Manage change and mitigate risk in your supply chain with the following strategies.
While most leaders approach supply chain innovation as multi-million dollar overhauls that take three to five years, there are some innovative ways to make changes now that yield immediate improvements and near-term ROI (return on investment).
With the following five steps and best practices, you can not only improve your supply chain, but also mitigate risk and manage change as you travel a path to savings.
Simplify your forecast scope
For long-time supply chain professionals, forecasts are a fact of life. Understanding and predicting demand can be the most impactful option for managing your supply chain—ramping up when you get it right or wrong.
Many companies fail to launch supply chain innovations because they rely on traditional demand planning and forecasting models that require extensive data and collection policies. Initiating this across all supply chain partners is beyond burdensome and can take months to collect the information, which can cause some of it to be less useful at decision-making time.
Instead, break out forecasts and modeling into units within your business. Look at fulfillment and shipping data. Perform analysis on separate vendor pricing and tracking raw materials. Look at the economies of your customers and shifting consumer habits. Don’t silo your data, but instead create smaller forecasts and models for individual business units, while leadership-level analysis creates a picture for the company as a whole.
2022 has taught us that demand forecasting is tougher than expected, while global supply chains are weaker than expected. Complex forecasts make it much easier to exacerbate these concerns. Start fresh and keep things simple as you and your partners relearn what works and how far out you can safely look.
Clearly define future roles and responsibilites
When you make the jump into a modernization initiative, your supply chain needs clear documentation and processes covering roles and responsibilities. This is not just an internal or team document, but a holistic look at your initiative across partners. Set requirements for everyone and every company involved with your effort. Set expectations for partners and providers by laying out this structure and sharing it with team leads to help address any bottlenecks in your process.
Most innovation and modernization efforts are good at creating roles and responsibilities. So, take this as a call to expand it to partners to cover a variety of elements, such as:
- Who manages the design of an initiative?
- Who is responsible for sandbox management and integration testing?
- Who guides implementation within each partner’s systems? Who crosses systems?
- Who owns updates and troubleshooting?
- Will change management leaders within companies be able to work independently or will ongoing work be dependent on other partners?
Documents don’t feel very modern, but they’re the core of your operations. Digitizing this effort and making them shareable across partnerships can improve your data management. It’s the foundational element for any bigger efficiency improvement you try to tackle.
For example, AI, machine learning, natural language processing, and other modernization tech will make a significant promise to save your supply chain. But without clear structure and responsibilities for training, application, and future management, there are no guardrails to prevent scope creep or having employee turnover send a project off a cliff.
Invest in simple data standardization
Supply chains are diverse, and partners within your network will have an extremely broad range of tools and capabilities. Getting the data that you need can’t come with a mandate to have everyone join the same platform.
Instead, look for database software that can standardize data so it can be leveraged and easily shared with your network. Stick to simple elements like API calls and push for tools with simple integration options. Since data standardization requires presenting data in a unified format, you can easily identify metrics about current freight rates and energy costs, for example, and discuss them with partners without miscommunication or any lack of info.
Data standardization allows partners to focus on data collection and analysis instead of spending time tracking down the info themselves.
Data standardization is a quick push that can yield significant optimization returns while improving core aspects of your business. Even if not all partners follow suit, your operations are better for it—data standardization improves what decisions you make with data internally and as a supply chain partner.
Use digital documents
While cloud computing has revolutionized many industries, supply chain managers have been sluggish to step away from their much loved spreadsheets as core planning documents. Here’s the shocker: That’s OK.
A majority of companies still use Excel as fundamental supply chain software. Previously, that has been used to take a swipe at small or lower-tech companies, but it shouldn’t be a default for you to consider someone a poor partner. Excel and spreadsheets have continually evolved to add new features and functionality over the past decade, allowing you and partners to stay on the same page and track changes in real-time.
Online versions of spreadsheets can be shared, which creates more opportunities for you and your partners to catch any errors. Some of that will be manual reviews while other times your spreadsheets, CRM, WMS, or other tools may generate an error message when trying to pull data. This is an opportunity to double check your supply chain for any errors or hidden vulnerabilities.
The risk of offline options is most partners and decision-makers are removed from the data. You get a dashboard or PowerPoint deck that offers a summation. This is the business intelligence that powers decisions. Any undetected error is now baked into the decision upstream, making it exceedingly difficult for downstream partners to detect issues and adapt accordingly.
Work against that vulnerability by partnering with companies that rely on Google Docs, Office 365, and other automated systems that make data available and shareable. The best news is that it’s also easy to automate moving this information over into your own data warehouse. Read-only access gives you and partners relevant information without putting the whole thing at risk of an errant keystroke.
Create a culture of small, consistent automation
Change management is often the biggest barrier to modernization. Throwing too much at teams too fast —or having wide-reaching plans that take years to execute—make it easy for people to slip back into old habits or develop data workarounds. Instead, prioritize small, agile solutions designed to tackle individual problems. Use these to build off each other and increase collaboration internally and with partners.
For many efforts, you’ll need to get customers and partners on the same page with platforms, integrations, and standards. Invest in a development team to ease that integration. Work with these partners to minimize the work they need to do for that support and minimize where the data shows up (and where you need integration points). The more you can push to one dashboard, the easier it is to keep improvements occurring with minimal disruption.
Change management is often reserved for the final leg of an update. Throw that on its head by bringing change management to the forefront of modernization. Get everyone excited for the change, minimize their requirements around new steps, and proactively support partners so their teams adopt changes, too.
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