Why Customers Aren't Just the End of Your Supply Chain

Men loading or unloading a delivery truck
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The toilet paper industry supply chain can be defined as “From stump to rump!”

A memorable catchphrase, for sure. It visually identifies the raw materials that kick off the toilet paper supply chain and finishes right at the end. How many other industries can come up with supply chain catchphrases that match its succinctness, accuracy, and ability to rhyme?

  • Golf clubs — “From ore to ‘Fore!’”
  • Fish food — “From DL-Methionine to Dory!”
  • Seafood — “From Dory to delicious!”
  • Tattoos — “From pain to stain!”

Where Customers Fall

These supply chain catch phrases put the focus on the end customer. And that’s exactly where supply chain pros have been taught to put their customers. But that kind of linear thinking is an analog view of the digital supply chain universe that we live in.

Supply chains are products of demand, value, and time. If supply chain pros can only function in a linear fashion, then they limit their ability to plan, predict, and deliver. Let’s look at those three supply chain elements in reverse order—time, value, and demand.

Time

Time. What else can crawl, fly, and heal all wounds? You can have time on your hands or it can slip away.  Albert Einstein was one of the first to consider a non-linear study of time. Which blew everyone’s minds—especially those time travel naysayers.

The concept of time travel—up until Einstein’s non-linear concept of it—could be shot down by any right-thinking, non-sci fi writer.

Because linear time travel requires the traveler to take his or her own physical matter (i.e. his or her body) into another time, either past or future, it would logically follow that linear time travel isn’t possible. You simply can’t move matter from one time to another. Why?

Because one constant in the universe is amount of matter in it.

There has been ever since the universe used a very big bang to crack itself open the same physical quantity of matter in the universe. That matter has changed forms a billion times since typing “billion times.” And ever since the very beginning, matter has formed, un-formed, and re-formed—well, a very large number of times.

So what stands to follow is that, since your body is made up matter right now, that matter existed in some other form in times past. And will dissolve and re-constitute in another form in the future. And, if the atoms that make up your body were part of a pterodactyl’s wing and a lava flow in the Mesozoic Era, then how in the heck could you feasibly go back in time and watch the dinosaurs play?

And there—time travel put to bed.

But since Paul Allen is living proof that time travel exists, how do you make it happen?

(Okay, since you asked—Paul Allen clearly came from the future. How else can you explain a guy who knew who to hang out with in Albuquerque, New Mexico in the 1970s [a dude named Bill Gates]? And then help that guy found a software startup [Paul called it Micro-Soft]? And then bail with his shares intact to go on and own both the Seattle Seahawks and the Portland Trailblazers?

How else do you explain a net worth of about $18 billion other than time travel?)

Back to the “how do you make time travel happen” question. Einstein used a non-linear time model to make it workable. He postulated that time may not be linear. What if time existed on multiple planes, and all of those planes existed simultaneously? So every moment in time that ever existed and ever will exist—is all happening in the same instant. And to travel through time, all you need to do is to figure out how those simultaneous moments connect and rewire the connection. Instead of going from this moment to the next, go from this moment to one that existed with dinosaurs or flying cars. You solve the “all the matter in the universe is constant” conundrum because all those moments exist in the same universe.

See there, simple. Time travel solved.

And so, time and its impact to supply chain. We think of time as that thing that we keep looking at our watches, phones, and calendars to check. But what if, like Einstein, we could access all the time we needed throughout every link in our supply chains?

Value

Value is driving decisions throughout your supply chain. Whether it’s a question of a product’s or raw material’s value (in terms of cost of goods) or the value-add of a particular operation. If we have the time to do something, the next thing we ask ourselves is, “What is the value of that something?”

Value is what anyone with “finance” in their job title will ask you about. And if you can’t answer the value question or justify your answer to the value question, then that thing you want to do might not get done. Without value, why do it?

But how do you measure value? Think about a child receiving Christmas presents. Each gift unwrapped becomes the most valuable thing in her life until she's finished and sitting in a treasure trove. It's easy to measure the value of those gifts in that moment. Until she goes to her friend's house and sees the three-foot-tall Barbie that she received for Christmas, and suddenly the value of the child's gifts at home goes to zero.

In your supply chain, you might think that value isn’t as fickle as it is to a five-year-old. You can, for example, break down your bill of material and see exactly what your costs of goods are. Value, you say, is strictly defined.

But what if your customer decides it doesn’t want that item any longer? What is its value then?

Exactly. To know value, you need to know customer demand.

Demand

In the question of where is your customer, we tend to think of our customer as the end of the supply chain. The rump in the toilet paper supply chain, as it were. But like Einstein’s version of time, your customer’s demand should be accessing every link in your supply chain all at once.

To integrate customer demand into your supply chain, you need to understand the impact of your company’s lead times (there’s that pesky “time” again). Yes, your company has multiple lead times.

Demand may come in the form of a customer order or a forecast. Or you may do some basic demand planning and incorporate historic sales and seasonality to refine customer demand. Or you may want to go all out and study your customer’s competitors, market landscape, and social media to get more robust demand planning. The trick is to know more about your customer’s demand than they do.

What do you with all that demand data? Einstein showed us. You can use it to drive value decisions throughout your supply chain. A customer’s demand should drive raw material purchases (or decisions to not purchase raw materials). Use your customer’s demand to determine how much inventory to hold at every link in the supply chain. Real customer demand should be driving freight and other logistics costs.

By finding your customer at every link in your supply chain, you are on your way to optimizing your supply chain— which is to say you’ll be getting your customers what they want, when they want it, and accomplish that by spending as little money as possible. From stump to rump.