There is an ongoing shift away from traditional retail to direct-to-consumer shipping. Considering that 40% of the brands are now selling directly to the consumer, and that those DTC sales are projected to reach $130 billion by 2025. This requires a supply chain with different capabilities than those in place today.
These trends are changing the way in which organizations are looking at supply chain. They are constantly keeping track select metrics like warehouse utilization levels, actual customer service level, cost to serve/profitability of product categories, and use of stop-gap measures to determine if there is an ongoing impact on revenue growth and operating margin.
It is important to ensure that Operations tracks and has visibility on these metrics across their organization’s supply chain, as these metrics will provide an indication that negative business impacts may be imminent. Operations should not only track and generate reports on the metrics, but it should also have the channels to communicate these metrics and their resulting impact to the business to the organization’s C-suite.
Sales and Operations Planning (S&OP) is a crucial initiative that many leading organizations are implementing to ensure even wider visibility on customer impact. The next evolutionary step in S&OP is to leverage real-time visibility to align better on expected and incoming demand, which better equips the organization to shape and serve that demand.
These metrics must be monitored often to plan necessary changes to the supply chain, as the lead time to these changes could range from a few weeks to several years based on the level of network upgrades needed.
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