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With the growth of emerging markets and the reality of permanent volatility, meeting consumer demand is becoming ever more challenging. Globalization and regulatory changes further confound the struggle.
What can companies do to conquer these issues and challenges? Accenture believes that high performance can be achieved by evolving to a dynamic, demand-driven supply chain.
Accenture believes that high performance can be achieved by evolving to a dynamic, demand-driven supply chain, one that optimizes product allocation and availability to maintain revenue flow without incurring extra expense.
Improving forecasting is half the equation. While forecast numbers and actual orders may align quite favorably, fulfillment may be struggling to keep up; enabling the supply chain is the other half of the equation.
The issues that prevent the supply chain from meeting demand are myriad, among them:
Fluctuating supplier lead times.
Ever-changing business models.
Legacy manufacturing and supply processes.
A lack of information-sharing among departments.
Focus on cost reduction strategies that interfere with supply chain agility.
Accenture High Performance Business research has identified four distinctive capabilities among leading companies:
Transparency. Demand-driven companies can make a fulfillment decision at the time an order is created.
Responsiveness. Highly responsive retailers have processes that can be easily adapted to align supply with demand.
Collaboration. Organizations with dynamic, demand-driven execution commit to partnerships among suppliers, manufacturers, retailers and third-party logistics providers that transform independently owned and operated entities into strategically aligned, cohesive organizations.
Agility. Leading retailers have in place the infrastructure, technology and processes that bring agility to the supply chain, giving them the ability to respond to peak season demand.
Developing a dynamic, demand-driven organization to help lead a company to high performance begins with a thoughtful consideration of the current state of operations and proceeds to the implementation of metric-driven capabilities:
Assess your current capabilities. An assessment of current capabilities may reveal that the organization has several foundational components already in place for building a dynamic, demand driven organization.
Determine opportunities and develop the road map. It is probably not realistic to try to tackle all four of the capabilities of dynamic, demand-driven organizations at once. After selecting one or two key capabilities to pursue toward high performance, the benefits need to be enumerated, costs of implementation calculated and potential return on investment determined.
Establish metrics for success. Key performance indicators (KPI) for measuring success need to be identified, with the help of key stakeholders and decision makers who can help ensure that these KPIs align with the organization’s core strategy.
Implement the road map. Once metrics for success are established and agreed upon, work can begin on implementing the quick wins that will deliver immediate value. Longer-term initiatives can then be implemented and progress tracked through KPIs. The distinctive capabilities of transparency, responsiveness, collaboration and agility are all within the reach of most enterprises on the journey to creating a dynamic supply chain.
Gary Godfrey is a senior executive in Accenture Supply Chain Management consulting. He has 25 years of supply chain experience in global supply chain transformation, fulfillment strategy and network improvement. His focus areas include retail and consumer goods, but he has also worked across communications, high tech, media and entertainment and utilities. Godfrey is the global lead for Accenture’s Integrated Planning and Fulfillment group.
Bill Frey is a senior executive in Accenture’s Global Supply Chain group with more than 20 years of experience. His areas of experience include delivering operational improvements through the implementation of supply chain technology solutions. He has delivered warehouse, transportation, order management, inventory control and asset management solutions to Fortune 500 clients across a variety of industries, with a heavy concentration in the retail and public service industries.
Sundip Naik is an executive in Accenture Supply Chain Management consulting. He has an extensive background in global supply chain transformational programs focusing on network design, fulfillment strategy, distribution re-engineering and transportation operations. He has worked in the retail, consumer goods, communications and high tech industries. Most recently he has led Accenture’s North American thought leadership and offerings within the planning, fulfillment and sustainability areas.
Angela Evers is an executive in Accenture Supply Chain Management consulting. She has an extensive background in supply chain transformation, transportation strategy and planning operations. Her focus area is the communications and high tech industries, but she has also worked across retail and manufacturing. Most recently, she has led Accenture’s North American thought leadership and offerings for the integrated planning and fulfillment.
March 22, 2012
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