Supply Chain Best Practices for 2021
Supply Chain Best Practices is a topic of great interest to Source International and every progressive supply management organization. We study the market to gain insights into what the best and the brightest are doing. One such resource is Gartner, a leading research and advisory company founded in 1979, that researches the supply chains of hundreds of companies to produce the Gartner Supply Chain Top 25, an annual ranking of the world’s best supply chains. Gartner’s Top 25 celebrates examples of supply chain excellence that understand customer value, invest in demand management, and promote innovation.
The three key trends of supply chain best practices that stand out for 2021 are:
The Purpose-Driven Organization
In large corporate supply chains, more ambitious sustainability goals are being set and the plans to achieve these goals look more achievable than ever. Some are even treating environmental, social and governance (ESG) investments as a purely operational cost. Many investments benefit both planet and business with sustainability factors like carbon emissions considered along with cost and service trade-offs. Some examples include optimizing inbound supply and distribution networks to take vehicles off roads and reducing air freight. Process-based companies are reusing heat from upstream manufacturing processes to power others downstream. At a product development level, we see more recyclable and compostable materials and creative solutions for increasing shipping density. Some products are being designed for circularity, while others are designed to drive a smaller customer environmental footprint. Beyond the natural environment, many supply chain organizations have increased focus on diversity, equity and inclusion (DEI). Some have even linked executive bonus compensation to progress against DEI goals.
Customer-Driven Business Transformation
The COVID pandemic produced supply disruptions, larger-than-normal demand swings, and an accelerated level of business model transformation, requiring supply chains to be highly adaptive. Many changes were driven by an increase in products and services delivered directly to customers and patients, instead of through more traditional, centralized locations such as physical stores and medical facilities. Retailers saw tremendous shifts from brick-and-mortar channels to direct-to-consumer (DTC) sales, which in turn required significant investments in fulfillment center automation to handle elevated e-commerce orders. As DTC orders have increased as a percentage of sales, the higher cost of delivery in the “last mile” has led to innovation and new partnerships such as co-sharing brick-and-mortar space for specialty sales and expanded e-commerce returns offerings. Overall, the supply chains most able to adapt to shifting business conditions win in the marketplace.
The Digital-First Supply Chain
Supply chain leaders have reached a point where they consider themselves “digital first” in the use of technology to enable more seamless customer experiences and more automated and insightful decisions in supply and product management. A common feature is a shift toward common ERP platforms, processes and datasets that can be leveraged for insight and decision making. Artificial intelligence (AI) and machine learning (ML) are being used more commonly to analyze supply constraints in real time and balance market share, profit and customer support objectives such as in transportation to monitor and manage shipments. Shop floor automation continues in factory environments with some of the more advanced players using centralized, remote factory monitoring and accelerated automation in distribution and fulfillment centers. Digital transformation requires talent. Several supply chain organizations run digital literacy and dexterity programs to enable employees to better understand and exploit digital business opportunities and learn how to use data-driven analytics for more informed decision making in their roles.
2021 Supply Chain Excellence Ratings
The 2021 Rankings of the world’s most superior supply chains that lead the workd in deveoping and implementing Supply Chain Best Practices:
- Cisco Systems
- Johnson & Johnson
- Schneider Electric
- Dell Technologies
- HP Inc.
- The Coca-Cola Company
- British American Tobacco
- General Mills
- Bristol Myers Squibb
Superior supply chains deliver on the business’s purpose and employing supply chain best practices help organizations understand customer value, invest in demand management, and promote innovation against ESG using peer benchmarks for supply chain transformation and to accelerate supply chain performance. Thanks to Gartner for this excellent report on and for some very helpful Supply Chain Best Practices to shore up supply chains in 2021 and beyond. Download their complete report HERE.
For more information on Source International and how we can help your company achieve supply chain excellence contact our experienced team today to set up an exploratory call. You’ll be glad you did!