Reduce Supply Chain Excess

Supply chain excess – it costs!

Supply chain excess estimates range from $100 billion to over $1.5 trillion depending on the geographical region and various product categories. With new environmental restrictions being introduced by state and federal governments it is no longer feasible, or affordable, to procrastinate on reducing supply chain waste. While there may be some initial costs, green supply chains consume significantly less energy in manufacturing, transporting and warehousing vastly saving money in the long run.

Packaging sustainability – repackage, recycle

First, begin with examining all product designs. Where can material expenditures be reduced? Are there more energy efficient savings? What about different product packaging options?

Secondly, examine raw materials waste. Can any materials be recycled, or redesigned and be reused? With how technology has progressed a lot of waste, which was previously discarded, can now be recycled.

Reduce supply chain waste

Is there a way to efficiently decrease excess inventory? Certainly the internet and globalization have made it much easier in finding buyers for consumer products. But at the end of the day, a large volume of excess inventory indicates that the end-to-end supply chain remains largely inefficient.

It’s virtually impossible to completely eliminate all excess inventory, however, it can be substantially reduced by engaging with more efficient supply chain practices. By ensuring the best quantity of supply exists in the supply chain, while also building with quality products, a significant reduction will happen.

Implementation of waste minimizing programs have been successful in improving company products and reducing overhead costs. For example, Microsoft recently renovated their Redmond, Wash., campus with stellar energy efficient results. Through a combined effort of energy management, alarm management and fault detection, Microsoft expects to save more than $1 million per year in energy costs, with a payback of less than 18 months. In a statement released by Microsoft’s Chief Environmental Strategist:

“What we learned confirmed our hypothesis: Microsoft (and by extension, many organizations with similar real estate portfolios) don’t need to undertake capital-intensive retrofits to cut building energy costs. Instead, we saw buildings become dramatically more efficient by introducing software to harness and utilize the building systems already in use. By integrating powerful analytics that add intelligence to existing building infrastructure, our buildings got smarter, more efficient and less costly to operate.”

In all, waste reduction increases the quantity of finished goods that will pass quality green standards, while also, minimizing the waste of raw materials.

Key Questions to Ask SCM Vendors

Think of it as two phases for your company.

Phase One: Supply chain evaluation

20/20 hindsight can be a horrible headache. How many times have each us said, “If I knew back then what I know now, I would have done this differently.” This can be no different when choosing SCM software. Strategic planning, thorough research, and handling critical questions will save you from future “shoulda, coulda” woes. In fact, a comprehensive assessment of your own company’s supply chain should be first priority before initiating SCM vendor talks. Here is a list to keep in mind while evaluating:

  1. Have you conducted a comprehensive assessment of existing businesses? Do you have a legitimate need for SCM software at this time?
  2. What is your overall objective?
  3. Do you have a selection committee in place? Are members from across different departments (top management, consultant, suppliers)?
  4. Have you identified specific requirements you want in your SCM software?
  5. Can you justify an investment which may not see a ROI for over a year? Are there any government grants your company will qualify for to help offset costs?
  6. How much change can your company make?
  7. How will you support and maintain new technology?

The more initial information gathered, the better the results when implementing SCM software.

Phase Two: How will this work for my company?

With a plan in mind, start vendor searching! Ultimately, you want a complete SCM system, which will intelligently integrate with your established CRM. This is the time to ask hard-hitting SCM software questions. Here is a small list of example questions:

A) Clarifying communication:

  • How would the SCM software work with your customer relationship management (CRM) system?
  • How would your business, IT and SCM software strategies all fit together?
  • Ask to speak with other vendor clients or customers. How has the SCM software worked for them?

B) Getting the service and support you need, even long term:

  • What type of flexibility and reliability do you offer?
  • Do you have a future road map that will help my company grow?
  • Could you list the top few supply chain performance improvement initiatives over the next couple of years?
  • What kind of training is required for program managers?
  • What is the learning curve for SCM software?
  • Can this SCM system handle my company’s long term goals?

C) Maintaining your system:

  • Is the system difficult to maintain?
  • Is there a lot of downtime with the system?
  • What are your supply chain performance improvements initiatives for the following years?

Hopefully, these questions will give you a starting point to implement a thoughtful research strategy. Asking key questions will help you chose the best SCM software for your company, and avoid any long term regrets.

Social Supply Chains

Social media in the B2B capacity

In case you’ve been living under a rock, social media has completely changed eCommerce on a global scale. For the average consumer, its become second nature to follow trends online and searching for the best deals. Social media has certainly thrived in a business-to-consumer (B2C) setting, as online retail giants Amazon and Overstock.com can attest. But will social media survive in a business-to-business (B2B) capacity? Will this strengthen supply chains?

Social media with B2B might predict future inventory needs

A recent example of social supply chain involves global retail giant Walmart. After acquiring Kosmix, a social media platform, Walmart plans to devise and develop social, and mobile, networking capabilities within their supply chain. Kosmix, now renamed WalmartLabs, hopes to enhance Walmart’s communicative collaborations with customers, suppliers, and logistic service providers.

“Social networking and mobile applications are increasingly becoming a part of our customers’ day-to-day lives globally, influencing how they think about shopping, both online and in retail stores,” said Mr. Castro-Wright, Vice Chairman for Walmart, in a statement.

Anand Rajaraman, co-founder of Kosmix, said in the Walmart statement: “Our work has focused on developing a social genome platform that captures the connections between people, places, topics, products and events as expressed through social media.”

So, what does that mean? Simply stated, introducing social media in the supply chain puts people, not documents, in the middle. Facilitating a social supply chain environment allows intuitive growth, design and flow. According to Mr. Rajaraman, social media can even predict customer demands, which helps determine what new products should be added to different stores, “We’re analyzing social information for the neighborhood area of each store,” he said. “How should the interests of a community influence the assortment in the store?”

Here is one example. Perhaps after investigating your data you find an increase of social activity pertaining to “hiking boots” resulted in increased buying activity during fall, but primarily on the East Coast. This saves the company time and money during the following season.

Is it the next step?

Realistically, social supply chain is the next step of eCommerce development. Indeed, as Facebook and Google+ connect personal social circles, social media within the B2B environment creates enterprise collaboration with suppliers. B2B software companies, like Moxie Software and Yammer, can harness how people down the supply chain communicate and collaborate with one another, or improve how companies analyze real-time information to help make smart business decisions. The end goal enables an efficient, money-saving social supply chain.