I'm at the APICS fall conference in Orlando this week, rubbing shoulders with folks from areas of the supply chain we don't normally talk to in Modern. APICS's roots are in operations and as such there are a number of manufacturing personnel on hands, including operations planning. But, just as Material Handling Industry (MHI) launched Modex a few years ago to find our place in the supply chain, APICS announced today that it is rebranding itself as a supply chain organization.
They're in good company. CSCMP's roots are in logistics and ISM's roots are in procurement, but both organizations realize that what they do has impacts across an organization. Sitting in the educational conferences today, there were several takeaways that apply to what we do inside the four walls of the warehouse.
Innovation is on everyone's front burner: Innovation is one of the themes of the conference and it was mentioned in almost every session I sat through, including the keynote address. It's easy to dismiss innovation as just the latest industry buzzword, like visibility, sustainability, collaboration and lean. However, in the hyper-competitive world we all live and work in, I think there's something to the idea that incremental improvements are no longer enough to deliver a real advantage. Amazon, for instance, put the retail world on its heels when it began offering free delivery a few years ago and has kept its competitors huffing and puffing to keep up as it plans for same day delivery. If those weren't innovations, I don't know what is.
No company today is an innovative island: What does any of that have to do with materials handling? Everything. Amazon's innovative go to market strategies require equally innovative order fulfillment processes to make good on the promise to the customer. They won't develop those on their own. "Innovation can no longer be done internally because companies are no longer self-sufficient," Steven Melnyk, a professor at Michigan State, told his audience. "You have to focus on innovation with your suppliers." That's the opportunity for our industry.
Who is your key customer: That's a question from the same presentation by Melnyk. He argued that the concept of a business strategy is being replaced by a business model. At the heart of a business model is three important questions:
Who is your key customer? If you can't answer that question, you're likely to focus on the wrong things.
What is your value proposition? That's another way of asking will your key customer pay for it; does what you do satisfy corporate objectives; does it differentiate you in the marketplace; and do you have the capabilities to achieve the business model goals? That's the role of the supply chain – and what we do inside the distribution center.
Alignment: Is the business model aligned with broader corporate goals and objectives?
Our role is changing: "Business today views the supply chain as a strategic asset," Abe Eshkenazi, APIC's CEO, said during his opening remarks. "They are the nerve centers of business and the back bone of the global economy."
Like innovation as a buzz word, it would be easy to dismiss that as the kind of cheerleading you'd expect at a conference. But then I think of companies I've featured in Modern recently, including Gilt Groupe, Wirtz Beverage and Giant Eagle. All three are examples of companies that know who is their key customer and have adopted innovative materials handling technologies to give their companies a competitive advantage. And all three are the nerve centers of their business.
