Written By: Matthew Baggetta
Feb. 27, 2017

4 Keys Leading Suppliers Use To Unlock Hidden Growth Potential

Last week, we saw how ERPs alone cannot handle the kind of demand volatility mass customization presents to suppliers—especially when it comes to managing product customization for brands and the retailers they serve.

In the last mile of product customization—arguably the most complex leg of any supply chain—suppliers are meeting their customers’ needs, achieving the perfect order, and unprecedented levels of customer satisfaction by adopting the right tools for the job.

When using the right tool for the job, challenges and obstacles become opportunities to drive new areas of growth and cost reductions. This week we dive into the four key business capabilities that separate leading suppliers from the crowd.

Turn Stress Into Success

It’s bright and early Monday morning. You promised your biggest brand customer you’d produce three-thousand cases of multi-packed product for start of ship by this Thursday. It’s 6am and all the right personnel are on the floor ready to go, their headcount calculated based on careful estimates of your production capacity. The lines start to hum. All day long you are swamped with emails, paperwork, and meetings about last week’s orders and don’t get a chance to check in with your line leads on this important order.

At day’s end, you get reports that your team has produced four hundred cases. Not seven hundred and fifty like you planned. Your pupils dilate and that vein in your forehead starts to twitch again. Thoughts race through your mind: Why wasn’t I notified sooner? There’s no way I’ll make the deadline at this pace. If I don’t deliver this order OTIF, our relationship with this brand is toast. Night shifts, I’m going to need night-shifts. How am I going to cover the costs of last minute night-shifts? Who am I going to find to work them on such short notice? And on and on…
This scenario isn’t uncommon for many suppliers. With the rise of mass-customization style demand, and an exponential increase of touch-points, filling orders can become complex and overwhelming especially when it comes to last mile product customization.

But for today’s properly equipped, leading suppliers, this additional complexity is a gold mine of potential growth rather than a hindrance. With the right tools, more complexity means more data. The tools that are able to capture, analyze, and display the right information at the right time, can unlock actionable, data-driven insights and capabilities to inform and power the everyday decisions suppliers must make to run their operations.

Real-time, data-driven decisions are powerful because they are more accurate, and representative of the present state of your operations at any given moment. These types of decisions allow operations personnel to make consistent, incremental adjustments that, over time, cascade across entire systems and optimize entire workflows.

The stress and uncertainty, thousands of dollars in chargebacks and goodwill of your brand that is jeopardized in the scenario above can be prevented with a smart system that knows the location, state and condition of all your product and packaging materials, and the pace and efficiency of your shop floor operations. Such a system notifies the right people of anomalies in real time. This surfaces small inefficiencies–or big ones–before they spiral out of control.

4 Key Growth Capabilities of Leading Suppliers

Only contract packagers and 3PLs who can develop the following business capabilities will be able to keep pace with mass customization demand and offer brands consistent, reliable last-mile product customization services:

1. Operational Agility: The ability to onboard brand customers quickly and securely into your network and provide real-time inventory and production capacity updates. The ability to get lines up and running with standardized processes, and the ability to do all this with a greater proliferation of SKUs, regardless of location.

2. Speed to Market: In addition to launching a greater variety of products and promotions, you also need the ability to collaborate with brands in real-time, to reduce cycle times, and get products on shelves faster.

3. Risk Management: Increased variability introduces uncertainty to fulfillment and plan attainment. You are going to be expected to mitigate hazardous business risks, demonstrate high levels of quality control, and reliable traceability.

4. Persistent Innovation: You need to find proactive ways to improve your operations, and share savings and cost reductions with brand partners. You will be expected to use data-driven insights to identify areas of improvement and offer a mutually beneficial growth and scaling opportunities.

Today’s brand owners prefer to work with last-mile product customization experts invested in digitization, and capable of building profitable, resilient, long-term partnerships. Suppliers armed with the tools to increase operational agility, reliability, collaborative capabilities, and able to support continuous iteration are the ones thriving in the volatile contract packaging services market.

Those that resist investing in agile, data-driven capabilities fail to secure and nurture high quality strategic partnerships. Dependence on traditional tools and yesterday’s practices leaves suppliers unequipped for the everyday challenges they face in their organization, and the industry’s evolving needs.

Square Pegs and Round Holes

Part of the greater stress and struggle to manage mass-customization style demand comes from suppliers’ attempts to modify traditional ERP-only solutions to accommodate modern supply chain dynamics. But the rigidity that made ERPs stable in the past is ultimately becoming too unwieldy to keep pace with complex demands that require flexible and timely strategic response. ERPs have long been supporting business resource management without any allies, but today they’re no longer alone.

Together, ERPs and purpose-built, domain-driven SaaS applications can work together to relieve leading supply chain suppliers and the brands they serve, of complicated, costly and time-consuming IT commitments, while delivering the operational agility, cost-effectiveness, and usability necessary to establish mutual stakeholder satisfaction and drive business growth.

Today’s volatile market conditions didn’t appear out of thin air. To learn more about last-mile product customization, and the traditional vs. cutting edge solutions to handle it, check out Part 1 in our series on last-mile mastery: Why Depending on ERPs Alone Is Your Company’s Biggest Handicap. Next week, our series continues with Part 3: The Last-Mile Product Customization Tech Gap & ERP Myth.

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