Mobius - Market driven supply chain
easily around the needs of more profitable customers. These rules are then rolled out across the company, providing stable and strategy driven criteria for decision making. The rules drive sales and inform the shopfloor with regard to priorities for scheduling and allocation of inventory. They provide reliable data on which to tailor the supply according to the segmental needs, and are incorporated as an additional dimension into forecasting, demand planning and supply planning. Finally, should further prioritisation and investment decisions need to be made at S&OP level, these too can take into account margin impacts. Segmentation is by no means a new idea, but getting it to work is the challenge. The team likely to face the greatest culture shock and present the greatest resistance is sales. Where previously most account managers focused on sales volumes, they will be faced with completely rethinking their approach to the customer – renegotiating and redefining the services and prioritisations on offer, and resisting the pressure to return to old habits. During the transformation at Associated Weavers, the company completely reviewed and changed its entire demand cycle and planning logic, right down to how stock was allocated to the customer. “For our sales team, it was ultimately a convincing process,” De Wilde explained. “We began recording our KPIs at the outset of the process, and used them to demonstrate improvements in our business performance. Initially we achieved small increases. But then the KPIs started to seriously reflect the positive impact of the new rules.” For most departments, it is a relief to receive clear and concise rules for prioritisation and service levels. And ultimately sales becomes a strategic function – creating value for the company rather than volume. Desmet believes, however, that this level of segmentation is just the first step in achieving true maturity. “We call this the ‘defensive mode’,”
Desmet said, “where products and clients with a higher profitability justify higher service levels. The next step is the ‘offensive view’ which entails obtaining a better understanding of what customers really require, and what they are willing to pay for those services.” The offensive view therefore includes an in depth analysis of customer requirements. And the resulting segments are likely to be rather different, some of them incorporating a more proactive and collaborative approach. By better matching requirements and service in this manner, volumes and profitability can be grown in each segment. Many challenges face companies embarking on this process, one of the biggest being how to sustain the improvements. For Associated Weavers, the secret to sustainability “is down to the way you measure progress, follow it up, preach it and convince everyone,” De Wilde said. “Once everybody is convinced, it continues with almost no effort although, it is important to continue monitoring the KPIs.”
“None of this is rocket science,” Desmet concluded, “but it involves formulating fundamental questions which can also be very sensitive, and this has to be handled with subtlety to ensure people realise that they’re not working optimally across functional boundaries of the company.” The rewards for getting it right are very clear. “I would say we have migrated from total chaos - where the customer who shouted loudest received priority – to a situation where we have predictability and order,” De Wilde commented. “Now, when we promise something to our customer we stick to that promise.”
For more information please visit: www.mobius.eu or contact joanna.holmes@mobius.eu
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