Whether you’re talking about the Amazon Effect and the rapid growth of e-commerce, the changing global trade management landscape, or what’s happening on the technology front, it’s clear that the rules for success in supply chain management are changing. What are these new rules for success? How should companies respond? What role is technology playing? Those are some of the questions I posed to Gary Barraco, Director of Global Product Marketing at Amber Road, in a recent episode of Talking Logistics.
The Six “Rights” of Supply Chain Execution
Gary began our discussion by pointing out that the Amazon Effect, which he says had a critical turning point during the 2017 holiday season, has sped up supply chains for retailers and consumer goods manufacturers, causing a greater emphasis on sourcing. He therefore begins what he calls the six “rights” of supply chain execution by focusing on the right product at the right price, which of course, retailers and CGM companies have always focused on. But Gary goes much further to say the products must also be in the right place during the right time with the right compliance and working with the right partners.
“All of these ‘rights’ must be in place in the right balance in order to hit that sweet spot for success,” says Gary. “Beyond the right product at the right price, consumers want to know the product is available where they choose to shop for it — physical store, online or mobile app — when they want to buy, and that it has met appropriate quality standards and was sourced from ethical suppliers. Chief Supply Chain Officers must manage each of these functions to ensure end-to-end supply chain performance. This isn’t easy while we are changing from product-centric to consumer-centric supply chains because consumers have more and more say in what is ‘right.’ There is much more involved now than the perfect order metric.”
Supply Chain “Mores”
Gary goes on to point out the six “rights” must operate under what he calls the four “mores” of execution. “It used to be that speed-to-market was the primary determinant of supply chain success, often at the expense of the other variables. Now, if the price isn’t right, the quality isn’t there or the product isn’t innovative, the bottom line will suffer,” notes Gary.
“To balance the six rights and have speed-to-market, companies have to be more efficient and agile,” adds Gary. “The only viable way to do that is with digitization which can enable the four mores.”
Gary describes the four mores starting with more speed-to-market. “Shipping times have gone from weeks to days [and eventually hours],” he says. “And more agile planning, production and shipping processes to keep up with the ebb and flow of demand. We need more granular data down to the SKU level, or even size and color, throughout the product life cycle. And we need more accurate tracking for in-transit visibility from the first mile to the last mile.”
Digital Transformation
Digital transformation has been a hot topic for the past couple of years, so it isn’t surprising that Gary brought this up when I asked him about the first step companies should take to align with the six rights and four mores of supply chain execution. “The internet enabled the fourth generation of the industrial revolution that has created a new global trade environment. The total digitization of supply chain data through the internet, computing power and mobile technology is likewise enabling Supply Chain 4.0,” says Gary. “Digital transformation allows companies to quickly pivot in response to rapid changes in the market and also is a foundational requirement for implementing new technologies such as blockchain.”
The Benefits
What are some of the benefits of digital transformation? Gary notes that digitization allows companies to not only better understand changing consumer demand, but also to collaborate with suppliers to innovate and rapidly prototype new products that will uniquely meet that demand.
Second, Gary mentions visibility to compliance issues for quality and ethical sourcing across global supply networks that consumers are demanding. And also visibility to all of the many factors of day-to-day supply chain management, particularly enabling exception management to ensure the product arrives when and where it’s supposed to.
“It all comes down to the consumer,” says Gary. “We have to provide them with transparency from raw materials all the way to the consumer’s doorstep.”
Getting Started
Despite all of the talk about the need for digital transformation, most companies are still on the sidelines. How should they get started? What is the “savvy” framework Gary describes? What are the stumbling blocks? Gary provided some great insights on these questions, so I encourage you to watch the full episode for all the details. Then keep the discussion going by posting a comment and adding your own thoughts and experiences.
