If you want to stay ahead of your competition, take the step beyond the traditional approach to supply chain. Most supply chain analysts believe that to remain competitive, companies must transform their supply chains from being focused inward to focusing on trying to predict demand to customer-driven chains that are organized to respond to demand with lightning speed. This takes communication and collaboration among trading partners, from customers through to suppliers. It takes a completely different supply chain architecture that focuses on sensing, shaping and driving an intelligent response.
As supply chains extend globally, they become more complex. The flow of supplies, finished goods and information is widely distributed, presenting significant challenges across a manufacturer’s entire supply chain network of customers, suppliers and logistics providers. Mergers and acquisitions, increased competition, wider fluctuations in the availability and costs of raw materials, reduced demand and supply predictability, and dispersed assets further add to the broad array of challenges manufacturers face when planning their operations. As a consequence, volatility is increasing, while predictability is decreasing. Rapid responses and clear visibility into the supply chain are required to avoid costly mistakes. To achieve success, companies need to gain visibility into their complex supply chain network to collectively sense and respond to changes.
The ERP is not the end-all solution. Most manufacturers have invested heavily in internal process standardization and company-wide ERP systems in an effort to improve efficiency. The scale and internal efficiency of these investments have driven savings through simplification and centralization, while enabling increased control over a company’s internal operations. Industrial manufacturers must buy from and sell to nearly every industry in the world, creating special demands on their business requirements. It is these unique characteristics associated with industrial manufacturing that keeps the ERP from being a complete solution. When the standard processes and monolithic ERP systems meet the outside world, they stumble on two significant challenges. First, information flows in/out of the company remain overwhelmingly manual. The historical complexity of linking these different systems together means that most transactions between companies – orders, invoices, confirmations, status updates, etc. – remain paper, fax and phone based. The reality is that manufacturers can’t expect all of their customers, suppliers and logistics providers to collectively adopt a single process.
When companies can operate their supply chains to respond directly to external market drivers, this is known as the outside-in supply chain. This enables companies to focus more on sensing, shaping and driving an intelligent response to the environment happening outside their internal control. Outside-in supply chains put the customer first. These supply chains maximize the value of technologies that enable collaboration across multiple networks of corporate stakeholders and supply chain trading partners. As companies utilize collected data to analyze consumer behavior, they begin to focus their supply chains on the customer. This type of supply chain allows companies to determine what has changed since the last forecast, where the product needs to be now, and how to get it there.
The new outside-in supply chain architecture requires a multi-tier business-to-business network, like a supply chain operating network, that provides reliable secure connections and communications with all trading partners – suppliers, logistics service providers, and customers. Trading partners on the network gain supply chain visibility into processes and can collectively sense and respond to demand and supply challenges. With an outside-in supply chain network, transaction data is captured across the entire network, creating a critical mass of real-time business information allowing trading partners to better respond to customer demands and drive value out of their supply chain network. Companies no longer have excess material inventories at a time when prices fall, or a shortage of inventories at a time of increased demand. An outside-in supply chain is strategic, focuses on what matters for the customer, and creates a successful and collaborative partnership that adds real value over time.
Rich Katz is CTO at Elemica. Rich is responsible for directing Elemica’s Product Management and Development activities, joining Elemica in 2009 through the merger with RubberNetwork. He has an extensive background in Enterprise Resource Planning, Application Development and Business-to-Business eCommerce. Prior to Elemica, Mr. Katz was the Director of Implementation Services for ATT’s Enterprise’s Ariba Practice (formerly USI) and has held Senior Manager positions in Arthur Andersen’s Advanced Technology and ERP practices. Mr. Katz earned a Bachelor’s Degree in Electrical Engineering from the Georgia Institute of Technology.
An outside-in supply chain is strategic, focuses on what matters for the customer, and creates a successful and collaborative partnership that adds real value over time.Which supply chain strategy takes an outside in view? ›
An outside-in supply chain is strategic, focuses on what matters for the customer, and creates a successful and collaborative partnership that adds real value over time.What is supply chain logistic? ›
Supply chain logistics coordinate the storage and shipping of goods and services across the supply chain. The practice begins with raw materials, continues on to manufacturing and/or distribution and ends when a business delivers finished goods to the customer or when products are returned to their final destination.Why would a supply chain manager outsource logistics? ›
Reduce overall costs
When not done right, logistics costs can add up quickly. By outsourcing the supply chain, you can worry less about managing logistics systems yourself while benefiting from lowered fulfillment logistics costs, including warehousing, fulfillment, and shipping fees.
