New survey highlights practices that limit supply chain firefighting

Oct 15, 2020  |  4 min read

Where do you stand in relation to your competitors’ supply chains? Are you healthy, or are you falling behind? How do the best-performing supply chains function…and what can you learn from them?

In summer 2020, we surveyed 500 North American supply chain professionals at consumer goods manufacturers to help answer these questions. From analysts to the C-suite, they gave us an in-depth look into their day-to-day experiences. The results allow us to draw data-driven conclusions about how supply chain teams can navigate a never-ending stream of changes - without constantly running from one fire to the next.

We’ve distilled some main points below. To get all the details, read the full report, Beyond the chaos: Supply chain survey shows what separates relaxed responders from stressed suppliers.

Stressed suppliers and relaxed responders

You’re likely already familiar with one clear message from our findings: the gap between plan and reality is near universal across consumer goods companies. Our survey showed:

  • 71% face an unexpected change in customer orders at least a few times a month
  • 66% face an unexpected change in consumer demand at least a few times a month
  • 61% see unexpected changes in sell-in with the same frequency

Execution teams must then figure out how to avoid out-of-stocks, OTIF fines, unsaleable inventory, damaged relationships and other potential costs when things don’t go according to plan. Firefighting and scrambling to prevent problems is common. 

Weekly time spent firefightingHowever, that’s not always the case. Some respondents reported spending just a few hours a week or less in frenzied firefighting - we call them the relaxed responders. Their experience contrasts in important ways with that of another group, who we’ve termed the stressed suppliers. These supply chain professionals devote 25% or more of their time every week to this frustrating activity.

The differences between these two groups point to strategies you can use to reduce firefighting efforts and increase supply chain responsiveness.

Using data to understand problems and align teams

On average, relaxed responders report better access to usable data, as well as a better ability to use it for analysis and cross-functional decision making. We see that stressed suppliers are: 

  • 59% more likely than their relaxed peers to call basic data access a problem, so they’re more often relying on guesswork than data to solve problems.
  • 54% more likely to admit challenges with data harmonization, without which teams have to manually cross-reference data from multiple retailers, each with different formats, units, nomenclatures and time intervals.
  • 36% more likely than relaxed responders to have trouble aligning the team in response to customer-order and sell-in changes, where sales and supply chain may see the issue differently. Without a single source of truth, teams commonly use their own data sets (or, worse, just hunches), and therefore come to different conclusions.

Seeing problems sooner

Relaxed responders can also address unexpected changes in less time – and confront fewer obstacles when they do so. It takes them 1.5 days less than their more-stressed peers to respond to an unexpected change in customer orders, which gives a substantial head start on fixing issues before they turn into real problems. 

Getting more proactive is possible for relaxed responders as they are:

  • 30% less likely than stressed suppliers to say their lack of supply chain visibility is a barrier...which means they can detect problems sooner and address them with a better grasp of supply chain status.
  • 48% less likely than stressed suppliers to struggle with the gap between planning and execution, so they’re better able to see and address changes within the S&OP cycle. 
  • 48% likelier than their more-frenzied counterparts to say it takes less than an hour to analyze inventory health for a given product at a given location.

Enabling teams with purpose-built tools

When it comes to understanding POS data, stressed suppliers’ analysis methods were significantly different from relaxed responders.’ Those methods almost certainly slow teams’ response times and efficacy, too.

Stressed suppliers are more likely than relaxed responders to use inefficient methods for POS analytics

Stressed suppliers are:

  • 72% more likely to use standard BI tools to understand their supply chain. That’s better than nothing, sure. But they’re hard to use, difficult to customize for specific use cases and (frequently) reliant on stale or inaccurate data. Many more relaxed responders seem to have ditched standard BI apps for more-powerful, purpose-built solutions.
  • Nearly 1.5 times more likely than relaxed responders to use external consultants. That means their teams develop a reliance on others, instead of building their own capacity to quickly resolve supply chain issues.

More insights from the survey

Our longer report discusses other differences between the two groups, along with best practices. It explores aspects like:

  • How relaxed responders leverage the best data sources, like POS data, for decision-making
  • The ability to quickly ascertain supply chain health, and the role of an up-to-date, accurate supply chain map in handling surprises
  • The relationship between forecast accuracy and time spent firefighting

Download Beyond the chaos: Supply chain survey shows what separates relaxed responders from stressed suppliers now.

Posted by Alloy