Wednesday, October 29, 2014


Too many manufacturers, wholesalers, and retailers are doing the same old thing when it comes to supply chain management.  As a result, these firms compete on price.  They have to because the businesses lack competitive differentiation that new supply chain management with its service provides.  Companies basically do the same things.  They have created a de facto world of commoditization.  All this means missed sales and reduced margins.  Why do this?  One answer is they are afraid to change.

You can easily tell these firms.  They think of ecommerce as shipping orders via UPS and similar firms.  They have much money tied up in inventory—and many are products which do not sell or are out-dated.  They rationalize about the low cost of capital to explain inventory levels.  But they had the same problem when interest rates were higher.  Yet with all the inventory, they struggle to deliver orders, complete, and on-time. 

The blue ocean supply chain reinvents supply chain management and—

*is designed from the customer back through the company and to suppliers. That provides way to incorporate service. It is not based on just picking and shipping orders from their facilities.

*is segmented to tailor and provide best service to key sectors.  That is contrary to the monolithic supply chain now used.

*is built on integrated process throughout the entire supply chain.  This is different from trying to cobble dysfunctional company activities together.

*includes high-level, integrated technology that provides visibility across the supply chain, uses RFID at the item level, and works on all devices.  It is more than WMS and using carrier track-and-trace information.

*uses logistics service providers that complement innovative supply chain service.  It is about performance, not low price bids. 

The new supply chain enables a firm to be more responsive to customers. It compresses time. All of it builds brand and creates competitive advantage and value to customers.  Innovative supply chains support blue ocean business strategies for global e-commerce and multichannel sales.  All of this means increased revenue and profits.     

Where are you on the blue ocean supply chain for your industry and market—innovator, early majority, or laggard?