Today companies are not only delivering a product, but delivering a bundled service with additional capability and additional promises. This starts with the initial delivery; it has been said that "the quality of the information provided with a delivery is as important as the product quality itself". The reality for anyone who has been made a business promise is the moment that promise is broken, trust has been compromised and customer service has been tarnished.
For those companies that are waking up to omni-channel thinking, the customer promise is paramount and the promise should be (OTIF) On Time In Full, this is a costly level of service to maintain all the time every time, so the key is "How well you manage failure?"
If a Customer orders a camera, camera case, tripod, memory card and other accessories from you they want everything together. To let them down because one of the basic components is missing seems illogical and commercial suicide, so stocking most of the product runners (core commodities) seems like common sense; where as the main piece, the camera itself should drive the promise date.
With this in mind the stock check starts with the primary product, then any key secondary products such as a secondary lens would be logical, then the capability to deliver needs to be checked, then the promise can be made.
It all sounds simple but the reality is that very few businesses are able to achieve this, supplier systems are not integrated, stock accuracy is poor, logistics integration is not what it should be; so the likelihood of getting it right more than 99% is low.
Businesses are protecting themselves from this risk by getting more and more stock, this makes sense on the commodity items like memory cards, batteries etc. But the more they invest in stock of shorter life cycle products, the more that inventory is at risk of discounting and obsolescence, also the more stock you have the less responsive your supply chain becomes.
So the techniques you can look at to improve are: better demand sensing tools, improved data analysis, improved exception management that frees your supply chain staff to focus on the things that really matter.
A number of University Research projects I have launched recently point to the "value of the promise", the cost of failure and the amount companies are having to invest in trying to protect themselves against failure is significant.
Are you exploring the possibilities of Predictive Replenishment and giving yourself insight into your Supply Chain through smart exception management?
Dave Food
T: +44 7775 861863
Touching Tomorrow,today