Changes are inevitable. One way by which we may have to change is our coffee drinking habits. According to Bloomberg, the coffee supply chain is struggling with constrained supply and increase in prices is inevitable. In today’s dynamic business environment, disruptions like material shortages or changing customer preferences can cripple your bottom line. Traditional, linear supply chains struggle to adapt. This article explores how adaptive supply chains can help businesses thrive. By embracing collaboration, real-time data, and a focus on sustainability, companies can build resilience, improve margins, and gain a competitive edge.
Top Challenges Faced by Companies:
Customer Preferences:
Example: An online fashion retailer faces the challenge of constantly changing customer preferences.
In this scenario, by adopting an adaptive supply chain, the retailer uses real-time data analytics to identify emerging trends and collaborate closely with suppliers to quickly adjust production and inventory levels to meet customer demand. They design their supply chain on a continuous basis and focus on ecommerce retailing strategies that segment their customer base according to buying behavior.
Supply side shifts:
Example: A global coffee manufacturer experiences disruptions due to a natural disaster affecting one of its key suppliers in Brazil due to dry weather.
This manufacturer had designed optionality into their supply chains predicting turbulence in supplies and proactively worked with alternative suppliers to ensure continuity of production and minimize revenue loss.
Structural Changes in Supply Chains:
Example: A consumer goods company decides to near-shore its manufacturing operations to reduce transportation costs and improve responsiveness.
They underwent a thorough Network Optimization exercise to identify the roadmap of transitioning to a hybrid offshore/nearshore model. They also performed Transportation and Inventory Optimization to ensure that products are delivered on time and with minimum inventory. Finally, the company collaborates closely with local suppliers, sharing real-time data on production requirements and inventory levels. This collaboration enables faster response times and cost savings.
Lack of Visibility into Supplier Processes:
Example: A global automotive manufacturer struggles with limited visibility into supplier processes, resulting in delays and cost overruns.
By implementing an adaptive supply chain solution, the manufacturer gains real-time visibility into supplier forecasts, capacity, and delivery schedules. This enables better planning and coordination, reducing lead times and improving cost efficiency.
Where do companies start their journey towards Adaptive Supply Chains?
Perform Integrated Scenario Planning: Integrated Scenario Planning (ISP) serves as an optimization layer on top of the supply chain technology stack, leveraging mathematical algorithms and optimization models to support decisions across key supply chain elements: locations, products, demand, supply, inventory, and transportation. ISP enables the creation and governance of a transformation roadmap for improving supply chain performance, turning complex planning scenarios into opportunities for margin enhancement.
Collaborate on Purchase Orders, Forecasts, Capacity, and Inventory: In adaptive supply chains, companies collaborate with their suppliers to share critical information. This collaboration allows for better planning and optimization of the supply chain, ensuring the right products are available at the right time.
Leverage Real-time Risk and Compliance Data: By leveraging real-time risk and compliance data, companies can identify potential disruptions and take proactive measures to mitigate their impact. This data-driven approach enables faster decision-making and better risk management.
Optimize Carbon (Scope 3): Adaptive supply chains prioritize sustainability. Companies work closely with suppliers to identify opportunities for reducing carbon emissions and implementing environmentally friendly practices. This not only aligns with sustainability goals but also enhances brand reputation.
Build Tighter Supplier Relations: Tighter relations with strategic suppliers is key in adaptive supply chains. By building closer relationships with suppliers, companies can improve communication, trust, and efficiency. This collaboration leads to better coordination and overall supply chain performance.
Benefits of Adaptive Supply Chains:
Improved Resiliency: Adaptive supply chains enable companies to anticipate and respond to disruptions, enhancing overall resiliency.
Better Ability to Manage Sustainability Initiatives: An adaptive supply chain helps companies effectively manage sustainability initiatives and implement environmentally friendly practices, reduce waste, and meet sustainability goals.
Improved Supply Assurance: Through enhanced visibility and collaboration, adaptive supply chains improve supply assurance. Companies gain better control over supplier processes, monitor inventory levels, and ensure timely delivery.
Margin Multiplication Effect for Buyers and Suppliers: Adaptive supply chains drive cost savings as well as prevention of revenue loss thereby impact margins holistically.
Network Effect for Buyers and Suppliers: As more companies join adaptive supply chains, the network effect comes into play. The larger the network, the more opportunities for collaboration, knowledge sharing, and cost savings. This network effect benefits both buyers and suppliers, creating a virtuous cycle of continuous improvement.
In conclusion, enabling adaptive supply chains is essential for companies to thrive in today’s complex business landscape. By embracing collaboration, leveraging real-time data, and prioritizing sustainability, companies can drive resiliency and margins in Collaborative Supply Chain Networks.
Nari Viswanathan is Sr. Director of Supply Chain Strategy at Coupa, where he manages the Go to Market strategies for areas of Supply Chain and Direct Spend. Nari Viswanathan is a six times SDCExec Supply Chain Pro to Know award winner. Over the past 20 years, Nari has held VP and Director of Product Management, Research and Marketing roles at various companies such as E2open, i2 Technologies and Aberdeen Group. He is a proven B2B marketer with expertise in content marketing, competitive intelligence, and positioning.
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