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| To achieve a Step Change in your sales and profits, we
must be able to overcome the 3 Barriers to improvement in consumer
supply chains; |
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| 1. |
Intense Competition |
| 2. |
The
Stock Dilemma |
| 3. |
Supply
Chain Complexity |
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| If we work with you, we will help you to overcome
these barriers in your specific situation in order to achieve a Step
Change in sales and profits. |
| So let’s start by understanding these
barriers… |
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| The product offerings in most consumer markets are
quite similar. This makes it difficult to differentiate from the
competition and therefore there tends to be strong focus on price as a
competitive tool. Most manufacturers have focused heavily on reducing
costs through such initiatives as outsourcing and lean manufacturing -
so there is limited scope to reduce costs further. |
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| Therefore, to achieve a Step Change in sales and
profits, we must create a decisive competitive advantage.
Also, this
competitive advantage must be difficult for the competition to copy;
otherwise the advantage will not be sustainable. |
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| Contact Us to discuss how
we can help you to develop a decisive competitive advantage for your
company. |
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| All companies seek to make money i.e. profits. And to
maximise profits we must do two things; |
• maximise sales, and
• minimise costs |
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| Also, because our customers demand a short order lead
time, we must keep some stock so that we can supply our customers in a
reasonable time. |
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| The problem is we can’t be sure how much our
customers will order. We might try to forecast but there is
one thing that we can be sure about – the forecast will be wrong. The
only question is ‘how wrong? |
| So here is the stock dilemma |
| On the one hand we want to maximise
sales so we must hold high stocks. But if our
customers order less than
expected then we will have excess stock. Excess stock leads to excess
costs, especially if the products have a limited shelf life or become
obsolete and we can’t sell them. |
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| On the other hand we want to minimise
costs so we must hold low stocks. But if our
customers order more than
we expected then we risk running out of stock and losing sales. |
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| So to achieve a Step Change in sales and
profits, we
must find a solution to the Stock Dilemma. To discuss how we can help
you to solve this dilemma, Contact Us |
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| All supply chains are complex and complex supply
chains are difficult to manage |
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| Our normal response to this problem is to divide
the
supply chain into functions and to appoint managers to manage
those
functions. Because the functions are less complex they are, by
definition, easier to manage. |
| So when we want to improve, we tend to focus at the
function level. For example; |
• The Purchasing manager might want to reduce the cost
per unit of raw materials.
• The Manufacturing manager might be interested in improving production
efficiency.
• The Logistics manager might strive to raise truck and warehouse
utilisation. |
| This can lead to a long list of improvement ideas. |
| But remember that the goal of your company is to make
money. So consider this: |
| Do all
improvements at function level lead to improvements of the supply chain
as a whole? |
| Consider these situations; |
• The factory manager wants to raise the productivity
of the factory. The company has an order for 10,000 of a popular
product. It is one hour to the end of the shift and 10,000 have been
produced. The factory manager could stop the machine and spend the last
hour doing maintenance or he could keep the machines running and
produce another 5,000 for stock. What should he do?
• The transport manager wants to increase vehicle utilisation. Today,
he has enough orders to fill one vehicle plus 10% of another. He could
send two vehicles out today, one of them nearly empty, or he could
delay the delivery of some orders to tomorrow so that the vehicles will
be better utilised. What should he do?
• The sales manager focuses on sales value. He is having a tough
discussion with a customer. They want a huge discount on a product,
otherwise they won’t buy. Should the sales manager take the order? |
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| These are not easy decisions to make. Complexity in
consumer supply chains makes it difficult to be sure that individual
decisions lead to improvement of the supply chain as a whole. |
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| So to achieve a Step Change in sales and profits, we
need a simple way of linking decisions taken at function level to the
performance of the whole supply chain. |
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| Contact Us to talk about
how we can help you and your people to make decisions at any level that
will lead to a Step Change. |
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