The three major functions that are critical to the success of logistics operations are transportation, warehousing, and inventory management.What is an example of an outside in strategy? ›
An example of an outside-in business would be an electronics store that offers integrated support services for all of its brands.What is an outside in approach? ›
The Outside In strategy takes customer value as its starting and end point. Companies using this approach are focused on creating and nurturing their customers by providing high calibre customer value. They put themselves in the position of their customers, and view themselves from their perspective.What is difference between supply chain and logistics? ›
The basic difference between Logistics and Supply Chain Management is that Logistics management is the process of integration and maintenance (flow and storage) of goods in an organization whereas Supply Chain Management is the coordination and management (movement) of supply chains of an organization.What are the most commonly outsourced services in supply chain? ›
Some common outsourcing activities include: human resource management, facilities management, supply chain management, accounting, customer support and service, marketing, computer aided design, research, design, content writing, engineering, diagnostic services, and legal documentation.”What is outsourcing of logistics called? ›
The terms “outsourced logistics” and “third-party logistics” are roughly interchangeable — they refer to the same thing. Outsourcing logistics is when a company uses an external provider (aka a third-party) to handle various supply chain functions.
A supply chain is the network of all the individuals, organizations, resources, activities and technology involved in the creation and sale of a product. A supply chain encompasses everything from the delivery of source materials from the supplier to the manufacturer through to its eventual delivery to the end user.What are the 7 R's of logistics? ›
So, what are the 7 Rs? The Chartered Institute of Logistics & Transport UK (2019) defines them as: Getting the Right product, in the Right quantity, in the Right condition, at the Right place, at the Right time, to the Right customer, at the Right price.What is the most important thing in logistics? ›
A major element of logistics that most will recognise is transport. This includes all modes of transport including road vehicles, freight trains, cargo shipping and air transport. Without transport, goods would be unable to move from one stage to another within a supply chain.What are the 7 functions of logistics? ›
A logistics company is an entity that designs, controls, and manages another company's supply chain. The logistics company can operate during supply procurement, storage, transportation, order fulfilment and distribution, depending on the commercial agreement between the two involved parties.What is outside-in approach vs inside-out? ›
The Inside-Out approach is guided by the belief that the inner strengths and capabilities of the organisation will make the organisation prevail. The Outside-In approach is instead guided by the belief that customer value creation, customer orientation and customer experiences are the keys to success.How can I improve my outside-in strategy? ›
If you want to take an outside-in approach to strategy you must be willing to continuously invest in learning about and from your customers and to translate this knowledge into initiatives that will enable you to gain a competitive advantage, improve your market position and ultimately your shareholder value.What is outside-in strategy and inside-out strategy? ›
With the outside-in strategy, you first observe what the customer wants, then find and offer the solution. In the inside-out strategy, however, you first develop the product or service, then you create desire for it in customers.What is an outside in approach to business? ›
An outside-in perspective means that companies aim to creatively deliver something of value to customers, rather than focus simply on products and sales.What is the product mindset outside in? ›
The outside-in approach is the belief that customer value creation is the key to success. This is elementary in the world of Product—look at your customers' unrealized needs and translate them into solutions that will serve them.What is outside in organization? ›
An outside-in organization creates processes and organizational structures that let designers, product managers, engineers, marketers, and others orient their viewpoint as if they were a customer looking in at the organization's products.
The four functions of marketing logistics are product, price, place and promotion.What is an example of logistics in real life? ›
Planes, trains, cargo ships, and even the 18 wheeler you get stuck behind on your commute to work are all a part of the logistics supply-chain that help deliver the Prime package to your door or your coffee shop's inventory to their store.What are two types of logistic strategies? ›
- Inbound Logistics. Inbound logistics is sourcing and transporting raw material from a supplier to the buyer's manufacturing unit. ...
- Outbound Logistics. ...
- Reverse Logistics. ...
- Distribution Logistics. ...
- Third Party Logistics. ...
- Fourth Party Logistics.
Supply chain has broader scope than logistics: Supply chain is about creating an uninterrupted, cost-effective flow between consumer demand and the delivery of finished goods. Logistics is about planning and organizing operations to ensure supply chain and commerce processes run smoothly.What is procurement vs logistics vs supply chain? ›
Both are important functions in supply chain management. Procurement is the process of sourcing goods (e.g. raw materials, components, finished goods) and services whereas Logistics includes transport, warehousing and added value services - end-to-end, from extraction to factory, to delivery, to maintenance and return.Is logistics bigger than supply chain management? ›
Supply chain managers work across multiple functions and companies to ensure that a finished product not only gets to the end consumer but meets all requirements as well. Logistics is just one small part of the larger, all-encompassing supply chain network.How does logistics work? ›
Logistics deals with the movement of goods from a single company's perspective, meaning the movement of materials and goods one company receives and manages internally as well as when it moves those goods to a customer.What are the two major functions of logistics? ›
- Order processing. Order processing is the process of receiving and filling customer orders for goods or services. ...
- Warehousing. ...
- Inventory management. ...
- Logistical packaging. ...
- Transport. ...
- #1 CONTAINER CORPORATION.
- #2 BLUE DART EXPRESS.
- #3 GATEWAY DISTRIPARKS.
- #4 AEGIS LOGISTICS.
- #5 ALLCARGO LOGISTIC.
- Professional outsourcing.
- IT outsourcing.
- Manufacturing outsourcing.
- Project outsourcing.
- Process outsourcing.
