At the first annual Supply Chain Insights Global Summit (SCISummit) held in Phoenix, Arizona, earlier this month, Lora Cecere of Supply Chain Insights opened the event. In her opening comments she said, “[A]s we think about embracing the supply chain as a complex system, we need to imagine new processes outside-in.”
The “Outside-in” Supply Chain
Later in the SCISummit, Philippe Lambotte (Merck, Inc.) would remind us all:
“We think about supply chains as going from right-to-left or left-to-right…. What we don’t think about [is that] we’ve been raised and trained [to think of the supply chain] sequentially…. In fact, the world works in concentric circles…. What is exciting to me is making things available anywhere, anytime, and much faster.”
It is, of course, very true. We are used to planning, designing, and thinking about our supply chains like this:
While our logic is linear, the real world is not (as Lambotte properly assessed). The real world works like this:
All the raw materials are at the center of all the potential supply chains. All the customers and end-users are on the outside of the circles. There is not, necessarily, a single path from raw materials to the satisfaction of end-user wants, wishes, needs and desires. There may be, in fact, an infinite number of paths to be imagined and discovered as we rethink and re-imagine our supply chains “from the outside-in.”
Rick Sather, Kimberly-Clark Corporation’s VP of Customer Supply Chain, agrees with the outside-in evaluation of supply chain design, construction and performance. He told attendees at SCISummit that only seven or eight years ago, Kimberly-Clark (K-C) viewed their supply chain in a pretty straightforward way: “Make it and ship it.”
However, since 2005, K-C has thoroughly reworked their supply chain management and operations. Today, Sather said, we look at our supply chain by starting at “the [customer’s] shopping cart.”
Today, K-C has an entirely new view. Sather told the audience that, in the past, promotions frequently led to scenarios where they had “too much inventory in some stores” while other stores would be suffering from “massive out-of-stocks.”
K-C has taken a number of steps to move toward a truly demand-driven supply chain. They have begun using “shelf-back sensing,” and now have visibility into about 70 percent of their channel’s product consumption on a daily basis. They have leveraged tools from RSI (Retail Solutions) and Terra Technology to accelerate improvement.
K-C’s strategies for LEAN production (implemented incrementally over the last seven or eight years), combined with strategically placed inventory buffers and rapid response to demand-sensing allow their supply chain to respond with the right products at the right time in the right places. This has dramatically improved customer service rates and reduced stock-outs during peak demand periods and promotions.
Redefining Our Supply Chains
If the SCISummit brought one message into clear focus it was just what Lora Cecere has been trying to tell supply chain managers and executives for some years now: The new world of supply chain management is not about making “old systems, like advanced planning, …faster…. [I]t requires the redefinition of what we’re doing…. It’s not about ‘evolution,’ but a ‘revolution’” that’s needed if companies are not going to remain “stuck” with little or no real improvement in the coming years.
Stay tuned for more updates from the Supply Chain Insights Global Summit 2013 right here in coming articles. Also, we would be delighted to hear from you. Please feel free to leave your comments here, or contact us directly, if you wish.