Anybody with a stake at any point along the supply chain will tell you that things can go wrong in a second. And when they do, every business suffers the effects. That’s why the importance of supply chain sustainability goes beyond going green, protecting the environment, and proving the business’s values. Economic supply chain sustainability helps companies save money while boosting their productivity. When sustainable techniques and tools are added to the supply chain, businesses can increase the efficiency of infrastructure and processes like supply, monitoring, and prediction of demand.
Four Goals of Economic Supply Chain Sustainability
The many benefits enjoyed by companies with an economically sustainable supply chain can be traced back to four fundamental factors:
- Acceleration and improvement of decision-making
- Effective deployment of inventory
- Efficient utilization of assets
- High fulfillment rates and improvement of customer satisfaction
The benefits of these four factors cut across the entire supply chain and heighten a company’s potential to serve customers and return value to stakeholders.
Tools and Strategies Required to Achieve the Four Goals of Economic Supply Chain Sustainability
In order to achieve the four goals of an economically sustainable supply chain, businesses need technology that provides visibility into the entire network. Here are three capabilities the supply chain platform must support to enable economic sustainability.
1. Connecting demand predictability, lead time, and customer satisfaction
This is one of the key strategies companies must master to achieve the four goals of economic supply chain sustainability. It enables them to get a handle on three important factors that dictate the pace of the supply chain: demand, supply, and time.
A strong sign of profitability for any business is when it can accurately predict changes in demand and match them with changes in supply across any given time period. This allows businesses to maintain service levels across all customer segments and sales channels with minimal backlog, resulting in high cash conversion rates.
But this is a fragile scenario, one that can easily get thrown out of balance when something goes wrong on the supply end, as it often does. Demand-driven businesses are almost always hit hard by disruptive shocks caused by unforeseen supply variability.
Today’s non-linear supply networks rely on so many providers just to deliver one product that it leaves demand-driven businesses vulnerable to bottlenecks when one factor goes wrong.
Establishing an economically sustainable supply chain requires businesses to be able to collaborate with suppliers and trading partners seamlessly and consistently, optimizing their safety stock, and improving monitoring of activities up and down the supply chain network. Mastery of supply and demand variability can fuel a digital supply chain that seamlessly serves both company needs and customer demands.
The resulting real-time data on business-critical processes like supplier performance, product movement, and vendor compliance results in the following:
- Decision-makers can make decisions more quickly and accurately on factors like alternative sourcing, manufacturing planning and scheduling, and distribution strategies to better meet customer demand profitably, on time, and in full;
- The business is empowered to leverage its data from the supply chain overview to better leverage company assets and deploy inventory to achieve operational efficiency;
- Reliable supply chain planning and execution optimizes fulfillment and keeps customers happy and satisfied, coming back for more.
Thus, the goals of an economically sustainable supply chain are satisfied.
2. Using visibility and data to maximize the supply chain
The power of cost-benefit analysis, AI-driven inventory management, and insight-driven decision-making can be seen when balancing and synchronizing supply variability with shifts in demand at the opposite ends of the supply chain.
These capabilities make it possible to leverage historical data and merge it with expected customer behavior to plan out creative demand-driven strategies, as well as make sourcing and distribution decisions.
Businesses are also able to visualize activity across the supply chain and spot early signs of supplier trouble, which enables a proactive response to any supply variability issues in their extended network. In addition, this capability can be tied to other business needs like environmental sustainability and social sustainability compliance.
At this point, the business can achieve the goals of a sustainable supply chain as insight-driven analysis and action lead to:
- Operational optimization
- Better allocation of capital to acquire material, whether raw or finished, needed for timely delivery and customer satisfaction
- Significantly improved market share due to greatly reduced time to market, better allocation of investment and operational capital, and satisfying customer needs.
3. More effective control of the supply chain to boost profitability and customer loyalty
With real-time, real-world data at their disposal, businesses can gain better control of the supply chain. As such, the inherent risks of supply variability are fully understood enough to bring production and distribution into alignment in order to fulfill customer expectations, thus achieving the goals of an economically sustainable supply chain as their bottom line significantly improves.
The Logility® Digital Supply Chain Platform
Logility is at the forefront of the movement to accelerate the sustainable digital supply chain. We’re helping businesses better sense and respond to changing market dynamics and more profitably manage their global businesses.
The Logility® Digital Supply Chain Platform leverages advanced analytics and artificial intelligence to empower businesses to achieve greater visibility, accurately plan and accelerate cycle times, improve precision, and boost operating performance.