Expanding Your Supply Chain For a Healthier Bottom Line

Let’s start with a quick premise review. The supply chain starts with the inception of the product and ends with the happy and loyal customer. Everything between these two ends belongs to the world of supply chain management. As a manager, you are more than a purchasing agent. The logistics under your umbrella force you to deliver raw materials as well as consumer satisfaction.

Dual Material Logistics

Within the management of a manufacturing company, there are two key flows managed in the supply chain. At the production end, the flow of materials will make or break the manufacturing outcome. At the consumer end, information is the primary commodity being moved, creating purchasing agreements, customer satisfaction and long-term loyalty. The logistics for both of these flows must be integrated into the company’s management. Information and materials are not mutually exclusive. Any manager that has had a purchasing request lost in the system understands how closely linked the two are. Logistics integration that cross the boundaries of supplier, manufacturer and consumer have a profound impact on the bottom line of a company. Take a look at the position that Amazon.com plays in supply chain management. The company has positioned itself as the logistics conduit for distribution and customer care by having all of their services integrated and easily accessible by everyone in the supply spectrum. As you look at your own organization, ask yourself which people have access to the chain. If it is only you and a handful of people, then logistics is not well integrated and you are hurting your bottom line.

Resource Based Theory

As a supply chain manager, you are sometimes caught between a rock and a hard place. Industry logic affirms a homogeneous construct for your business, assuming sector pricing standards and labor amount. Everything that you read compares the efficiency of your manufacturing to the average of every other manufacturer. From a company management perspective, companies are heterogeneous, with your organization being the most unique because it is vying for the market lead. Resource Based Theory (RBT) brings the two viewpoints together. According to RBT, a company’s value is derived from the sum of all of its resources. With RBT, a business becomes more than its product. An obvious example is Starbucks. Though known as the supplier of your morning java, the company has allowed for multichannel access to its supply chain, offering bulk coffee and teas, as well as a corporate culture that has become an intangible but marketable asset. In other words, they have bundled all of their resources, which include coffee, teapots and a smile, into one name that is simply branded Starbucks. These combined resources stand outside of a homogeneous industry average, making the company a dominator of its market. For your company, you may want to do a whitepaper analysis of the resources that it brings to the brand, then package these as a singular resource for the world.

Mass Customization

On the supply chain spectrum, there is a place where vendors blend with customers at a transactional level. As a resource, you are no longer supplying only a product. Your company is facilitating this logistical transaction from the beginning to the end. Because of new abilities regarding logistical integration, customers can customize their orders as a mass customization process. Mass customization is shown to attract new customers, assuming that it is done correctly. O-ring and seal manufacturer Apple Rubber is an expert at mass customization. They have created a simplified process and added access to specialists so that they can avoid having to read the customer’s mind, which is common for other manufacturers. As a revenue generator, mass customization will increase sales, but be sure to make the process robust so that your company, as the manufacturer, understands everything that the consumer requires. This is the soul of logistical supply chain management.

Closing Thoughts

Whether you implement mass customization or choose to make use of Resource Based Theory, it’s becoming clear—based on the successes of the aforementioned companies—that bundling all of your resources facilitates productivity and betters your company’s image. As a supplier looking to strengthen your brand, make sure to devote just as much time and effort to customer care as your do to ensuring efficiency and quality in production.

Guest Blogger – Paul Reyes-Fournier

Paul Reyes-Fournier has served as the chief financial officer for social service organizations, churches and schools. He created his own marketing firm, RF Media. Paul holds a BS in physics and an MBA.

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