Where does it hurt? Everywhere.
We all knew that there were challenges because of supply chain disruptions, but one thing sums it up.1
Issues have manifested across the organization, from planning through sales. Traditional supply chains focused on efficiency and cost removal. Yes, there were always disruptions, but they still felt isolated and rarely forced strategic reevaluations. That has changed. The pandemic showed that supply chains are not a cost center but strategic to growth. What good is a low-cost supply chain when you can’t get the product to the shelf? After all, 46% of consumers switched brands mostly because their preferred product was out of stock.2
While the pandemic was a unique event, other disruptions are becoming less isolated: labor, weather disruptions, port disruptions, regional strikes, packaging shortages, and governmental regulatory changes. While individually they are manageable, taken together, they become death by a thousand cuts.
Aligning Organizational Decisions
To become resilient, companies must have a consumer-focused supply chain that connects decisions across various organizations. The basis is anticipating consumer demand across all channels and sharing it through a unified demand signal (video). While challenging before, its complexity has grown due to the rise of online shopping through marketplaces and DTC. Even before the pandemic, many companies only achieved <50% forecast accuracy on channels such as Amazon.
Through a consumption-based, unified demand signal, companies achieve one version of the truth and create alignment at every level. Hyper-localized AI models that can extract the baseline demand as well as critical external and internal demand drivers. With this knowledge, combined with what-if capabilities, companies can simulate different scenarios and effects on their organization – bringing people together in one aligned plan.
Sources:
- CapGemini, “Fast Forward: Rethinking supply chain resilience for a post-COVID-19 world”
- Periscope by McKinsey, “Retail Reimagined: The New Era for Customer Experience”