Sparks are Flying in Supply Chain!
SPARKS ARE FLYING IN SUPPLY CHAIN!
“We can’t get enough of the sparklers!” mused Abby Adams, the head of Picking, Packing, and Shipping at SPARKLE, a $50M fireworks company. She hustled down the aisle of the 30,000 square foot warehouse with an order in hand, looking for all the items on the rush order.
“We should have known early in April that we’d need them in July!” Abby’s grumbling became audible as she passed by Ben, who was in charge of Supply Chain.
Ben looked up and said, “Abby, we are all in this together!”
Abby stopped at his desk. “Oh, yeah? But I’m the one who will take the heat for this – I can’t fill our best customer’s order!”
Ben thought about a way to calm the situation. “Abby, I’ll call the customer and substitute some great sizzlers for the sparklers - it’ll all work out.” He continued, citing Ben Franklin, his favorite patriot, “We must, indeed, all hang together or, most assuredly, we shall all hang separately.”
Just then, Scotty, the CEO, showed up. He was humming a tune from his favorite songwriter, Francis Scott Key (you know, the Star Spangled Banner!). “What’s up?” Scotty asked, as he felt the tension between Abby and Ben.
Ben stood up. “Scotty, we have a problem. It started last December when I was having trouble ordering the fireworks for the 4th of July season. I thought we’d catch up in the Spring. But it turned out the shipping containers coming from China got delayed. We ordered two containers with 800 cases of fireworks each. That would have been plenty to fill our orders. But it wasn’t until last week I got a notification our containers had arrived, and it always takes us at least two weeks to get through customs. The bottom line is there is no way we can get our hands on the fireworks before July 4th.”
Scotty stopped humming. This was frustrating. They’d had the same situation last year, but all the stock had shown up just in the nick of time. For weeks before that, and up until they’d finally arrived, Abby had been beside herself with worry and had frequently upbraided Ben for his poor planning.
“Oh Ben, go fly a kite!” cursed Scotty. “I told you to get the damn Demand Planning system in last year when we had the same problem. We need the right systems or we will fizzle!”
A key to supply chain management is keeping disruption as low as possible while keeping customer fulfillment as high as possible.
Fortunately, there are dozens of software solutions that you can put in place to simplify the supply chain, logistics, and warehouse management process.
Some of these solutions are already features of your core systems, and some are ‘edge solutions’ that can be easily integrated. Always avoid those that have no ready ‘handshake’ with your core systems.
Here are 5 pointers to keep in mind when implementing these features or ‘edge solutions’:
1. Manage Suppliers – get to know the lead-time for each supplier so that you can gauge the time it will take to arrive and thus the optimal time to order. This can be input into the profile of the supplier, which will then be used to calculate re-order dates.
2. Plan Logistics – Getting the product onto a ship, onto a train, onto a truck, through customs, and arriving at your warehouse is a complex job. Simplify by using a logistics module to plan the pallet as well as the path from supplier to your warehouse.
3. Handle Inventory – become familiar with seasons, major customers’ ordering patterns, and alternate SKUs allowed. Managing the inventory levels is a balance between space and time, so implement a system that speaks to order entry as well as to supply chain.
4. Demand Demand Planning – It’s critical to anticipate demand so that the items ordered can be shipped on-time. This is about knowing your customer. Analytics around most frequently ordered across all customers, least frequently ordered, and seasons of ordering all play into marketing, purchasing, and pricing. Smart systems make recommendations and help you to never miss a sales opportunity!
5. Have Faith in Fulfillment – Customers need to have faith in your ability to fulfill on-time, as-ordered. Keep a scorecard of number of 100% fulfilled orders – it’s a point of pride as well as a way to bolster confidence between you and your customer. (While avoiding short-ship penalties, to boot!)
By staying on top of your inventory, you create resilience by keeping customers happy and by giving power to marketing to boldly let your customers know that they should order even more, and you will deliver it all.
Smart companies take proactive steps today to shine next year. The systems available abound. The hardest part is making the selection and getting all the data loaded. Give yourself six months lead-time and engage the company in embracing new systems.
Indeed, that is exactly what SPARKLE did. Immediately after the 4th of July, they launched a Demand Planning project to evaluate their needs and select an ‘edge system’ that would integrate with their core systems.
By the end of the calendar year, they were in ‘Go-Live’ mode. By the next 4th of July, they saw an increase in revenue by 25% as orders were fulfilled early and there was time for re-orders by new and old faithful customers.
SPARKLE held a party of their own and lit a few spinners to celebrate.
Abby walked over to Ben to congratulate him on getting the