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sinha.rk.dr@gmail.com
Are your Supply Chain improvements taking you closer to your goal?
Supply Chain teams undertake various improvement initiatives. Each of these initiatives should take us closer to the company goal. If the goal is to make more money now as well as in the future, every initiative should have a clear linkage to higher profits.
We should establish this linkage before finalising the improvement project. However, my experience in working with several companies indicates that many projects don’t have the clear linkage, they just hope that faster customer service or happier customers would result in more profits.
Teams often focus on value creation, which is the right thing to do. However, we must also have a pathway to capture a part of this value, else the entire value capture is done by the customer.
For example, if we establish a flexible and reliable replenishment system with retailers, they would make more money from the same shelf space allocated to our products. Shouldn’t we capture a part of it? Reduce promotional expenses? Extend the assortment for a bigger share of the planogram?
My suggestion is to establish a pathway to value creation as well as to value capture for every improvement initiative!