multiple forecasts
(e.g. sales, manufacturing, suppliers). Multiple forecasts mean multiple
demand/supply plans. This is bad! Each plan/forecast introduces another
level of inaccuracy and complexity, and the result is higher than necessary
inventory levels, more stock outs and errors, and lower service levels. You
only need one forecast that starts with the consumer, that is updated in real
time as demand and supply conditions change, and that computes
downstream and order forecasts at each node. Never forecast what you
can compute.

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NETWORK MODEL integrated planning and execution with all parties on one platform

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3. You Can’t See or Influence Supply in Real Time
Even if you can understand and respond to consumer demand, if the rest of
the upstream supply chain community does not, then the wrong products are
still being made for the wrong locations. Yes, every party should see the
demand, but ideally they should also be able to see the supply plans and
product in motion so that the demand/ supply match is clear to all.

4. You Have No Visibility or Response Capability to Issues Across The 
Global Supply Chain
Regardless of which party has custody of physical inventory or where the
information resides, you can/should be able to view all shipments, inventory,
and capacity limitations in real time and on demand. You can’t fix problems
if you do not know they exist. But what good is the ability to sense a problem
without the accompanying ability to respond? The newly visible information
needs to be actionable.

5. You Don’t Incrementally Re-plan and Execute in Real Time Across 
The Community
Demand and supply conditions are constantly changing. As soon as you
finish making a plan, it becomes inaccurate, and as time goes on, more
inaccurate. You need the ability to adjust your plans in real time and execute
those plans across your trading partners. You need to be able to do this
incrementally, resolving only the problem areas in the plan so as not to
create nervousness across the rest of the chain.

The fact is, if you’re only worried about managing what goes on in the four
walls of your enterprise, the industry’s standard local tools can suffice. But
in the modern outsourced supply chain, your success largely depends on
what occurs outside of your four walls.

This is why most companies would benefit from connecting to a cloud-based 
many-to-many network. Doing so allows them to easily connect and
coordinate with their trading partners no matter where they are physically
located. They would then respond to supply and demand shifts in real time.
They would optimize existing processes and discover new ways to capture
value. They would be demand driven.