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Part - II

Supply Chain of the Future

A critical element in the supply chain is the presence of front-end teams operating interactively as one unit, or "face to the customer." The customer expects transactional ease and perfection in order fulfillment and quality. A redefined customer relationship in the enterprise of the future will have a direct correlation to how many times an order is fulfilled correctly on the first try, according to what participants in that marketplace segment are looking for.

The future supply chain organization will be one that feels that it has a direct impact on market share, among many other non-traditional metrics. A company's market share is directly and indirectly impacted by a supply chain organization in the following ways:

• Minimizing warehouse mis-picks, transportation or cross-dock errors, etc., can result in a one-time market share increase within a period. This keeps the customer from moving to a competitor to complete the order, which would cost market share.

• Sustained performance improvements can help an organization satisfy customers and minimize any tendency to go elsewhere.

• Routinely meeting customers' basic expectations means repeat business and more customer loyalty.

Both customers and suppliers are striving to improve efficiencies, and a quality customer would love to engage in discussions and interactions in order to avoid inefficiency and subpar performance.

Digital Loyalty Networks

One important concept to ensure long-term sustainability and growth is the use of digital loyalty networks, which use new communication and processing technologies and permit online sharing of information across the enterprise and with trading partners. This creates a true end-to-end interaction, resulting in a network of collaborators and loyalists aimed at satisfying everyone associated with the transaction, business or network.

Of fundamental importance is portfolio management, which sorts out the one-sided expectations that may result from a weakness in the supplier's core competencies, unrealistic customer expectations or other factors. This portfolio approach offers the supplier a choice of dealing with a group of customers or not. It challenges all aspects, segments and needs of the current and desired customer portfolio, and examines whether the supplier can meet certain customers' expectations.

Historically, purging customers was unheard of, and it is still not popular. Doing so doesn't necessarily mean losing share in the long run, since the company would be focusing its energies on building business in the market segments where digital loyalty network members are present. However, knowledge of what you can, can't or are willing to do is a powerful criterion for positioning the company for growth.

Supply chain and technical "collaborators," or those who bridge external and internal activities, along with "loyalists" - those who interface with the customers - must operate effectively for digital loyalty's promise to be realized. Connecting the loyalists and collaborators is the ultimate goal for the enterprise of the future. The result is an enterprise approach to optimizing the path for improved return on investment (ROI) metrics and improved business architecture. Digital loyalty networks represent a vision for today and the future. Indeed, many companies are now in the early stages of maturation in collaborative and loyalist activities.

The world is changing more rapidly today than ever before, and enterprise technology professionals are joining with ERP technological enablers in order to demolish and transform the inflexible organizations of the past. The focus is on the one key common denominator - the customer's order - which is every teammate's top priority.

To reiterate, an effective supply chain management operation understands the importance of the vital three elements of people, process and enabling technology. Indeed, the mantra among successful SCM teams is adherence to them as the keys to achieving operational excellence through perfect order fulfillment.

Concluded.

* Joseph Slota is a supply chain professional with Deloitte & Touche LLP. He is a former vice president for supply chain management with Philips Electronics NV and held positions in finance, marketing and operations management with Johnson & Johnson, Mobil Oil, Reckitt & Coleman and American Cyanamid.