A Good Economy is the Best Time to Transform Your Supply Chain

Posted by Supply & Demand Chain Executive | May 10, 2019 10:29:53 AM


2019 has been great for business. The economy continues to move from strength to strength despite widespread predictions of the next economic downturn at the beginning of the year. For the month of April, the Department of Labor reported that nearly 263,000 jobs were added - well above what analysts had predicted. With the unemployment rate sitting at 3.6 percent, and the corporate tax rate lowering from 35 percent to 21 percent on 2018 revenues - most companies are enjoying a fat balance sheet.


However, the worst strategy for your business is to get comfortable with the supply chain status quo. A healthy economy and larger profits is the best time to push your digitization initiatives forward as a top priority. This runway allows breathing room for not only implementing your core projects - be it at the beginning of your digitization journey or years into the process. But it also allows room for the ingenuity, creativity, and customized solutions that will be required to remain competitive.


Despite record growth and paying effectively zero percent on their 2018 taxes - Amazon continues to transform their supply chain. They recently announced the launch of Prime One-Day standard shipping for all Prime Members, as well as the launch of their digital freight brokerage platform, quoting below market rates and shaking up the freight industry. The point? With more than 100 million Prime members in the US alone, and soaring revenues - Amazon isn’t comfortable with their supply chain, why should you be with yours?


A quick win project that can help get the ball rolling is establishing a Sales & Operations Execution (S&OE) Center of Excellence. Many organizations have done the hard work of optimizing their sales and operations planning (S&OP) functions, but they haven’t closely examined their sales and operations execution (S&OE) capabilities.


Fluctuations in demand, shortages, delays, and disruptions can instantly reveal the weak points of the supply chain. As a result, these impossible-to-plan-for events often relegate supply chain teams to a life of fighting fires. Establishing a center of excellence (CoE) that focuses on sales and operations execution can help organizations respond to unexpected variations in a structured, systematic way.


While there are many approaches to establishing an S&OE Center of Excellence, it’s important just to start. Because despite the record economic growth, retail continues to take a huge hit. Nearly 6,000 store closures have already been announced for this year - that’s more than all of 2018 combined (Coresight Research) - and it’s only May. Likely as a result, April marked the third month in a row that retail employment has fallen.


It’s only a matter of time before this lack of competition corrodes the bottom line of not just retailers - but pharma, CPG, manufacturers, suppliers, and a wide range of other industries. We live increasingly in a winner-take-all economy where the players at the top dominate profits, with little room for supporting actors. And with the lack of competition in the marketplace, profits can be made or broken depending on the health of your supply chain.


It’s a painful reality, but Digital Transformation is a journey that should never be complete. Because as soon as you’re able to provide two-day delivery, you discover you’re already behind.

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