Supply Chain and Sales alignment increase responsiveness

Date Posted: March 10, 2021

If you’re a supply chain geek, you probably already follow Supply Chain Now, the go-to podcast for all things supply chain. (In fact, you may have caught Alloy on a previous episode.)

Hosts (and supply chain experts in their own right) Greg White and Scott W. Luton talked with Alloy VP of Client Solutions Logan Ensign on Episode 574, out now. After getting to know Logan a bit, they talked about the realities of the relationship between supply chain and sales and how to break down traditional silos. If you like what you find below, listen to the entire show for more.

An ever-changing world needs more-responsive supply chains

In the past, “pretty good” was good enough for supply chain. Logan says, “It was once acceptable to be able to say, ‘Oh, well, things are going okay.’” If service levels and shelf availability were fine, the world was right. “But,” he adds, “the world’s changing.”

Retailers now expect more from their suppliers, Logan says. 

Especially the last six, nine months, there’s been a lot more urgency around real digital transformation of the supply chain. Retailers are providing way more data, and they do that with an expectation that you’re going to use it. With all this data and transparency, brands have a lot of pressure to execute and compete.

The bottom line is that supply chains are having a hard time keeping pace with changing consumer preferences, many of which were accelerated by the pandemic. As Scott says in the podcast, a lot of companies are accelerating technology deployments to try to keep up, such that things they were thinking about implementing in 2025 are rolling out now.

It’s important, however, that those technology investments are made in the right areas. One problem Logan sees is that companies spend considerable resources on forecasting, but under-invest in preparing for when reality inevitably doesn’t match plan. Until organizations focus more on prepping for always-changing conditions, supply chains will always be playing catch-up.

Logan recalls a conversation his team had with a demand planner at a food brand. When they asked how often he changed the plan after it was made, the planner replied, “every single day.” Logan then asked why the planner’s organization continued to spend so much time on forecasting, instead of (knowing reality will never match predictions) building responsiveness into the system. He responded, “I’ve been asking that my whole career.”

 

Data drives alignment and helps organizations solve issues together

It’s hard to be more responsive when Sales and Supply Chain aren’t aligned on the problems. Part of the challenge is these teams look at different data. “We’re looking at different numbers, different sources of truth, and only part of the picture,” says Logan. 

“Supply chain teams are looking at ERPs, planning tools, forecasting tools. The retail and sales teams are looking at their spreadsheets and portals.” Splintered information and perspectives hurt cooperation. Arguments about data cause serious delays with real-world consequences.

Without a shared understanding, teams waste weeks assembling and collating data and then debating methodology for calculating metrics, like Weeks of Supply. In the meantime, panic reigns, says Logan. The organization is under pressure to determine how they adjust production or whether they expedite freight. Factoring in the time for discussion and follow-on queries, necessary insights finally arrive days or weeks too late – which could mean disaster. 

A week or two, says Scott, “can be deadly, could mean empty shelves in hundreds of locations, perhaps.” Greg agrees, focusing on product launches.

“When you're launching a new product, you can't afford to be out-of-stock because it could literally kill the product. It happens all the time.”
-Greg White

What would be better? Logan offers the metaphor of data as an objective referee. With a single source of truth, we no longer waste time talking past one another. Instead, he says, “we can all be on the same page about the problem and get to the next conversation, which is ‘what do we do about it?’”

Logan introduces another helpful analogy for this crucial shared perspective. The brain senses data about the world, processes it and coordinates the body’s actions to respond accordingly. Likewise, pulling together data can spur collaboration so the entire organization is aligned. “At the highest level,” he says, “Alloy is a platform that’s designed to be a central nervous system for supply chains.” 

Incentives and motivations matter, too

Within an organization, various parts frequently serve at cross purposes. Supply Chain wants to increase efficiencies and service levels while minimizing excess inventory and transportation costs. On the other hand, Sales prioritizes sell-in and their individual customers.

While that contrast can create healthy checks and balances, mismatched priorities also make it challenging to align Sales and Supply Chain to respond to changes. “This is where a lot of the disagreements happen,” Logan says.  A shared data foundation can help you reach common ground on how to respond when reality doesn’t meet forecast, but it’s also important to recognize that a central reason for disagreement is different motivations and incentives. 

Seeing that can be the basis for strategic change, says Logan. He tells an (admittedly radical) success story about a consumer electronics company. This client’s sales team had been traditionally compensated based on sell-in, as is common. However, their new VP Sales recognized the problems it could cause, such as channel stuffing, and wanted to change it to focus the team on actual sell-through. Alloy gave them visibility into point-of-sale and inventory across every channel, so the VP could easily track sell-through performance by rep and manage his team based on it. His Account Managers also gained the insights to improve it. They made the change to incentivize sell-through, and it created closer alignment with Supply Chain, as well as customers. 

The client then went a step further to reorganize into retailer-specific task force teams. Each major retail team now includes someone from Supply Chain, someone from Sales and someone from Finance, so they are very tightly aligned. The move was quite transformational and has led to better in-stock rates, higher forecast accuracy and greater efficiencies.

With data on your side, retailers listen to what you have to say

While it’s undeniable that data fosters better collaboration inside your organization, it doesn’t stop there. Data also supercharges your external conversations, helping meet those rising customer expectations. Done well, it can become an important differentiator and strengthen relationships with suppliers and customers alike.

You position your brand as a trusted advisor so that when you make data-informed, cross-functional recommendations about ordering or inventories, retailers listen. Especially because you can make those recommendations early enough that they have real impacts. 

Logan tells of one such time when a retailer placed an order the supplier could tell they didn’t need. “That same day, the whole organization was on the same page,” he says. “We can’t fill this order.” The sales team contacted the retailer, had an honest discussion and convinced them to amend their order.

With this level of transparency and data-empowered insight, how do you think the retailer now responds to that supplier’s advice? Honest, data-backed discussions that show they’re looking out for the retailer’s business have promoted that brand from just another supplier to trusted confidant and solidified the relationship for years to come. What’s more, the order change freed up inventory to fill other customer orders where the inventory was more needed, helping maintain those relationships, too!


 

There’s plenty more in the conversation between Greg, Scott and Logan. Listen to the entire show to learn more on topics including:

  • OTIF fine avoidance
  • The supply chain of crested geckos
  • The “penalizing culture” of today’s retail reality

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