At a time of global uncertainty, companies are casting about for ways to get better control of their businesses. "There's so much volatility," says Barr, "uncertainty about consumer preferences. They're looking for a magic elixir to bring calm to the chaos."
The biggest gap in network design today is the lack of a "shelf-back" approach, Barr says. Companies fail to build a business model that stretches from end to end. As a result, they often can't determine the right price for a product in a given marketplace. In addition, they tend to assume that the product launch will remain stable, despite past experience to the contrary. "Prices and competitive situations can change," he observes.
Channels have a tendency to shift rapidly, altering not just price, but consumer preference as to product size, SKU and packaging. To protect against unpredictability, companies need to address product, process and supply chain all at once. They should be looking at the location and timing of a product launch, the precise sector they are targeting, and the strategies they intend to employ. A rigorous plan will help to determine how to proceed - for example, a high degree of volatility might dictate the use of a contract manufacturer.
"In the shelf-back process, you ask what are the ranges going to be," says Barr. "You play out the possibilities."
The supply chain, by its very nature, is an interdisciplinary function. It requires businesses to cut across corporate silos to achieve maximum efficiency and responsiveness. Companies need to determine exactly who should be involved in the up-front design process. Frequently those individuals will hail from both the supply chain and commercial sides of the organizations.
At the same time, management of the process needs to be centralized at some level. "At the end of the day, someone's got to be accountable," says Barr. "We end up relegating that to the supply chain organization."
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