Supply Chain Visibility

There’s a dangerous undercurrent tugging at even the best manufacturer and distribution channel relationships: the inability to set and manage expectations based on supply chain visibility.

While many manufacturers insist they have the ability to make and keep commitments based on visibility into multiple layers of their supply chains, their dealers and distributors report just the opposite.

The Domino Effect

I asked auto dealers if available-to-promise (ATP) and capable-to-promise (CTP) are important to fleet sales, and the answer was yes. These dealers only order from manufacturers that have proven they can deliver ATP dates. So fundamental and so often overlooked: Dealers only trust manufacturers who can make and keep commitments based on solid knowledge of their supply chains.

These dealers sell fleet vehicles, mostly to small and midsize businesses, and the vehicles help those businesses expand and grow. An accurate ATP date produces a domino effect, because the small business can predict when it will have additional revenue-generating assets on the road.

Conversely, not delivering on an ATP date kills the pipeline of new revenue the small business was betting on. This domino effect of commitments in fleet sales has a lasting effect. One manufacturer shouldered its way into a tight rural market by having superior control over ATP dates compared to entrenched competitors. The result: 30 percent of sales now go to the new manufacturer.

The Emperor’s Clothes

For manufacturers that are getting beat in fleet sales channels, the disconnect between corporate and field is significant. C-level executives are hesitant to tell the CEO that external systems need more fixing than internal ones. These broken channels cost companies millions in lost opportunity — all because no one has the courage to say that despite all the internal spending, it is the systems that matter to channels and customers that need fixing.

Some C-level executives in this position will tell you that their business models don’t require them to deliver available-to-promise and that the supply chain is not important to their channels. I was shocked to hear this from a telecommunications executive whose growth strategy involved customized computer telephony integration servers.

Manufacturers need to realize that by enriching the channel they are enriching their customers. The reality is in the channels.

Stronger Channels

Once upon a time it only took market development funds to keep a distributor, dealer or channel partner satisfied and selling your products. No more. Competitors want your channels, and they will deliver advanced systems that give dealer reps the assurance that ATP, CTP and other indicators of delivery dates from your supply chain can be counted on.

If you have invested in delivering such tools to your channels, great. If you’re ignoring the problem, go visit your lowest-performing dealers and see if your competitors’ products are selling well. If so, chances are it’s because the dealers have learned to trust the competitors’ supply chain promises.