"The only way to truly create transparency and eliminate the opacity of business operations is through the evaluation of a company's cost to serve. The insights through this process are invaluable and will lead to exceptional performance. I've experienced this first hand. Ultimately, the evaluation of cost to serve and net landed profit can result in a significant competitive advantage."
- Christopher Adams - Supply Chain Executive
We all know the traditional supply chain mandate;
“Get the right product, to the right customer, at the right time, at the lowest cost”
This mandate is creating cascading problems and continual operational stress due to capacity shortages, increasing complexities and escalating costs. Working harder and longer can only take you so far, often with disappointing results.
Supply Chain “Fire Fighting” can be stopped only by looking at your challenges more holistically. This starts with the servicing of customers and the availability of products based on their profit performance. This extends to the entire value chain including strategic vendor alliances.
The power of having an effective and sustainable approach to tackling this issue is well documented in the Harvard Business Review article Managing Alliances With A Balanced Scorecard by Robert S. Kaplan, David P. Norton and Bjarne Rugelsjoen.
In this article, the work done by Christopher Adams and his Team at Lagasse Wholesale, now Essendant, yielded significant results. A key building block for this effort was creating specific Cost-to-Serve and Net Landed Profit performance information for every Customer and Product for Lagasse Wholesale’s operation.
How is this done? The following link is a 2 minute video that summaries the approach.
It is self-defeating to continue to try and plow through ongoing supply chain operating requirements without the ongoing benefit of prioritizing available resources.
2022 will continue to see ongoing end to end supply chain disruptions. How will your company deal with these ongoing stress points and battle fatigue?
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All the best,
CEO – Competitive Insights