3 Dangers of Resting on Your Supply Chain Laurels

by David Weaver

It is a common phrase: "Don't rest on your laurels." In other words, don't be satisfied with your past successes. Go out and strive for more. In today's culture of "hustle" and entrepreneurship (for better or worse), where you are expected to be available to your business or boss 24/7, this phrase seems obvious. However, we have seen many businesses over the past several years run into problems due to a lack of supply chain innovation, slow reaction to changing market conditions and a resistance to change.

Just last week it was announced that Sears/Kmart will be closing another 40 retail locations, with a total of 300 planned closures this year. The company is not alone. This is just one example of many in the current retail crisis that is seeing malls being boarded up or repurposed. From an outside perspective, it seems as though more effort could have been placed in developing an omnichannel strategy, as consumer preferences changed and the desire to shop from home grew.

Those companies that perhaps labeled omnichannel strategy development as a trend or buzzword are now struggling. This is where I see the danger for supply chain managers and the industry as a whole. With so much technology available to managers, it is easy to become overwhelmed and dismiss the latest developments in blockchain, artificial intelligence, machine learning, and virtual reality as a hype that has nothing to do with your business. This is, however, a dangerous and slippery slope.

While some companies are still figuring out the best way to make a quick buck by cutting costs along supply chain operations, others are out trying to separate buzzwords from practical new solutions to current supply chain problems. If proper due diligence is not done, several dangers lurk around the corner. Here are three:

Upset Customers

It is not difficult to upset a customer. It is as simple as missing a promised delivery date that could drive them to a competitor. Interaction with end-users is the final step in a long and complex supply chain and should therefore not be underestimated.

In the case of brick and mortar retail, face-to-face interactions are essential. I am currently shopping for a new kitchen. I have a budget and am ready to buy. I visited two locations to compare prices and offerings. In the first store, a small, family owned business, I was greeted, offered a drink and provided with competent advice. In the second store, a large furniture chain here in Germany, I was completely ignored while two employees talked about their after-work plans. Where do you think I am going to buy my kitchen?

Something as simple as customer service training can go a long way toward being successful in the final stage of supply chain operations. However, if large chains with limited online offerings continue to rest on their "large chain" status and don't focus on fulfilling customer needs, they will certainly run into problems in the future. This goes along the lines of the omni-channel experience.

A big topic within retail and e-commerce at the moment is virtual reality. IKEA announced last month the launch of its virtual reality online store with up close and personal views of their furniture selection. This is not a solution for customers who go to the store for the meatballs, but it certainly adds value to the overall customer shopping experience. IKEA seems to get it. Will other furniture stores follow suit?

Stronger Competitors

When I think about competition within the supply chain industry, the first thing that comes to mind is Walmart's push back against Amazon. Walmart appears to be one retailer not satisfied with resting on its laurels of being a low-cost brick and mortar retailer. It serves as an example of a proactive approach. If you are not figuring out how to get your customers the products they want in a comfortable online shopping experience, or providing them with great service and user experience at your locations, someone else will find a way to do this.

Not too long ago, there were many startups striving to be the next "Uber" for the logistics industry. The competition within the last-mile delivery space is fierce. I could imagine, after weeks of bad press and scandals emerging from the popular ride-sharing company, some of those logistics startups are now distancing themselves from this statement. Now it might be hip to be the next Lyft. Lyft is viewed as the main Uber competitor and appears to be winning with its slow and steady strategy. While Uber was busy "hustling", Lyft was slowly building out its service and taking care of its people along the way. The point? There is always someone nipping at your heels looking to take some of your market share. Assessing market threats and opportunities on a regular basis is essential to survival.

Unsatisfied Employees

If supply chain managers continue to be tasked with merely finding ways to cut costs and are left with limited room to create and innovate due to rigid organizational structures, they may soon become discontent with their roles. Establishing a culture of innovation and encouraging employees to keep an open mind about change and the implementation of new technology will help create a positive working atmosphere.

Continuing with the Lyft/Uber example above, it all begins with the new employee onboarding process. Uber clarifies numerous requirements upfront with new drivers, then the contact between company and driver is held at a minimum. New drivers at Lyft are mentored by an experienced driver and are guided through the entire hiring process. They even receive a starter packet from the company. For these reasons, and many more, Lyft is continually tagged with having a better corporate culture than Uber. This is an important aspect for all those last-mile startups out there. Take care of your people and spend less time "hustling" and more time figuring out ways to improve your corporate culture.

Closing thoughts

At the end of the day, it is important to keep in mind that the supply chain is more than a cost to be managed. This brings back to mind one of my favorite quotes I heard at a supply chain conference in 2014: "Supply Chains are not a cost to be managed. Supply Chains are an asset to be leveraged and should be an engine that drives value creation." - Jeanne Reisinger. With this statement in mind, it is clearly important to continue to find ways to leverage the supply chain asset and not become content with its current performance. This can be accomplished by keeping end users in mind, analyzing market opportunities and threats and creating a corporate culture that is open for change and encourages innovation.

What other dangers to the supply chain industry are lurking around the corner?

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This article was originally published on the All Things Supply Chain Blog.



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About the author

  • David Weaver

    I started working for INFORM in 2011 and have since developed a passion for all things related to inventory management and demand planning. I am an online marketing enthusiast and an inventory and supply chain optimization devotee.

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