Supply Chain Management
Most CEOs are surprise to discover that what they thought was a well-functioning Supply Chain turned out to hide such a tremendous amount of problems.
Five tell-tale signs that help you recognize a broken Supply Chain:
- Silos mentality - The big companies are often confronted with this problem. The different departments of the firm are not sharing information properly, and in case of failure the departments tend to evade responsibility.
- Unhappy customers - The quality of the service is directly affected by a broken Supply Chain. Customers are not only looking for a good quality offer but also reliable one. Brand image is at stake here.
- Struggling sales force, declining market share - The weakness of the reliability of the supply chain makes the work of the sales force more difficult as the brand image of the product is becoming less attractive. Even low prices are less appealing to the customers, because the competitors win on service. And, when you win by reducing pricing, you encounter the next problem.
- Eroding margins - A broken Supply Chain is a handicap that hits on both fronts. Rising logistics cost raises the cost of the goods sold. At the same time, poor service can only be overcome by lower prices. The company faces a dilemma. Either raise the price to maintain the margins at the risk of losing sales, or accept the drop in profitability. Most companies opt for the second option - and blame the competition. Only a few recognise the root cause - the broken supply chain.
- Burgeoning inventories and missed deliveries - Many CEOs are surprised to find both the problems at the same time - overflowing warehouses, and missed deliveries. The reason is simple - their supply chain carries the wrong type of inventories, and in the wrong places. People do their best - by hunting around for the right inventory in the shortest period of time, and by expediting. But, a better solution is to carry the right inventory in the right place.