Vantage Point - Demand Driven Supply Chains: Mantra or Mayhem?
By Chris Scharaswak, Director of Supply Chain Excellence, Retail & CPG, Ryder Supply Chain Solutions
The Mayhem
It's no secret that becoming Demand Driven is top of mind for retailers and CPG manufacturers alike. In fact, today's economic conditions have made the traditional demand forecast virtually obsolete, as consumer purchases have decreased and shifted. Even when times are good, promotions, seasonal stocks, local market factors, and product customizations closer to the point of sale challenge retailers to 'sense the shelf' more accurately.
Adding to the mayhem is the complexity and interconnectedness of today's global supply chains. Lead times have increased due to overseas product sourcing, and fuel prices continue to be unpredictable. Credit and stability among vendors is more uncertain. Security concerns have grown substantially, and the supplier base remains fragmented.
What does this all mean? Being Demand Driven is not a choice; it's a mantra that companies are forced to live, eat and breathe in order to remain competitive. And increasingly, companies are turning to their supply chains to respond to the 'pull of the consumer.'
The Mantra: better, faster, cheaper. That's the name of the game.
There's much to be said about the total landed costs of sourcing products overseas to serve domestic markets. Retailers and CPG companies realize that despite lower labor and manufacturing costs, the elongated supply chain is fraught with transportation and distribution inefficiencies. The risks are many -- wider delivery windows, increased potential for product damage and obsolescence, and so on. In an attempt to mitigate risk, companies are holding higher levels of buffer inventory and operating inefficient distribution networks domestically.
So is there a "better, faster, cheaper" to be had? Absolutely! Retailers are getting better at collaborating with their suppliers to capture point of sale data and adjust product flows accordingly. Technology now provides visibility in the supply chain to dynamically adjust shipments and fulfillment. International transportation capabilities, including capacity availability, have improved significantly in recent years, and infrastructure in emerging markets, such as China, is better, too. Security regulations, such as C-TPAT and 10+2, are helping logistics service providers and their clients to move products better and faster every day.
Interestingly enough, because of these substantial improvements in international sourcing and transportation, companies are increasingly looking at their distribution networks for opportunities to bypass their distribution centers completely. By keeping inventory continuously in motion, order-to-cash cycles improve, fixed asset expenses are reduced, order fulfillment rates increase and goods reach store shelves with no intermediary storage whatsoever.
Now that's better, cheaper and faster!
About Chris Scharaswak
Chris Scharaswak is the Director of Supply Chain Excellence, Retail & CPG Vertical for Ryder Supply Chain Solutions. In his role, Scharaswak is responsible for business development and account engineering, account implementations and ongoing quality and continuous improvement support. He has been a supply chain innovator for more than 15 years and actively practices and promotes Lean/Six Sigma.
Ryder is a Fortune 500 provider of logistics and transportation solutions worldwide. To find out more about Ryder, visit www.ryder.com or call 1-888-887-9337.
The Mayhem
It's no secret that becoming Demand Driven is top of mind for retailers and CPG manufacturers alike. In fact, today's economic conditions have made the traditional demand forecast virtually obsolete, as consumer purchases have decreased and shifted. Even when times are good, promotions, seasonal stocks, local market factors, and product customizations closer to the point of sale challenge retailers to 'sense the shelf' more accurately.
Adding to the mayhem is the complexity and interconnectedness of today's global supply chains. Lead times have increased due to overseas product sourcing, and fuel prices continue to be unpredictable. Credit and stability among vendors is more uncertain. Security concerns have grown substantially, and the supplier base remains fragmented.
What does this all mean? Being Demand Driven is not a choice; it's a mantra that companies are forced to live, eat and breathe in order to remain competitive. And increasingly, companies are turning to their supply chains to respond to the 'pull of the consumer.'
The Mantra: better, faster, cheaper. That's the name of the game.
There's much to be said about the total landed costs of sourcing products overseas to serve domestic markets. Retailers and CPG companies realize that despite lower labor and manufacturing costs, the elongated supply chain is fraught with transportation and distribution inefficiencies. The risks are many -- wider delivery windows, increased potential for product damage and obsolescence, and so on. In an attempt to mitigate risk, companies are holding higher levels of buffer inventory and operating inefficient distribution networks domestically.
So is there a "better, faster, cheaper" to be had? Absolutely! Retailers are getting better at collaborating with their suppliers to capture point of sale data and adjust product flows accordingly. Technology now provides visibility in the supply chain to dynamically adjust shipments and fulfillment. International transportation capabilities, including capacity availability, have improved significantly in recent years, and infrastructure in emerging markets, such as China, is better, too. Security regulations, such as C-TPAT and 10+2, are helping logistics service providers and their clients to move products better and faster every day.
Interestingly enough, because of these substantial improvements in international sourcing and transportation, companies are increasingly looking at their distribution networks for opportunities to bypass their distribution centers completely. By keeping inventory continuously in motion, order-to-cash cycles improve, fixed asset expenses are reduced, order fulfillment rates increase and goods reach store shelves with no intermediary storage whatsoever.
Now that's better, cheaper and faster!
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About Chris ScharaswakChris Scharaswak is the Director of Supply Chain Excellence, Retail & CPG Vertical for Ryder Supply Chain Solutions. In his role, Scharaswak is responsible for business development and account engineering, account implementations and ongoing quality and continuous improvement support. He has been a supply chain innovator for more than 15 years and actively practices and promotes Lean/Six Sigma.
Ryder is a Fortune 500 provider of logistics and transportation solutions worldwide. To find out more about Ryder, visit www.ryder.com or call 1-888-887-9337.