Rush Hour

What's New?

To Blackwell's way of thinking, the increasing competitiveness of the marketplace is rendering the traditional supply chain obsolete. "In supply chains, the products normally start in the mind of the manufacturer, and they're pushed through to distributors, then to retailers and eventually to consumers," he says. "But when you reinvent this supply chain, you start with the mind of the consumer. I call it a `demand chain.' "

Peyton, too, points out the shift in emphasis in favor of consumer demand. "[Business is] much more customer-demand-driven than it was in the past," he says. "You have operations that have this as the ultimate imperative rather than having things organized according to how long it takes to get machine tools set up to do a production run. It's forcing companies to be much more agile--and to have faster inventory turnovers."

Again, the idea is to have exactly the right product at exactly the right time. Relatively simple in theory? Yes. Just as simple in execution? Not really. "It's easy to talk about the concepts of logistics, but it's difficult to do them," says Blackwell. "That's why execution is so important. Entrepreneurs might say `Well, yes, I can see the importance of it'--that's the first step. The next step is doing it, and that's the hard part."

Ironically, at the same time companies are striving for speed in the marketplace, they're also struggling to hold down costs through low inventories. For examples of real companies doing this--and doing it right--Blackwell points to the computer industry. "In the traditional supply chain, a computer company decides what is to be made and then builds it and puts it into inventory," he explains. "At Dell Computer and Gateway 2000, however, they've revolutionized the computer business because they don't make the computer until somebody orders it. That's much more efficient."

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This article was originally published in the February 1998 print edition of Entrepreneur with the headline: Rush Hour.

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