The regular readers of this blog series are already enthusiastically planning how to incorporate software as a service applications into their supply chain operations because they know that it makes the capabilities and power of dedicated software applications easily accessible to all businesses. They also know that a SaaS solution packaged with a strong integration engine gives the potential to connect system’s business to business on a single, powerful, integrated planning platform, and are very excited by the possibilities that this affords them. The irregular readers can either take my word for it or check out the earlier posts!
Traditional multi-tier supply chains are characterised by isolated silos of knowledge and data spread across time zones and geographies. Whilst the objective of each tier of the supply chain is typically aligned to satisfy the end customer demand in the most cost effective manner, with often independent businesses working to get your stock downstream to your customer in the most efficient way, the silo effect can significantly impact the overall efficiency of the supply chain.
When all of the tiers of the supply chain are owned and co-ordinated by a single business, then even in a traditional silo’ed model, it can be possible to enforce an inventory management approach that is closely aligned with business strategy based on corporate directive. However, the further downstream you go in most distribution networks, the more fragmented the ownership of the network becomes.
Dealers serve your end customers and these dealers might be fully owned subsidiaries, technical distributors, independent businesses, service centres or a combination. Each of whom have their own business objectives, strategies and profits to consider. As a consequence of this, the closer you get to the end customer, the more pronounced the silo effect becomes and the more difficult it is to adhere to a single unified supply chain strategy.
The scenario we are facing is one in which OEM’s hold vital information directly relevant to inventory management close to the customer that is not made available to the dealer. This could, for example, be intelligence regarding recommended stock lists, critical stock lists, supersession information and experience from other markets.
Conversely, the dealers hold a lot of vital information close to the customer that is directly relevant for good service like visibility of true customer demand, local campaigns, their own stock visibility and an understanding of the competitive landscape and the local machine population. Often due to lack of appropriate tools at the dealer, this intelligence is often not applied to the dealer’s own inventory management approach in an effective way.
These silos are literally a barrier to successful co-operation between the tiers in your own local supply chain and are detrimental to every interaction that occurs, not just in your supply chain, but through a network ripple effect out into your extended supply chain. Worst of all, these silos prevent you from effectively serving your end customer! The potential gains of connecting all of the players in your supply chain to a single system are therefore extremely apparent.
If you can make it so easy to connect businesses to the same system that all they require is an internet connection and the ability to export some simple inventory and demand information in a basic format, then even better. Syncrons SaaS solutions have evolved over 20 years to allow for just that resulting in supply chains operating as a co-ordinated whole rather than as individual units.
Breaking down the walls in your supply chain improves visibility across the tiers, getting you closer to the end customer and allowing you to employ more consistency in your planning approach across the whole network. It facilitates increased co-operation between dealer and OEM, which invariably leads to significant improvements in supply chain performance.
Breaking down the walls is a significant step, but it is also a first step. Next we will discuss what you might want to build with those bricks…