Articles

Reduce Costs and Enhance Supply-Chain Accuracy

Categories: Business Management, Distribution & Supply Chain, Innovations, Trends & Technology

Information-gathering systems and analytical tools have received little attention from the media. Yet a recent Bloomberg BusinessWeek survey found that these tools are expected to become increasingly important in both the jansan market and many related supply-chain industries.

The survey, conducted during in the summer of 2012 and published in January 2013, asked 318 directors, managers, and C-level executives from around the world—almost all of whom are involved in their organizations’ supply-chain management—about what types of information-gathering systems and analytical tools they use now and what tools they expect to use by 2014.*

These are some of the key findings of the survey:

• Eighty percent of respondents indicated that better demand and forecasting tools will be necessary in their business operations by 2014.
• According to 78 percent of respondents, systems that allow distributors to collaborate with their customers and suppliers will become a bigger concern by 2014.
• Seventy-six percent and 77 percent, respectively, indicated that supply-chain analytics and sales and operating planning will become more pressing issues next year.
• Nearly 80 percent indicated that supply-network traceability will be a top issue for them by 2014.

For many of these respondents, the recent financial crisis has had a two-fold impact. When the economy started to sputter in 2008, many organizations initially stopped or curtailed investing in analytical tools, which are defined as advanced software programs or Web-based technologies that allow companies to reduce operating costs by making more accurate purchasing and forecasting decisions.

Yet the downturn also eventually drove many companies and supply-chain executives to explore the numerous benefits these tools offer. This is because real-time information often becomes all the more critical during economic downturns, especially when it comes to making purchasing decisions. When money is tight, organizational pressure to spend wisely, reduce costs, and make more prudent purchasing decisions takes on increasing importance.

“The supply chain is a very complex problem that you have to solve in real time,” says David Dobrin, president of B2B Analysts, Inc. “Sales operations and planning [are] where the rubber hits the road—they are the keys to aligning supply and demand.”

For many executives and organizations, these lessons, once learned, become a part of standard operating procedure. Reducing costs, improving product availability, and upgrading supply-chain capabilities remain high on the list of priorities even as the economy begins to recover and many sectors and companies once again focus their efforts on growth and expansion.

First and Foremost: Accurate Forecasting
While the Bloomberg BusinessWeek survey investigated a number of distribution and supply-chain issues, at the top of the list in importance—and one that is specific to the jansan industry—was the need for planning tools that improve supply forecasting. According to some of the survey’s respondents, the ability to forecast product and supply needs is critical to reducing business operation costs over time.

One timely example of this principle came from Jim Keppler, an executive with Whirlpool Corp. Keppler says his company was able to shift 4 percent of its fixed supply-chain costs over to variable costs as a result of using analytical tools that helped them better forecast their supply needs. “We focused on inventory reduction,” he says, “which enabled us to consolidate warehouses and reduce total warehouse space and in turn lower operating costs. “

Other sectors including health care, hospitality, government, and education could also benefit from using these analytical tools. However, many are unaware that these systems even exist, let alone how they could benefit organizations in a variety of industries. This is also true for many within the jansan industry.

Forecasting tools allow jansan distributors and facilities of all kinds to accurately address their product needs (especially when it comes to paper and cleaning products), thus leading to cost-effective purchasing decisions—a major money-saver when budgets are tight. Especially now, these tools and the information they supply are increasingly important.

These systems provide much greater accountability, accuracy, transparency, traceability, and sustainability for supply-chain management. According to the Bloomberg BusinessWeek survey, a clear majority of executives and other thought leaders in this area believe that these tools can reduce operating costs and improve product availability as well.

*About the survey: About half of the respondents were selected from companies with annual sales of US$100 million to $1 billion; the rest were from $1 billion to $5 billion companies. The largest business sectors from which respondents were pulled were manufacturing and industrial. Additional respondents were from retail/wholesale and business and financial services. Nearly 40 percent of the respondents were based in the United States, more than a third were from Asia, and the rest were located in Europe.

About the Author.

Leah Waldrop is marketing manager for Afflink’s eLev8® system. Afflink provides an array of comprehensive sales and marketing solutions to more than 300 distributors and 200 supplier organizations of jansan, packaging, safety, and office products. Waldrop can be contacted via Afflink’s Web site at www.afflink.com.