Gartner’s list of the top 25 performers in supply chain management highlights businesses using innovative and effective tools and systems that have catalyzed their success. Our countdown exists to support companies in optimizing their supply chain, which begins with knowing what success looks like and themes that can help companies manage their systems effectively.
Last time we discovered the success of Inditex and Nike, which are both influential players in the fashion industry due in part to their supply chain management. In this article, we’ll look at how AbbVie and Alibaba have created success in their own unique supply chain systems, coming in respectively at numbers 11 and 10 on our list.
Innovation is inherent at AbbVie, the biopharmaceutical company that focuses on delivering a stream of innovative medications to help people suffering from a range of serious diseases. AbbVie sources suppliers who can meet their material demand and quality worldwide, essential to remaining compliant with the growing regulation obstructions. The quality of materials is paramount, so the limited room to onboard new suppliers calls for effective supply chain management and visibility to maintain their operations.
Pharmaceutical supply chains have the responsibility of delivering life-enhancing and saving medications to the public, and it’s an understatement to say they experienced high pressure this year. The adaption of the AbbVie supply chain strategy to incorporate transportation visibility gained them much-needed agility and rise to the challenge of the pandemic while improving the customer experience.
AbbVie sought real-time visibility of their products in transit and the status of their shipments to gain increased control over and insight into their logistics. Their pharmaceutical products are high-value shipments that must be temperature controlled, which requires additional monitoring to ensure the quality of their delivered products. Visibility allows them to be proactive about their logistics and have room for contingency plans when hiccups and delays occur.
However, real-time visibility also catalyzed another benefit – AbbVie discovered the data gained from tracking their shipments could significantly enhance the customer experience. They built a service team that responded to customer inquiries about their shipment purchases and available products – this ability to deliver an accurate answer for customers significantly impacted customer trust and relationships.
AbbVie’s Approach to Visibility
AbbVie initially intended to use a third party to install a visibility approach but had challenges building the connections and standing their system up on its feet. They had different issues in resourcing when they opted to develop their own internal visibility system, too. They eventually landed on the right partner with the expertise to drive the capabilities and connect their logistical network reliability. Their approach was simple – to understand the data sources and connect to their shipper’s entire network – but not easy.
As an immediate effect of developing a reliable system, communication with carriers improved, meaning shippers could make appropriate and proactive decisions that protected the state of the products in transit and the efficiency of the deliveries. As a long-term benefit, carriers could look into their analytics and dive into areas of improvement to improve logistics capabilities.
AbbVie overcame the immense challenge of connecting their countless carriers delivering life-saving products to patients in over 70 countries through effective supply chain management. Management like this highlights how leadership and management can solve seemingly impossible problems for the collective business world.
Alibaba’s success is not solely derived from being a part of China’s enormous economy but primarily due to its comprehensive supply chain strategy that considers the entire life-cycle of its customer experience. Their strategy is based on understanding their customer’s preferred behavior, establishing the partners and platforms that can provide this, and then placing substantial efforts to continue managing their systems.
Customer Behavior and Delivering Service
Alibaba doesn’t carry inventory but connects customers to vendors, so while they reduce their expenses by not holding physical items, they also don’t have control of responding to customer demand. Therefore, their strategy had to be based on a different business model to deliver customer service based on consumer behavior.
Their leadership team dove into the behavior of the China consumerist market, and they discovered that Chinese customers enjoy negotiating on prices. This led them to create a platform that allowed their customers to shop online as they would in real life – as their platform facilitates users to open a discussion about prices negotiations and discounts with vendors.
This system required an added venture into increased customer service initiatives, where Alibaba introduced a team of representatives to mediate disputes. This team has the power to manage and control vendor’s performances and incorporate top-performing vendors into their marketing campaigns.
Managing Logistics for Full-Cycle E-Commerce
Initially, the company used a third-party logistics provider to manage the delivery of their marketplace with an integrated data platform to link the carriers. However, this meant they were limited by the capabilities and quality of their partners, who struggled to manage the growth of Alibaba.
Alibaba ventured out of strictly being a goods marketplace to providing a complete end-to-end system from source to consumer. This involved acquiring and purchasing carriers and logistics facilities to establish a new supply chain that had complete control for faster fulfillment and reduced outsourcing costs.
Removing the middle man in the process provides Alibaba with better control of the customer experience and moved them into the new, major-player, top-ten territory.