How Supply Chain Genius Creates Value for Consulting Organizations
Effective supply chain management is a critical growth enabler for retailers, and consulting companies play an important role promoting retailers’ success in that area. Although these relationships create meaningful value, significant opportunity remains for consulting firms to enhance their service offering by delivering a truly dynamic, business outcome-oriented approach for retailers seeking to improve operations and achieve greater supply chain maturity.
Supply Chain Genius is a powerful software solution that consultants can leverage to help customers transform supply chain management into a dynamic, agile, and largely autonomous business discipline. Supply Chain Genius technology offers a unique platform that empowers retailers to create a digital twin of their supply chain and automate decision-making processes. By harnessing the power of data-driven insights, scenario modeling, advanced analytics, and decision intelligence, consulting firms can guide customers to optimize and transform their supply chains to achieve targeted business outcomes.
With Supply Chain Genius Technology, consulting firms can enhance their service offering to retail customers. Here's how:
Embrace Agile Methodologies: To stay competitive, retailers must adapt quickly to changes in customer preferences and market dynamics. Consulting companies can guide them to achieve greater supply chain maturity and agility, enabling rapid adjustments to optimize inventory, improve responsiveness, and enhance overall supply chain performance.
Optimize Inventory Management and Drive Margin Enhancement: Advanced analytics gives users insights into scenarios and trade-offs, supply chain points of failure, supplier performance, and opportunities for cost optimization. Greater inventory visibility allows retailers to avoid markdowns and enhance customer satisfaction. Automation and simulation further enhance efficiency by determining optimal procurement and supply chain policies. As a result, consultants leveraging Supply Chain Genius are able to directly contribute to incremental, compelling improvements in customers’ margins.
Retailers operating in today’s highly competitive, complex market face unprecedented supply chain management challenges. Resulting inventory issues are expensive and erode retailers' already thin margins, making supply chain optimization a key success factor. Stockouts alone cost retailers an estimated trillion dollars per year in missed revenue. Although the most acute phase of the COVID supply crisis is behind us, that massive disruption continues to impact retail supply chains through shortages, logistics and transportation constraints, and significant human resource issues.
At the same time, consumers demand greater personalization and product variety than ever before, driving SKU proliferation and supply chain complexity. The pace of new product launches in grocer’s alone is twice what it was two decades ago. Adding more difficulty, consumers also expect speed and convenience in the form of a frictionless omnichannel experience. Further, increasingly ambitious objectives in the area of environmental preservation complicate supply chain management, especially since the bulk of retail’s environmental impact is linked to their supply chains. In most cases, retailers are facing these unprecedented supply chain management challenges with the same siloed organizational processes and technical ecosystem that they have had in place for twenty years.
Stockouts, excess inventory, and cost overruns are the obvious margin-deteriorating symptoms of suboptimal supply chain management. However, the true cost to retailers of supply chain management failures is much higher and more complex. Cart abandonment, damage to brand reputation, loss of market share, delayed cash flows, loss of productivity, and increased operational costs are all consequences of inflexible supply chain management.
Even those retailers who have made substantial investments in business transformation and APS software continue to fall short of achieving the agility and intelligence they need to shore up a competitive advantage in today’s market.
Consultants can help retailers chip away at these considerable challenges thanks to their expertise in inventory and supply chain management. To catalyze their impact and differentiate themselves from competitors, consultants need to embrace innovative solutions that provide actionable insights and empower their retailers to dynamically and automatically optimize their supply chains. Supply Chain Genius technology allows consulting firms to add more value than ever before, both for operational engagements and to support true business transformation.
Paradigm Shift: Towards Dynamic, Agile, and Autonomous
To understand how Supply Chain Genius enables a true paradigm shift, consider how typical retailers currently operate: Their teams define target service level order brackets or backup stock policies once a year by distribution center, supplier, or item category. Incoterms are defined during negotiations and then established as static policy that remains in place regardless of how business conditions evolve. This practice is easy to understand: For most retailers, defining rules and policies is a time-consuming process that usually revolves around spreadsheets. It is therefore typically done at a low frequency and at a high level.
That stale, inflexible approach almost certainly leads to suboptimal results. Even though low-frequency, high-level management is the most common approach for practical reasons, retailers should be managing rules and policies frequently and at a granular level because the market and supply environments continuously change. A one-size-fits all target service level might look right for the entire company when budget and objectives are defined in November or December. By February, however, the target service level most likely warrants revision in light of the new usual black swan, the real demand for new items in the assortment, or an unexpected supplier constraint. Additionally, the target service level may have to be adjusted at an SKU level. For a company objective of 97%, the optimum service level for some items may have to be 95% to avoid too much inventory, and it could be 98% for other items with more stable demand and more reliable suppliers.
The value creation potential of dynamic, granular management of buy rules and policies is clearly enormous when the target service level example is extrapolated to all the other rules and policies retailers have to manage, including those related to backup stock, product flow (cross-dock vs. stored vs. inbound grouping, etc.), orderable unit and multiple, order frequency, order bracket, incoterms, change of supply approach to support a demand change or promotion, buy opportunities, investment buy opportunities, etc.
Supply Chain Genius works differently than an APS. It can be used as an APS substitute for replenishment planning. And it is complementary to APS solutions because it goes beyond APS output to calculate multiple distribution and procurement scenarios in relation to business metrics and identifies the best policies to meet current company targets.
