A recent halt in market growth for retail leader Adidas, reminds organizations about the importance to assess their supply chain excellence strategies.
According to Supply Chain DiveSupply Chain DiveSupply Chain Dive, Adidas will see a stunt in market growth this year for their North American. They’re facing ‘supply chain shortages’ as a result of unanticipated demand. This hurdle is reportedly due to the organizations complete reliance on outsourced manufacturing. However, it asks us to question whether a the right supply chain excellence model is being followed.
To grow in an ever changing global market, organizations must strive to implement a long term supply chain excellence strategy. The concept of supply chain excellence, has been re-examined many times over the years. The need for continuous re-examination is in response to a variety of factors such as technology, globalization and consumer demand. Some experts believe that achieving supply chain excellence is an ongoing journey rather than a final destination. Instead of presenting a single definition to explain supply chain excellence, let’s discuss how supply chains help organizations, like Adidas, succeed.
The impact of global markets
According to global statistics, ‘1.8 billion people purchased goods online’ in 2018’; this valued at 2.8 trillion U.S dollars. Market forecasts predict to see this grow over the next couple of years, with projections of ‘up to 4.8 trillion U.S. dollars by 2021’. These statistics show an increase in consumer demand, an outcome that is commonly linked to ecommerce and anywhere, anytime platforms.
However, what happens when retailers remove the ability for consumers to physically shop in a store? There is an increase in expectation for fast delivery services. ForbesForbesForbes states that
The constant demands for faster and more efficient delivery put a strain on even the mightiest of supply chains.
This means that organizations must continue to meet consumer expectations. In February, Morai Logistics discussed the emergence of a demand-chain model and the benefits it provides supply chains. It helps meet consumers need for instant gratification by localizing production to create opportunity for efficient and immediacy. Therefore, it improves customer experience and optimizes order fulfillment in order to keep up with demand.
When an organizations supply chain is not fully optimized, there are a variety of challenges that can impact growth. And, as evident from the above example with Adidas, it can also impact organizations of many different sizes. Why do supply chains have such an impact on the success of an organization?
Recommendations for supply chain growth
In response to an increase in consumer demand, on both production and delivery, supply chains are integral to a company’s success. In fact, half of businesses whos have ‘poor supply chain performance’ are found to ‘fail or close down’. This usually happens within the first 5 years of the business opening. How do companies prevent this risk from happening?
According to ForbesForbesForbes, there is no denying the need for companies to ensure their supply chains are ready to meet consumer demand. They provide the following recommendations to help ‘optimize supply chains’:
- Look at the end-to-end experience
- Improve visibility by creating cross-functional teams
- Learn how to take the right data and turn it into insightful information
- Integrated supply chain excellence throughout the entire organization
The above recommendations will help ensure organizations are focusing on the right areas to improve their supply chain. To compete with the increase in consumer demand, organizations must ensure their supply chains strategies consider all of the above mentioned factors.