Too often supply chain-based organizations operate in siloed environments. At Reveal, we see it frequently -- procurement does not communicate effectively with production; production does not communicate effectively with warehousing; warehousing does not communicate effectively with distribution; distribution does not communicate effectively with customer service; sales does not communicate effectively with any of the above; etc. -- each area is treated as an utterly separate function instead of an interconnected part of a working whole.
Likewise, it is also easy to isolate supply chain as a completely separate entity within an organization and silo it instead of seeing it as a critical component of the company's brand strategy and how it goes to market. It is important to step back and consider a broader perspective of how supply chain challenges can affect the company as a whole and impact its brand, positively or negatively.
Brand Management & Supply Chain Management Intersect
Consider the Chipotle E. coli outbreaks, where in late 2015, 60 people across 14 states were infected, 22 of whom had to be hospitalized. The outbreaks wrought havoc on its brand: 43 restaurants had to be closed temporarily, and the U.S. Food and Drug Administration, Centers for Disease Control (CDC), the U. S. Department of Agriculture Food Safety and Inspection Service and public health officials all investigated. The official cause of illness remains unknown. It has been suggested that a common ingredient served at the fast-casual restaurants was the likely source, but it could not be tracked.
That’s a supply chain problem. There are effective SAP solutions for tracking and tracing, product recall and so on. Fast forward to the present. The one-time popular chain is beleaguered with consumer concerns about the safety of its offerings, and market experts speculate that it may take years for the company to recover its sales. In short, a likely problem in the company’s supply chain has negatively impacted Chipotle’s once-sterling brand.
Chipotle’s woes serve as a cautionary tale: If you want to manage your company’s brand image effectively, make sure to take your supply chain into account. There is a correlation between your supply chain and how your company is perceived in the marketplace.In contrast, love ‘em or hate ‘em, Amazon is a master of supply chain. Ask any Prime member seduced by the allure of two-day shipping. Amazon has become the online shopper’s resource for one-stop efficiency and reliability. It is not without its faults; the company does demonstrate logistical challenges at times. But Amazon did not grow to be a titan by ignoring supply chain problems, Amazon has built its brand on being able to deliver. If a product is purchased but backordered, a customer receives an email; if a shipment is late, the customer receives email notification, etc. Importantly, incidents like these qualify more as exceptions instead of rules. Those at the helm of a supply chain know that at one time or another there will be events to manage; it is how you resolve them, if you can.If you cannot produce and deliver a quality product on time because you have supply chain events, it can damage how customers perceive your company. Consider how improving your extended supply chain will not only increase your company’s efficiency levels, it can also transform your brand in the marketplace. Some questions to ponder:
- Is your organization a master of its supply chain and, by extension, it's brand?
- Can you deliver the right products to the right place at the right time?
- Is your supply chain empowered to react quickly to contain events as they happen?
- Can you track supply chain problems back to their source and isolate them?
- Is your supply chain equipped to resolve and rectify issues after they occur?
- Is there room for improvement in your process?
- How has your brand been impacted -- positively or negatively -- by your company’s supply chain?
Like it or not, your company's brand image is connected to, and arguably dependent upon, how well your supply chain operates. Enhance your brand by making effective supply chain management part of your overall brand management strategy.
A final word here about Chipotle, lest this seem merely an academic exercise: The chain reported its second-quarter earnings this summer. According to an article in USA Today, "The restaurant chain's profit plunged to $25.6 million in the quarter ended June 30, down 81% from $140.2 million from the same period a year ago."