Improving Supply Chain: Four Main Items

When you look at any business there is always the basic supply chain. There is supply, mediator and customer. As i was reading an article in MIT Sloan Management (Summer 2010), i intend to elaborate a little bit more with more localized context of the four main items the author highlighted. The main article is “The Four-Point Supply Chain Checklist – How Sustainability Creates New Opportunity”. I attempt to give a smaller scale perspective of how the idea presented in the original article can be somehow used for most of us.

a) Redesign Packaging

There is always a standard packaging for our product, and there is always a need to redesign at some point. Why? Because customers needs and wants are moving target. They change according to time, trend and segment. Some of us may have products that evolve from being a basic thing to become a more sophisticated thing. For example toys manufacturer, whereby initially they probably just an OEM supplier then move into making its own toys. There is also some improvements in quality from low to high. Therefore, redesigning packaging is a must.

Packaging also involve customer service, value-added stuffs and post-sales other than product presentation. Often times marketer sees packaging limited to “how a product being packaged?”. We also need to look into the pricing, incentives, content, ease of use and so on. By redesigning, we will be able to see any loopholes or new way of delivering the product. This is where examining the whole supply chain would be useful and fruitful if done right.

b) Modify Transportation

When there is supply there is always a need to transport them to the customers. Additionally with the most effective and efficient ways, of course. For example if you are a contractor you need to think where your sands, bricks and iron bars going to come from. Some questions you need to ask are they effective and efficient, what is the spoilt rate, what are the risks and at what costs. Sometimes you may get your raw materials cheap but the transportation cost is very high. You end up incurring a lot which you could have gotten it cheaper in total if you choose the lower transportation cost but slightly higher raw materials.

However in service business the transportation cost is more vague and sometimes not clearly define. how do you can “transport” in a service business? Say you are a telecom provider. Is it by your sales people, by your service to the customers, by number of brochures reach to your target segment, by the phone call you make to them? In service business, the definitive approach is “whatever you need to do to transport your service to the customers”. With this definition it entails marketing strategy as well on how the product is going to be transported. Modification of transportation will not only save money but also “safe” your clients database. I believe in todays competition while rough, fierce and ultra-competitive, it is easy to compete if you have solid planning and someone is overseeing that plan from time to time.

c) Invent with Suppliers

Not every supplier is necessarily supplying physical thing. And not all of them are being called “suppliers”. Some are called managing director, trainers, doctor, engineer, pharmacist, facilitator, manufacturer and so on. as long as they are the core group that give you the supplies to your customers, they are “suppliler” in this context. In some service business they argue that they don’t have any supplier because they produce the product themselves. Let say a manufacturing company that is designing leather office chair, who is their supplier? The designer. Why? Because without the designer you can never run your business properly and have happy customers. A number of times we put these core/essence group in our product design in their lab. We need to invent with them.

Another example is a consulting firm where most of the time they say their product is knowledge and they are the sole supplier. Most of the time a consulting firm is a “firms of individualist” because of intense competition among them and divided specialities that they possess. They are so guarded and refuse to share. This is the management should capitalize on this by getting them to work together and to-gather and to leverage their knowledge and expertise for new product lines. It doesn’t take much to come out with new product lines for a consulting or training firms. The demand is huge but the product offering is so little. We just need to invent and sit down together. Find a mutual ground and work on it.

d) Align with consumers

It is very interesting because they use the word alignment. Sometimes, what the customers wnat is A and we have A+. To align we should either remove the “+” sign or we sell to the customers the idea of having the “+” is significantly better for them. Not many products/services are too far off from what the basic customers needs and wants. There is always a neeed and want for every product or service, but we need to justify the economic part of it whether is it enough for us to sustain and make profits. That is more of the issue for any provider, to justify their own existence.

Additionally, when you have alignment with your customers we can also explore new directions. To align we need to understand the total business ecosystem so we know when to pull and push or stay.

I recently visit a long lost customer friend and he said he needs something new. Something that my company never did when we meet years ago. After 30 minutes chatting i found it is new requirement but with similar content. It just need some alignment, repackaging, additional value by the suppliers and more holistic delivery. I told him that, i think what you need is something we used to do but you just want it differently. He was happy with the explanation and i am currently working on that proposal. 😀

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