Physics of a Customer-Centric Supply Chain

  Hi, I’m Jithin Sunil- A final year MBA student from Amrita School of Business. Welcome to my Logistics and Supply Chain Management learning room. In this blog I am going to talk about how a customer-centric supply chain operates.

Many businesses are being customer-centric and putting the experience of the customer at the forefront of business priorities.

The Revolution of Nicolaus Copernicus was the development of a heliocentric model where the nucleus of the universe is the sun rather than the earth. Supply chain managers today need, like Copernicus, to conquer the impression of financial heresy in the business world by encouraging a rise in shipping costs that would boost margins.

To meet omni-channel demands, consider the financial consequences and delivery options. We have seen businesses increase product velocity by seven to 14 days, reduce supply chain operating costs by 15 percent, and slash carbon emissions by 15 to 20 percent through sophisticated systems such as export fulfilment centres and direct-to-store services.

A combination of lead time, safety stock policy, and demand variability is the pace of goods going across the supply chain and being available when and when a consumer needs to buy them. The math for calculating the velocity is simple in many respects; it is the input of demand variability that retains much of the difficulty. We are challenged to develop and implement a supply chain in many industries that is flexible enough to adapt to demand while being cost-effective.

To a ball rolling downhill, an agile supply chain is analagous. Until it reaches the bottom with an impact, the ball has kinetic and potential energy. Interestingly, as the ball gets closer to contact, kinetic energy increases while potential energy decreases.

Similarly, at the start of the supply chain, goods have the greatest potential for market effects. Goods can be configured, numbered, or packaged based on customer requirements at this stage. You eliminate waste and optimise the margin effect if you can delay flowing goods through the supply chain until demand is understood and design a faster speed-to - market model.

Friction created by competing internal priorities across various company stakeholders is a less tangible factor. The pace at which the ball rolls down a hill is slowed by friction. When and where products are required, a merchant or production planning group typically plans. Their priorities gravitate towards the availability and versatility of products to allocate goods as near as possible to final use; whereas the priorities of other stakeholders depend on cost efficiency. When deciding on the optimal distribution model, friction is a key factor to consider.

Most businesses plan and execute innovative supply chain systems. The range of distribution options to allow these programmes covers export distribution centres at source, multi-country consolidation, transit mergers, cross-country destination, import distribution centres, and bypass distribution centres. Such options for delivery are like points on the hill where the ball is rolling. The best distribution option to use for full effect will be defined by knowing the right business KPIs to concentrate on.

The consumer-centered calculation needed to meet customer demand, while effectively managing the supply chain, needs to include the constantly evolving supply chain system through which goods must pass, from the point of production to the point of consumption.

Happy Learning !! 😊