Al Girardi is Global Vice President, Marketing and Chief Marketing Officer at GEP.
It’s no secret that marketers sometimes view procurement teams with suspicion, even outright hostility. Make no mistake, we have seen real progress in recent years, but some friction remains.
Unfortunately, this friction creates a cascade of problems, starting with the lack of information on product profitability. Marketers, driven by consumer trends and brand promotion, often find themselves isolated, detached from the financial implications of their strategies. Purchasing and supply chain managers are tasked with minimizing costs within a complex, multi-tiered, multi-geographic value chain comprising hundreds and thousands of suppliers, often unaware of market trends. consumers or the market.
This misalignment leads to excess inventory, which leads companies to resort to deep discounts to empty their shelves. Over the past two years, retailers of all stripes, from Costco to Target, have experienced significant overstocks. Many were forced to cut prices aggressively, hurting operating margins, working capital and stock prices.
We are now seeing this phenomenon in computer chips. Just 16 months ago, a global shortage nearly crippled manufacturers. Today, automakers have excess inventory, which could lead to a sell-off in auto chip supplier stocks. Later this year.
After many years and millions of dollars invested in ERP systems and consumer data, how could so many large companies get this wrong? And how can we do better?
Marketers, like me, need to understand that supply chain management is not a remote back-office function but is an integral part of sustainable, profitable and profitable growth. Likewise, procurement professionals must be much more agile to respond to rapidly changing market needs. Yes, three-year fixed-price contracts with key suppliers have both disadvantages and advantages.
The good news is that AI is creating opportunities for marketing, procurement and supply chain professionals to work better together, which will allow businesses to better integrate these functions to drive competitiveness.
Here’s how businesses are resetting the crucial relationship between marketing and purchasing:
1. Integrate sales forecasts into supply chains
Sales forecasting is notoriously difficult because it requires a wealth of accurate data as well as the ability to analyze it quickly enough to provide insights in time to be useful. AI excels at processing data, analyzing numbers, and providing insights. As a result, companies should look for opportunities to deploy AI to help their marketing and procurement teams make real-time, data-driven decisions around supplier evaluation, risk analysis, supply chain and much more.
2. Gain visibility across the entire supply chain
AI plays a vital role in end-to-end transparency by giving real-time insights across the entire supply chain.
Procurement teams should use AI to gain real-time insight into their supply chain and the different components that make it up. Teams should especially rely on AI to quickly adapt to supply shocks, such as peak oil, tariffs, etc., giving them the opportunity to mitigate associated risks. Siemens is one such example of a company using AI to mitigate supply chain disruptions. The company recently experienced a shortage of Surlyn and used an AI solution to quickly find alternative suppliers. “Technology doesn’t give you the visibility you need to reliably prevent supply disruptions before they happen, but it can provide you with insights that can help you respond to supply issues. chain disruptions much faster than human buyers can,” said Michael Klinger, senior director of supply chain excellence at Siemens, at harvard business review.
3. Provide real-time sales price information to fuel purchases
To compete with Amazon, Walmart, a renowned leader in supply chain management, is investing even more heavily in its supply chain capabilities by increasing fulfillment capacity and warehouse automation and equipping distribution centers to deliver aisle and shelf-ready pallets to stores at any time. reducing both shipping time and costs. In short, Walmart has upped its game again integrate its global supply chain and marketing initiatives to optimize inventory and maximize product margins.
Today, agility and adaptability are essential to survival in the business world. The fact is that the traditional disconnects that separate marketing, purchasing, and supply chain teams hinder not only profitability, but also core competitiveness. Indeed, inertia here is a sure path to eclipse, irrelevance and collapse.
Forbes Communications Council is an invitation-only community for leaders of successful PR, media strategy, creative and advertising agencies. Am I eligible?
