Supply chain organizations face significant pressures resulting from global competition, shorter product life cycles, and lean economic conditions. The escalating requirements of large customers create painful challenges for those companies still tied to conventional supply-chain processes. 

“These customers are compelling distributors to adopt value-added, supply-chain services, such as collaborative planning and vendor-managed inventories,” says Jeff Pyden, managing director at Georgia-based, OmniVue. “Predicting and responding to customer demand is a consistent problem. Distributors constantly struggle with too little, or too much, inventory. These factors have become the bottom-line quality control issues.”

At each step along the supply chain, outdated systems make it difficult to identify products that are moving slowly, or are out of stock. Left unresolved, these issues lead to discounts, lost orders, higher inventory costs, and lost customers. To stay competitive and avoid being bypassed altogether, supply chain businesses must adapt to evolving market demands by reducing costs and creating service-related income. A poorly managed supply chain is a key quality issue.

“Gaining control over every aspect of purchasing, sales, and distribution, from order entry and procurement to sophisticated inventory and shipment management is essential… companies must control costs while providing great service by managing inventory, orders, and logistics more efficiently,” insists Pyden. Although one technology solution will not fit all distribution models, integrated solutions, such as MicroSoft Dynamics for Distribution, functions across the enterprise.

Purchase order management

Having the right goods in inventory is critical, because an out-of-stock situation can mean a lost sale, or even a lost customer. Crucial input from customers establishes forecasts for future demand; it is equally vital to have the right replenishment processes and an accurate inventory.

Inventory management

How much inventory is needed? When is it needed? Where is it needed? Not all stocked products deserve equal attention. “Too many companies lack that quality process allowing them to categorize products by making an ABC-analysis based on the quantity sold, sales volume sold, or the contribution margin,” explains Pyden. “By setting up parameters to decide when to replenish the product and how much to purchase, attention to quality production becomes axiomatic.”

The basis for deciding how much to purchase can come from a forecast made by input from relevant contributors. Forecast and replenishment parameters help in the decision-making process and the more accurate an inventory, the less is needed in safety stock.

Demand planning

As businesses are becoming increasingly geared to serve customers, demand planning gains importance. The performance of a business depends upon the quality of the demand plan.

“Poor forecasts can lead to insufficient, or unnecessarily high, finished good stocks, unused raw materials, misused production assets, and low margins,” says Pyden regarding the cost of poor planning.

Businesses that establish sound demand planning practices have significant competitive quality and customer satisfaction advantages. Distribution centers which streamline business processes help ensure that information is accurate, updated, and easily accessible. Customer, item, and pricing data uploaded automatically assists in building accurate quotes. Salespeople can be sure that the items quoted are in stock and that they are building quotes and orders based on the correct pricing; and once the order is submitted, orders must flow automatically for processing and fulfillment, compressing the total order time from order to delivery. This process accuracy is seen as a quality issue both to the internal customer as well as the end-user.

Sales order management

When the customer asks for a delivery date and price, the clarity of the answer often determines whether there is a sale or not. To attract and keep customers, the ability to take orders from different channels, push maximum sales to the customer, be prepared to answer questions regarding availability and pricing issues, and handle the inevitable return of some purchased items, are all fundamental quality issues.

Logistics management

In this highly competitive marketplace “It’s more important than ever to deliver the right goods in the right quantity at the right time to all customers,” Pyden notes. “Quality is experienced by having the right goods placed in the right warehouses, as well as a flexible transportation arrangements… whether you do the transportation yourself, or rely on a third party.”

Business agility and strategic vision

Because every distribution organization faces unique challenges, strategic technology providers should never presume to know the right solution for any organization until the operation has been evaluated. Examining the current methods for running the business, including processes, and strategic vision for the future, are essential. Business agility experts, such as OmniVue, must gather knowledge first, and make recommendations second.

At different stages of a business life cycle, distinct challenges need to be faced, yet the priority of optimally utilized and integrated technology solutions is frequently relegated to the back burner. Some of these stages include:

• Growing organizations find that staff members are busy tackling strategic priorities and do not have the time required to ensure that patches, fixes, and general application maintenance are kept up-to-date with current technology.

• IT staff is rarely utilized strategically due to excessive time spent on systems maintenance.

• There is a greater focus on core competencies instead of the responsibility of hosting and maintaining business technology applications.

• The company has outgrown an old system and needs to upgrade or evaluate new options.

• The company purchased an upgrade or new software, but the install and implementation failed to meet expectations.

• The company requires greater efficiency or effectiveness from its current software.

Pyden talks about a five-point methodology in which quality is central—envision, elaborate, engineer, enable, extend—all of which are designed to:

• Optimize limited time and resources

• Develop a scalable and adaptable long-term strategy

• Integrate world-class solutions at an affordable price

• Achieve competitive advantage

Whether a business owner, operations manager, warehouse manager, quality control/quality assurance manager, or sales executive, the focus is almost never on software technology solutions, rather better information to make better decisions. The ability to see the interdependent relationships of an ERP (enterprise resource planning) system, full accounting functionality, and a CRM (customer relationship management) solution avoids the segmentation, silos, and compartmentalization that deprive companies from true market agility. Strong forward-thinking operational and strategic leaders recognize that changing core business processes can comfortably transform potential to authentic acceleration of quality, profitability, and growth by configuring software solutions as capabilities.