In his bestseller The Tipping Point, journalist Malcolm Gladwell offered a new perspective on dramatic and unexpected change. Ideas, actions, and rumors sometimes behave like infectious disease epidemics, he argued. And even a small "outbreak" can have enormous effects on politics, on business, and on society.
The demand for supply chain speed may be a case in point. Though we won't subject the phenomenon to a rigorous tipping point examination, we can think of several seemingly minor developments that have driven it to a top-of-mind position among practitioners, academics, and consultants.
First came Federal Express in 1973 and its galvanizing slogan: "When it absolutely, positively has to be there overnight!" Federal Express revolutionized both the way carriers transport small parcels and documents, and the way we all view the radically fast movement of goods. (Later, the company changed its name to FedEx, which is, not coincidentally, much faster to say than its predecessor was.)
Then, the sure-to-fail Amazon.com phenomenon struck—and stuck. Emerging in 1995, Amazon raised the expectations of Americans, and later the world, about the online shopping experience. Today, we expect to be able to order virtually anything online and have it arrive on our doorsteps in a ridiculously short time. Whether we wanted an item that quickly was—and is—beside the point.
Suddenly, speed seems to be on everyone's mind. It also seems to be at the heart of business competition.
There are several facets to supply chain speed. Perhaps the most obvious is fulfillment speed— how rapidly an order is filled. Not just picked and packed, or processed and released, but how quickly it is delivered into a customer's hands. The importance of integrated performance among supply chain partners is immediately clear.
Why is speed so essential? For one thing, the competition is promising—and delivering—rapid fulfillment. It can be a source of competitive advantage. In some segments of the technology business, for example, it's not uncommon for a customer to place an order with two competing suppliers. The order that arrives first is accepted. The one that shows up second is rejected.
For another, almost all companies operate today with lower inventories than they used to (exceptions being when Far Eastern sourcing is involved). Rapid replenishment from suppliers is vital, then, to stock positions and to manufacturing and to customer service levels. The suppliers that consistently deliver quickly and on time tend to be rewarded with keeping the business, if not getting more, assuming that quality and accuracy are perfect.
Another important aspect of supply chain speed is speed to market. It involves, indeed demands, faster product development cycles, more and faster involvement of suppliers in the development process, collapsed timelines for packaging and marketing activity, white-knuckle scheduling through production, and extraordinary planning and coordination of launch communications and movement.
Flawless execution on this stage can keep a company in the spotlight for a long time, while the competition is still struggling to get an audition.
The concept of speed to market illustrates an important characteristic of supply chain speed. It is really about cultural attitude and behavior, with the mechanics really being a manifestation of core strengths and values.
That's right. Organizations that exercise, expect, and demand speed in their interactions and relationships are the winners in the supply chain speed race. It's all part of a whole. Speed to change. Speed to make decisions. Speed to act and react.
We'll take the case a step further and suggest that organizations that aren't good at what we might call "cultural speed" might not understand the context for operational speed—and what it takes to sustain satisfying relationships that depend on performance speed.
So, here's our fundamental position: Speed is good and speed is necessary. But indiscriminate speed can be if not dangerous, at least to little purpose. When we become enamored of speed for speed's sake, we are on a slippery slope. And a costly one.
Some things don't need the ultimate in speed. You know it, your customers know it, and their customers know it. They know it in their heart of hearts, whether they'll cut you any performance slack or not. Take body parts for collision repair, for example. The repairs will take days, if not weeks, to complete; the parts don't need to be at the shop the next morning. Similarly, the winter jacket from the outdoor outfitter doesn't need to be in your hands until the snow flies.
Some things do need speed. Outof-stock goods, sell-one/make-one JIT items, mission-critical service parts for equipment and machinery, communications network components in the wake of a storm—it's a long, and valid, list.
In our considered opinion, too few companies know how to evaluate and discriminate among these possibilities, how to apply different—and appropriate—levels of speed to them, and how to communicate the cost consequences (and benefits) to their customers.
Just fast enough
We, in the collective, owe it to our customers to talk straight to them about the costs of—and the alternatives to—the levels of service they demand. Few of us have the courage to pull it off, to tell them that the speed of service they are demanding (or that we are voluntarily providing) comes at a cost—a cost that may be needlessly high.
Think about it. What would it mean to your cost structure if you could ship some things in two days instead of one? What if you could aggregate enough to shift some things from LTL to truckload movement? Or from truckload to rail? Could you use less expedited air? Are all your valueadding activities really adding value? How much of the savings could you pass on to your customers? And what would that do for your price competitiveness?
Finding the right balance of speed and service for the right mix of products can be a win-win for you and the customer. And maybe—just maybe—whoever talks straight and knows when and how to apply supply chain speed can win out over the pedal-to-the-metal, speed-at-all-costs gang.
Let's not get too carried away here. Nobody, least of all us, wants to go back to the bad old days of "Allow 8 to 10 weeks for delivery." Or 52-week lead times for critical industrial components. These were hallmarks of the old economy, and the old supply-driven supply chains, in the days before we called them supply chains.
The United States wasn't really competitive then. The global economy did not yet exist. And we took, as individual consumers and as business partners, what "they" would give us—in quality, in quantity, and in time.
Those days are long gone, thank goodness. And we would like to have that book in less than a week, please.
Just not before 10: 30 tomorrow morning.