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The Fifth Element of Marketing: Supply Chain Management

The existence of competition means that there is always a need to differentiate your products and services from those of other enterprises in your space. And because nowadays product differentiation is hardly a significant factor in many industries, the only way to do this is sometimes through means beyond the popular planes of marketing. It is necessary to find other, more flexible aspects of your product and process approach beyond common elements such as packaging, pricing and placement. This is the side that most businesses ignore, and yet it is just as flexible as the more familiar elements of marketing and even holds greater potential in many instances to affect the overall image and perception of a product or service.

A business’ supply chain can be the secret weapon that drives profits to the highest possible margins in an industry – especially in markets where there is little or no product or service differentiation. Whether your enterprise’s supply chain is focused on physical goods or services, meeting and surpassing the demands of your clientele means that your supply chain must be defined by qualities such as efficiency and timeliness. Your supply chain can also be your business’ Achilles’ heel – the spoiling factor of an otherwise great product or service.

For example, take an instance where a client requires a certain good or service to be delivered within a limited time frame. The client approaches two potential suppliers with a brief outlining the short period of time within which the specified item must be delivered. Only the one with an agile supply chain will be able to meet the client’s requirements and be awarded the contract. Such situations occur on a daily basis, and sometimes costs us more than we realise. It is, however, very possible to transform an enterprise’s supply chain into an efficient and responsive business asset that grows an organisation’s profit margins significantly. According to Tim Richardson in an article on www.supplymanagement.com, there are 6 major steps to be taken to transform a service supply chain:

1. Take ownership

Ownership of the service supply chain has to come from the top and be defined with clear parameters and areas of responsibility.

2. Create a strategic understanding

In complex organisations, a cohesive strategy can get lost. Defining the service requirement in supply chain performance terms – including variables such as speed, flexibility and reliability across different markets and between current and legacy products – is key. A consultative process helps develop a template that clearly defines what the service supply chain is required to deliver.

3. Align and integrate

It’s vital that the purpose of each step in the supply chain is clear. The alignment of the service supply chain needs to be guided by specific market needs. Develop a supply approach that drives through efficiencies and creates the flexibility and resilience to respond to changing customer demands more effectively.

4. Consider an inventory re-profile

With service supply chain transformation comes a need to review inventory. A major stock keeping unit level re-profile of inventory may not only mirror a newly adopted structure and resupply routes, it may also reflect historical usage patterns, introducing a consistent level of service. This often calls for a major culture shift, but demonstrating the wider opportunity that an efficient supply chain can deliver can be compelling. Achieving that right balance between flexibility and cost means an organisation can respond to changing customer demands more effectively.

5. Take a global view

This is probably the most important lesson. All too often we see customers’ global operations structured and working in total silos. Even in multinationals that have so much to gain from re-evaluating this approach. Conversely, we see smaller organisations creating great examples of agile service supply chains in a truly global capacity. It’s about thinking right across the business and integrating customers and suppliers into that view. What will make the difference is where the whole, rather than the individual segment of the service supply chain is optimised. The right attitude helps when breaking down these silos. Visibility and accessible processes will deliver that advantage here.

6. Inhabit your customers’ world

It is essential to align yourself with your customers’ world when shaping high-performing supply chain processes. Moving closer to your customer delivers end-to-end integration and is how you see your own business in their terms. This is about thinking in market terms to create competitive advantage. The common thread across these steps is culture and aligned processes and thinking – shifting an organisational mindset to be more collaborative, flexible and integrated through every step-change.