In the age of supply-chain disruption, who are the winners and the losers? Martin Verwijmeren, chief executive officer of MPO, lays out the keys to success in a time of great uncertainty.
SCB: Some companies are outpacing others in their ability to adjust to so-called disruption more quickly. Why do you think those particular companies are winning and growing while others are stalling?
Verwijmeren: We have identified four reasons for that. The winners these days put the customer first. The customer is king when it comes to anything, anyplace, anytime, anyway. Beyond that, winners recognize that competition is global. They see internationalization as an opportunity instead of a threat, and go into foreign markets to expand. Third, they run their companies as a network. They recognize that they have a core strength, but also make use of other parties who specialize and help them to achieve best-of-breed performance. Fourth and finally, they embrace the cloud as an enabler to bring them to the next level.
SCB: You say they think the customer is king. At the same time, there has to be a limit to what the customer is demanding if it challenges your profitability. Isn’t there some kind of a balancing act that needs to be achieved?
Verwijmeren: Exactly. That’s also the secret behind the success of winning companies. They master the art of supply-chain orchestration. They’ll run the entire process not just in their internal operations, but also with their partners from an end-to-end perspective. They’re able to differentiate their supply chains per customer, making use of modern systems in the cloud.
SCB: The word “orchestration” conjures the image of a symphony conductor and musicians all playing in unison. Is that a difficult task in a multi-tiered global supply chain?
Verwijmeren: Exactly. It’s about multi-party orchestration. The winners, whether they’re manufacturers, wholesalers, retailers or logistics service providers, are working closely together to manage all their processes, from an end-to-end perspective across the network.
SCB: They must face the challenge of “delighting” the customer even as they grow.
Verwijmeren: Yes. The real winners have mastered the art of managing micro supply chains. They plan and execute for each and every customer order, be it for sales, purchase, return or transfer. They take into account inventory levels, product availability, carrier capabilities, transport services and other requirements that play a part in the end-to-end capabilities of the supply-chain network.
SCB: So in effect, every customer is an individual supply chain?
Verwijmeren: Yes. We call this customer chain control. Every customer order deserves its own supply chain, which needs to be controlled in a real-time fashion, but it also means planning and execution converge into one equation.
SCB: Another big buzz term today is supply-chain digitization. How does that figures into efforts to achieve excellence in supply-chain orchestration?
Verwijmeren: We see digitization as one of the ultimate challenges. Companies are already digital to a certain extent — they’ve invested millions into ERP [enterprise resource planning] and warehousing systems, for example. But that’s not enough to master true supply-chain orchestration. You need to add capabilities such as a control-tower platform to manage multi-enterprise networking. Secondly, distributed order management, to be able to source dynamically and pick the right distribution channel. And third, a multi-carrier TMS [transportation management system] to manage across carriers, taking into account their individual capabilities.
SCB: So many companies still exist on paper, relying on manual processes and spreadsheets. For all this talk of digitalization, we’re not completely there yet, are we?
Verwijmeren: Right. There’s still a chunk of manual work being done. But winners these days are trying to minimize that effort. They’re working on creating business rules and smart algorithms in conjunction with multi-enterprise networking, a control tower platform, distributed order management and transportation management.
SCB: How different is progress toward these goals among European versus North American companies?
Verwijmeren: Not that much. We face the same challenges on either side of the pond, and even in Asia-Pacific and South America. It’s quite a universal need these days, and the trends I’ve described are applicable to all regions. Supply chains today aren’t constrained to one region. There’s not that much of a difference between them when it comes to system architecture or business rules.