The retail owner didn’t believe in supply chain management and I don’t blame her.
The retail owner runs a store that sells office supplies. Her business was hit by the coronavirus pandemic that began in 2020 but which she recovered from as soon as infections subsided and the local government lifted restrictions.
The retail owner kept stocks of items that allowed her to sell to customers even as vendors were unable to deliver during the pandemic. She also already had on online presence in which customers could order supplies and she would deliver via courier, as a result from which she was able to expand her market to customers beyond her locale. And when she needed to replenish her stocks, vendors were all too willing to deliver.
From her long experience, the retail owner had very few issues with the so-called supply chains for the items she sold at her store. Suppliers delivered consistently and she had enough products to sell. Sometimes, she would run out on some items as some vendors wouldn’t be able to deliver right away. But the retail owner had several hundred stock-keeping units (SKU’s) or unique products which she made available to sell, such that customers always had alternatives. Customers could always choose another brand of pen or another supplier’s ream of bond paper, as the retail owner made sure prices were competitive.
The retail owner didn’t believe in supply chains; she didn’t have to. She didn’t think supply chains were relevant to her business. She had ample inventories which she managed via simple desktop software. She had close relationships with her suppliers and she had no trouble negotiating the lowest prices and discounts for the items she bought. Customers easily could find what they were looking for when they went to the store or to its e-commerce website and the retail owner delivered fast as soon as there was an order. There was no complexity to her store’s operations; staff had simple and clear instructions on what to do. What only made business complicated were tasks like paying taxes, government red tape, and handling administrative issues with her staff.
The retail owner isn’t the only one who didn’t believe in supply chains. Many business owners, large & small, also don’t. They don’t recognise that model of merchandise flow from source to end-user that require management in planning, procurement, production, and logistics.
In business, there are basically four (4) pillars to manage: sales & marketing, finance, operations, and people. Operations management is the parent of supply chain management but unlike the other pillars, executives had given scant attention to it. This is because unlike finance, marketing, and people management, operations management has no one-size-fits-all set of standards that would be applicable across industries.
Many enterprises blamed supply chain issues for out-of-stock items and delays in deliveries to customers they experienced from 2021 to 2022. But as much as executives identified supply chains as culprits for business setbacks, none have really found a way out of their quandaries. There has been much written about the mess and failures of supply chains but solutions so far had been elusive, if not simplistic.
Added to this is the lack of available talent to manage supply chains. Even though interest in supply chain management as a career discipline has spiked, it had been hard to find good help. Much of supply chain management relies a lot on experience, given the fact that the operations behind the procurement, manufacture, and logistics of merchandise are unique to the items that flow through them. One item’s supply chain is never the same as another, even if either is in the same industry or competes against each other directly.
Nonetheless, executives would rather delegate supply chain issues to operations managers. At the same time, they’d hesitate to have a high-level executive oversee all of at least an enterprise’s operations, preferring to maintain departments with different internal aims that would be easy to measure.
Lack of qualified talent, the continuing fragmented silos found in organisations, and executives’ lack of appreciation of supply chains present a pessimistic outlook for supply chains. Problems don’t get solved; executives end up hoping they will go away by themselves.
The retail owner, meanwhile, could care less. She was doing well without supply chains, at least she wasn’t preoccupied with them. Of course, it didn’t dawn to her that she already fixed her supply chain via the relationships she established with her suppliers and the practices she had put in place in her store. It wasn’t an overnight occurrence. She had planned what she would sell and built the structure and system that would govern her store. It wasn’t rocket science that needed pep talks and buzzwords. It was basically problem solving done proactively.
And that really is what is needed for supply chains. Not the discussions, not the buzzwords, or the belief or faith in that problems will go away on their own. But by identifying problems, defining them, formulating a roadmap of action plans, determining and getting the needed resources and people, and proceeding.
That’s what the management in supply chain management means.
Ellery's Essays 