Every business wants to succeed, that’s a given. That success almost always includes growth. It’s a simple metric that’s easy to understand and gives us simple, achievable goals. My bakery sells X amount of loaves in a day. Next month I want to sell X+1 loaves per day. Simple, measurable, attainable.
But what if that growth means your business struggles to function? What if my bakery goes from selling X loaves per day to X+100? Can I keep up with that demand? Will my customer’s lose faith if they’re unable to get the baked goods they’ve come to love?
This is why scalability has to be a core concern in any business plan. Whether you’re a startup or a multinational corporation, if you’re not ready to grow then growth might be the end of you.
Why is scalability in the supply chain so important?
Because the supply chain feeds your business. Without the ability to scale, your business will starve.
62% of tech leaders fear they’re at risk of being displaced by competitors who innovate more quickly
We often think about growth and scaling in terms of the physical aspects. Growth means bigger premises, more staff, or a larger fleet. We also think of it in terms of larger revenue streams. If we’re not ready for it, we might associate it with bigger headaches.
The truth is that it can be any and all of these things. But one thing that’s often neglected is the supply chain. If you manufacture a product and demand for that product goes up, you can capitalise by meeting that demand. You can hire more technicians, buy up warehouse space, and upgrade your logistics network. But if your supply chain is lagging, you’ll be dead in the water.
What is the most important aspect of creating a scalable supply chain?
You start with your business processes. This is true of day old start-ups and manufacturing juggernauts. If you have standardised, repeatable processes in place, you can scale any element of your business. The supply chain is no different.
If my newly popular bakery, with a rapidly growing customer base, has always operated on an ad-hoc basis, then growth is going to be difficult. Without clearly defined processes in place, I won’t know how many ingredients are likely to be used, how many baked goods I’ll need to produce, and where improvements need to be made to keep up with demand.
In supply chain terms, I won’t be able to effectively bring in the right supplies to meet demand. On the other hand, I may end up over ordering ingredients that go to waste, or deteriorate and end up contributing to an inferior product.
With proper process in place though, scalability becomes a breeze. With top level processes governing the day-to-day operations in my bakery, drilling down to individual processes for creating each element of my product, I have an innate understanding of how my business operates and what needs to change as growth occurs.
How do we achieve a scalable supply chain?
With technology and preparation. It’s easy to feel overwhelmed these days when it comes to the technology we have available. But scale has always been achieved using the latest technology. Up until 1440, books were copied by hand. Then Johannes Guttenberg invented the printing press and we could produce the written word to scale.
New technology has always helped businesses better provide value for their customers and today is no different. We’re in the fourth industrial revolution now and Industry 4.0 technologies are blurring the line between the physical and digital worlds. It’s these new technologies that are best placed to help you achieve a scalable supply chain, whether you’re baking bread, selling books, or manufacturing industrial equipment.
Those comprehensive, repeatable and scalable business processes you’ve mapped aren’t just pen and paper plans of how your business operates any more. They are living in a digital world where integration with disparate systems makes all of them far greater than the sum of their parts.
Manufacturing processes don’t just offer a guide to how a component is created, they can feed back on how well it’s being produced, how often, where it’s being shipped to and what response the customer has to it. The demand of your customers can connect directly to your ordering systems. The feedback from customers can link directly to quality control.
With such an integrated world, using 5G connectivity and the internet of things (IoT), your supply chain isn’t a separate consideration but a part of a living, breathing, manufacturing ecosystem.
By taking advantage of the limitless capabilities of the cloud, these integrated digital systems aren’t hampered by hardware or infrastructure considerations. As your business grows and your processes develop to meet the needs of a growing customer base, your digital systems can expand in an infinite space of possibility. Local ventures can become international within the cloud and small beginnings can lead to big dreams coming true.
What’s next?
We’ve already given you our intro to supply chains and digital threads, and we hope you enjoyed this week’s drill down on scalability in your supply chain. Next week we’ll be looking at key points like usability and sustainability in the digital systems you use. The following week we’ll be taking a deep dive into how affordability comes into the picture.
Martin Kelman will also be presenting his talk to the European Supply Chain Management Summit on digital threads. Make sure you book your digital seat today!