Success has to be more than cutting costs

I recently attended the annual one day seminar of the CSCMP Chicago Roundtable. The key note address Dr. Jonathan Bryne, a senior lecture at MIT and yes, a supply chain consultant.

The thesis he presented was that to be a success in the supply chain, one must successfully add to the profitability of the firm.  Many supply chains he encounters are being run reasonably efficiently says costs are were they should be. The costs have been cut.  But the value that supply chain personnel provide firm needs to be more than being efficient, it needs to help the firm increase its successful and profitability. Supply Chain which all the business operations is in a unique place to do this.

With the real time data that supply chain software is generating, it is much easier than in the past to cost each individual customer and each product or sku. Supply Chain personnel need to be proactive to use this data to find how can manage its customer approach. One simple example: A regular customer orders daily LTL shipments but those not bring much profitability because of the shipping costs and labor its entails. Sales can be approached to ask the customer to make larger order quantities, with both parties sharing in the savings and increasing the profitability of the account.

Dr Brynes said in some cases, highly profit accounts had led firms to realize they can invest more in customer service for this customer, providing additional services which would make it harder for the customer to rationalize a change in vendors.

There were several questions from the audience but relatively low profit customers whom might make up most of the volume in the business. His response was to use supply chain data to learn how to best manage this group of customers.

Non-profits which have a supply chain can make the same sort of management exploration, but with the goal of how effectively is the supply chain helping the organization meets its objects. Are there changes in the process which would help that?

 

 

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