Perhaps one of the most interesting aspects of business is that of operations. In this area of focus, I find no other perspective more intriguing nor more efficient than that of supply chain management (SCM). Supply chain management is all about the flow of business. When talking to SCM experts, you’ll quickly find that their views are strictly functional, analytic, and severely accurate when it comes to the math.
And, when you think on the companies with astronomic success, they all have state of the art SCM. Such names include Apple, Amazon, Unilever, Samsung, Coca Cola, McDonald’s, Starbucks, etc. Big deals, right?!
So, without further ado, here are…!
5 Supply Chain Principles to Optimize Your Business
1. Order Qualifier
The order qualifier is the first principle step in making the supply chain work. Customers in any industry have a base of attributes they look for in any given product or service. Such characteristic make a firm’s offering qualify for consideration. Such attributes could be that of product quality, service access, or cost per unit. Whatever the attribute, order qualifiers attract prospective buyers in hopes that they become life long customers. Many times, order qualifiers require regular revisitation as a business’ ecosystem evolves. Sometimes, order qualifiers quickly change to become something else entirely. Nevertheless, it remains important that your supply chain offers the basic qualifications of interest to a consumer. Then, it becomes your job to close that interest with an order placement!
2. Order Winner
Order winners are the deal makers. Product and/or supply chain attributes which customers intentionally seek are the winners here. Sometimes this is price, other times this is convenience of deliver. Regardless, order winners exist to convert the attention of an order qualifier into an actual purchase. This conversion is sometimes blatant, other times the attributes that turn an order from a qualifier into a winner is quite subtle. Careful analysis is required to distinguish them to which business buddies from marketing strategy can be most helpful. In all cases, it is important that order winners stay that way and do not become losers.
This is our deal breaker. What attribute about any order or order experience could make a customer cancel their order? Order losers can be both inclusive and exclusive attributes. It could be that a product includes a certain attribute which a customer simply does not want. It could also be that the process of order fulfillment may exclude an attribute that the customer is not willing to purchase without. Many times, an order loser could be the cost. Other times, it could be the quantity or the conditions. More often than not, a most common loser is time. This lead us to our fourth principle: time.
We all know this: we live in the age of instant gratification. Everything is instant. And, if it isn’t instantaneous, then it is too slow! Lead time is the amount of time a customer has to wait between their placement of an order and the fulfillment of that order. So, for a products based company, this is easy: order is made, order is completed. However, for a service based industry, the perception of initiation of an order may occur at different moments in time between the demand side versus the supply side perspective. It is exceptionally important to be certain that the demand side expectations and the supply side understanding of its burden of service is well aligned. This leads us to our last principle…
Putting the customer first is many times the best practice of any supply chain. If the customer wants their product supplied to them in a certain way, it behooves your business to formulate its structure around the flow desired. As a case study, Amazon discovered that customers were willing to put a premium on delivery time and no hassle return policies. As such, Amazon Prime was created. Even just recently, Amazon has restructured their supply chain as such that they offer same day deliver and more deals than in all history prior. And, you better believe they are making big bucks on putting the customer first. Do it!
By aligning the flow of your business in a way where your customers know they are your priority, you can quickly orient your firm to keep up with order qualifiers, maximize order winners, and eliminate order losers. The relationships grown from operating your business will give you plenty of information on how to best approach lead time opportunities and barriers such that your customers continually feel like they are number one.
Just remember, SCM is all about flow. Movement is key and movement circulating around your demand is best.