Take Charge of Your Supply Chain – Part 2 of 5
Any of us who went to business school learned the 4P’s of Marketing: Product, Place, Price, and Promotion. Obviously, all of those ‘categories’ have expanded over time but they are still a good touchpoint for planning efforts targeted to a specific audience. We think that you need to consider them as touchpoints for supply chain management. So, let’s explore them.
Product: Knowing the product is easy. The hard part is managing and considering everything else. How often is it purchased? Is it bought at a certain time? How many weeks of supply do you need? Will your customers buy something else if it isn’t available, or will they just buy it somewhere else? Every product is different regarding customer sentiment and that means, one set of rules and parameters can’t apply to everything you need to source.
Place: Today, ‘place’ needs to be considered on two levels. First, where is the product coming from, where are its components sourced, and how long will it take to get it? Without this knowledge, you can’t begin to know when to order, how much to order, or when it will arrive. Second, where does the product need to be delivered? Do you use one warehouse to distribute across the country or do different quantities need to be delivered to different locations? Right product in the wrong place is no better than having no product.
Price: Prices on everything have increased dramatically, due to raw material costs, shipping rates and more. That begs several questions. Do you know the price tolerance customers have for your products? Is there an advantage to ordering larger quantities now even if it impacts your financials in the short term? How do you balance price vs. quantity, and how do you do this for everything you need to source for inventory?
Promotion: Are there sales events or holidays for which the product must be in stock? What happens if the product arrives late or in lesser quantities? (You might be able to delay a sales event, but Mother’s Day and Christmas will happen without you).
While we have presented each of the Ps individually, the truth is that they are inextricably linked to each other. For example, there’s no sense having a product in the right place at the wrong price; having it at the right price but in the wrong location; or having it in the right location but after the promotional period has expired.
Forecasting and sourcing require understanding the interplay between the Ps and the ability to analyze data and trends. That’s where a sound technology platform can make the difference between ‘there’ and ‘almost there.’ With the right systems, analytics and planners, you too can get the 4Ps ‘right there!’
The third part of the series: Managing the Supply Chain Means Managing Every Link
Back to Part 1: The Days of Predicting Tomorrow Based on Yesterday are Gone