Supply Chain Performance Management: a hot topic

The business challenge: cash to serve pressure.

Aiming for a continued growth of our revenue, our business creativity explores many possible routes to success.  Product diversification, promotional goods and events are just some of them.  Many of these sound business ideas however also increase the variability of demand.  Similarly, supply variability or uncertainty has increased for different reasons.  Cost effective outsourcing to far away suppliers increases the leadtimes and the risk for late arrival.  Inventory in the first place and alternately excess capacity are the obvious stock absorbers.  And we’re facing many good reasons to raise one or both to safeguard our service promise to our customers.  However none of these measures is favorable for the companies Return-On-Net-Assets (RONA). On the contrary our aim to create shareholder value is driving us into the opposite direction.

The business challenge: cost to serve pressure.

Global sourcing and professional procurement departments have allowed us to obtain most competitive prices for components and services.  Leaving less opportunity for “negotiated” cost reductions.  For this reason, increase of our business complexity, shorter product life cycles, upgraded service offerings,… are likely to raise the cost to serve.  In this competitive world it seems tougher to raise our prices accordingly.  As a result many of us are facing “margins under pressure”.  Profitability at risk makes shareholder value creation a true business concern for many executive boards.

The information challenge.

In the past decade, many manufacturing and distribution companies have invested heavily in ERP and advanced supply chain planning systems in an attempt to optimize business processes and planning. But these same companies learned that despite proven business benefits in operations, such systems do not address the gap between strategic business decisions and tactical operational policies. These companies have also experienced the frustration of having gigabytes of data in their enterprise systems but having none of it available in a format that supports  the strategic decision-making process. Balancing inventory and capacity, managing the product portfolio, optimizing the cost to serve and ensuring profitability have always been critical concerns. Any gaps between strategy and execution invariably show up here first. And that is precisely why Equazion was created: a one-of-a-kind, intelligent decision support tool for making business decisions from a broader, 360° perspective.