Requirements for Dynamic Supply Chain Management
There are three critical pillars of agile management of supply chains and buy rules:
I. Clearly Defined Targets and Trade Offs: For example, if reducing the days of supply is required to meet a retailers’ monthly inventory target, they will need to select levers to act upon. Options include changing the target service level, orderable unit, order frequency, bracket, backup stock, or managing in cross stock instead of on stock. For each lever, decision-makers need to understand the impact on the target, timing of impact, and the trade-offs with other KPIS like cost to serve, service level, and capacity.
II. Automated Scenario Modeling: To achieve dynamic supply chain management, retailers must be able to launch automated scenario planning at scale. Granular what-if simulations must be automated so that retailers can evaluate the huge volume of combinations while maintaining the velocity required by the consumers.
III. Continuous Monitoring and Evaluation of Rule and Policy Changes: Visibility into the business impact of adjusting rules and policies is critical to choosing the right approach and enabling continuous improvement.To achieve this, an organization must have sufficient business analytics capabilities to understand the state of the business across the supply network. It must also have adequate decision intelligence to understand the decisions made, how recommendations can be improved, and which decisions can be automated. For example, a retailer seeking to dynamically manage its target service level must ensure that its inventory is reduced but its target service level is still achieved.
Supply Chain Genius: How We Can Help
The highly advanced data science behind Supply Chain Genius makes agile supply chain management possible. Our intelligent engine is 100% configured for retail and includes 80 use cases and hundreds of retail KPIs. Importantly, our solution has parametrization capabilities which allow users to codify any type of use cases, allowing them to enhance the engine with custom scenarios. The Supply Chain Genius solution offers customers:
A digital twin that provides visibility across the entire supply network, from POS to warehouse, including supplier-level performance. Visibility includes metrics across the different functions (inventory, finance, service level, workload, etc.) that allow users to easily understand the current state of operations, relationships between KPIs, and to monitor the real-time impacts of policies and rules.
An automated simulation engine that can perform scenario modeling at scale. Supply Chain Genius’ simulation engine runs automatically and continuously, for all the rules and policies defined and for all the suppliers-DC-store-items where they must be executed. Continuous simulation analysis is key to identifying the best scenario for a supplier-DC-store-item-day in light of changing demand and supply constraints.
An action library to parametrize supply chain management based on understandable recommendations resulting from simulations. Importantly, users can choose to automate actions based on criteria that they define, allowing supply chain and buy teams to focus only on the most critical decisions. For example, if a change of bracket yields reduced inventory and reduced spend while maintaining the same service level, that change can be automatically approved.
Analytics on all actions taken and decisions made that allow Supply Chain Genius to learn and improve. A record is kept of each action taken, whether the recommendation is accepted or rejected. This promotes continuous improvement in the quality of recommendations over time by fine-tuning the supply policies, configuration and trade-offs accepted by the retailer, paving the way for additional automation.
A Unique Opportunity for Consulting Firms
Consulting firms have a massive opportunity to help retailers seeking to optimize their inventory and advance in their supply chain maturity process. Despite the fundamental importance of supply chain optimization to retailers, many retail supply chain teams simply don’t have time to manage their policies and rules. Their main priority is getting products on the shelves so they can be sold to customers. All too often, that tactical focus impedes meaningful investment in optimization and strategic transformation.
By adopting Supply Chain Genius Technology, consulting firms can expand their service portfolio, establish a competitive advantage in the market, and enhance the value of each customer relationship. How does Supply Chain Genius drive value for consulting firms?
Analytics as a Service: By harnessing the power of Supply Chain Genius technology, consulting firms can provide value-added analytics services that allow retailers to optimize inventory management. Access to the data science-driven action library enables consultants to quickly determine effective strategies and tailor them to retailers' specific needs, enhancing operational efficiency and driving better outcomes.
Customizable Solution: Supply Chain Genius was designed for customization. Consulting firms can set the dynamic policy management to match with the specific business rules and operating model of each customer. They can configure the levers, targets, and trade-offs used as an input by the Supply Chain Genius simulation engine, and they can configure the recommendations and the user experience leveraging the output of the simulation engine. This tailor-made approach helps promote stickiness among customers.
Extended Business Consulting Services: Because Supply Chain Genius is designed for continuous use, it fosters the establishment of long-term partnerships with retailers. As rules and market dynamics change, consulting firms can provide valuable ongoing consulting services, recommending rules changes, and ensuring retailers stay ahead of the curve.
Broadened Scope Business Consulting Services: As retailers progress through their supply chain maturity process, consulting companies can ramp up their services to include deploying new rules, optimizing strategies, and innovating to achieve world-class inventory management practices.
Consulting firms play a key role in transforming retail supply chains and helping retailers manage their rules and policies to achieve a competitive advantage. SCG is the only solution on the market:
Enabling users to continuously evaluate and redefine tactics to achieve supply chain and buy goals
Empowering users to flexibly manage retailers’ supply chain and buy policies
Laying the foundations for autonomous management of policies and rules, with a digital twin, automated simulations at scale, an action library, decision analytics, and a retail-dedicated intelligence engine
In a constantly evolving retail landscape, the adoption of Supply Chain Genius technology represents a transformative opportunity for consulting companies. By offering cutting-edge services centered around optimization, predictability, and agility, consulting firms can empower retailers to overcome inventory management challenges and achieve world-class supply chain maturity. Embrace this technological revolution and establish your organization as a trusted partner in delivering superior value to your retail clients. The future of supply chain consulting starts with Supply Chain Genius technology.