Thursday, March 6, 2008

Blurring boundaries and blended competencies for retail and manufacturing supply chains

Widespread adoption of RFID in the Supply Chain Management (SCM) and Supplier Relationship Management (SRM) systems diminish the boundary between the retail and the manufacturing systems and the respective competencies begin blend as well. Today's supply chain goes beyond adding few more warehouses or trucks. Think about supply chain of a new Harry Potter book and you will have completely different perspective about the timeliness and the security of your supply chain orchestration.

Collaboration capabilities are the key competencies and they become even more crucial when a supply chain disrupts due to an exception. The solutions should have capabilities to handle exceptions. Some of the people whom I speak to in this domain tell me that a system typically does pretty good job when things are fine but when an exception occurs, such as a supplier backs out, people scramble to handle the disruption and an ability of a system to capture unstructured collaborative workflow in the context of the structured data could go long way. People don't want, and don’t expect, the system to make decisions for them. They want systems to help them and empower them to make decisions to make their supply chain leaner and smarter. They want an exception management system.

It would be na├»ve to say that retailers don’t model capacity. For retailers it is not just about demand and supply but how to optimize the shelf space and that’s part of the capacity modeling equation. The companies such as Demandtec have retail optimization solutions in this domain.

I see supply chain as a capability and not a solution and a well-designed supply chain could help companies achieve their in just-in-time inventory mantra.

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