- Operational outsourcing.
Shippers most frequently outsource domestic transportation, warehousing, international transportation, customs brokerage, and freight forwarding. Less frequently outsourced activities continue to be those that are more strategic and customer-facing.What is another name for logistics? ›
Outsourcing is the business practice of hiring a party outside a company to perform services or create goods that were traditionally performed in-house by the company's own employees and staff.What are the three types of outsourcing? ›
- Process-specific outsourcing. ...
- Professional outsourcing. ...
- Logistics outsourcing. ...
- Operational outsourcing. ...
- Manufacturing outsourcing. ...
- Project outsourcing. ...
- Demand management. ...
- Supply management. ...
- Sales and operations planning (S&OP) ...
- Product portfolio management. ...
- Supply chain management best practices.
The Top-level of this model has five different processes which are also known as components of Supply Chain Management – Plan, Source, Make, Deliver and Return.What is an example of Supply Chain Management in real life? ›
An example of a supply chain in the food industry includes farming, manufacturing, packaging and transporting food products. By managing the supply chain effectively, companies reduce production costs, avoid shortages of raw materials and deliver products to customers timely.What are the 5 P's of logistics? ›
- Production: Production of right material with right. ...
- Price: The right produced product can be made more. ...
- Product: The right product can be produced by using. ...
- Promotion: logistics should work closely with. ...
- Place: It reffers to the distribution channel's decision.
What is 5S? 5S corresponds to five Japanese words (Seiri, Seiton, Seiso, Seiketsu, and Shitsuke) that characterise the various actions as Sort, Set in order, Shine, Standardise, and Sustain.What is the key role of logistics? ›
The roles of logistics feature transportation/delivery, storage, packaging, cargo handling, distribution processing, and information processing, and many systems have been put in place to deliver products from the production location or factory to the consumer quickly and on time.
Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and occasionally security. Logistics is a channel of the supply chain which adds the value of time and place utility.What is logistics management in simple words? ›
Logistics management refers to the acquisition, storage and transportation of inventory from its origin to its destination. It involves maintaining the inventory, resources and related information, and getting the goods to the right location at the right time and to the right customer.What are the 13 logistics management activities? ›
Logistics management activities typically include inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfillment, logistics network design, inventory management, supply/demand planning, and management of third party logistics services providers.What does 3PL stand for? ›
A 3PL (third-party logistics) provider offers outsourced logistics services, which encompass anything that involves management of one or more facets of procurement and fulfillment activities.What are the 4 types of supply chain strategies? ›
Integration, operations, purchasing and distribution are the four elements of the supply chain that work together to establish a path to competition that is both cost-effective and competitive.What are the 3 types of supply chain strategies? ›
- Demand-driven supply chain strategy. A demand-driven supply chain focuses on meeting demand from the consumer. ...
- Agile supply chain strategy. ...
- Collaborative supply chain strategy.
The Inside-Out approach is guided by the belief that the inner strengths and capabilities of the organisation will make the organisation prevail. The Outside-In approach is instead guided by the belief that customer value creation, customer orientation and customer experiences are the keys to success.What is an example of an inside-out perspective? ›
It might be inside-out thinking when there's a conscious decision to make process, policy, people, systems, or other changes that: Don't improve the customer experience at the same time. Are about maximizing shareholder returns, not about benefits for the customer.What are the 4 C's of supply chain management? ›
Introduction to the four Cs of supply chain management : chain structure, competition, capacity and coordination.What are the 5 supply chain strategies? ›
The Top-level of this model has five different processes which are also known as components of Supply Chain Management – Plan, Source, Make, Deliver and Return.
Our framework encompasses four main configurations – the communicative, coordinated, collaborative, and co-opetitive – and we refer to these as the 4 C's in supply chain management.What are the three levels of logistics? ›
There are three levels for logistics decision: strategic, tactical, and operational.What are the top 3 elements of supply chain? ›
Generally the key aspects of Supply Chain management are Purchasing (sourcing), Planning (scheduling) and Logistics (delivery). Sometimes logistics is separate, and procurement may be included with Purchasing, depending upon how location specific the procurement activities are.What is inside vs outside concept? ›
“Inside” refers to the space that is contained within the boundaries of an object, such as the inside of a house or the inside of a box. “Outside” refers to the space that is outside the boundaries of an object, such as the exterior of a house or the outside of a box.What is inside vs outside thinking? ›
Most of our thinking is "inside-out," meaning that we start with an issue as we or others see it at first and then explore solutions within that initial mental frame. Outside-in thinking, by contrast, means seeing the issue always from multiple perspectives.What is inside vs outside acting? ›
Actors who work inside-out usually benefit greatly from being physical, because it brings about more discoveries and helps them get out of their head. Actors who work outside-in benefit from being encouraged to make strong choices supporting their physicality.What is inside out approach approach? ›
An inside-out approach starts with what an organization already possesses before looking at anything else. It assesses as an organization's core competencies, talent, resources, customer relationships, and networks and how these could be leveraged.