As the pandemic continues to affect supply chains around the world, agility and flexibility are more important than ever.
While lean manufacturing has long been heralded as an effective way to keep costs low, business leaders are discovering that operating too leanly can leave very little wiggle room if anything goes south.
Today, we’re looking at a company that rethought their lean manufacturing model long before the pandemic began. To learn how to optimize your supply chain, look no further than the Girl Scouts.
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In helping the client get its project back on track, one of our primary focus areas was decreasing their customization needs by improving their processes to align with the system's best practices.
The Girl Scout Cookie Supply Chain
The Girl Scout’s handling of the cookie season is a good example of supply chain management in general. While not every company has seasonal products, many businesses offer short-term products and promotions that aren’t available year-round, much like your beloved Samoas.
Girl Scout cookies are also relatable in terms of demand variability. While one might argue that Girl Scout cookies are always in high demand, this isn’t actually the case. In fact, sales dropped dramatically in 2021 as a result of the pandemic, leaving the organization with 15 million boxes of unsold cookies.
Many companies have seen the same variation in buyer behavior and have made adjustments to their selling strategies to accommodate short-term setbacks.
Then, there’s the operational strategy behind Girl Scout Cookie Season. As with most businesses, independent agents are tasked with making sales and are personally responsible for the profits they bring in. At the same time, there are multiple partners working behind the scenes to keep everything afloat.
A Look at the Selling Process: From Pull to Push
For decades, the Girl Scouts ran what’s commonly called a pull system. In short, this means that they collected orders for their cookies and then placed an order with their local troop. This way, they only purchased the exact number of boxes they needed.
In 2013, the organization decided to switch things up. Instead of approaching customers with catalogs and taking orders for future deliveries, they would now have boxes of cookies already in stock. This way, buyers could experience instant gratification.
This push system requires Girl Scouts to estimate future demand when placing orders. Using their own instinctual estimates or sales data from years past, they buy the cookies before the selling season begins.
Push systems create a degree of inventory risk, as there’s no surefire way to buy exactly what you need. Indeed, many naysayers claimed that taking this approach would lower the number of overall cookie sales and could negatively impact morale.
However, the strategy actually helped top performers hone their selling abilities and increase their potential.
The Limitations of a Lean Supply Chain
The former pull system employed by the Girl Scouts emulates the modern, lean supply chain. While pull-oriented systems are designed to be frugal in nature, they can limit overall sales.
As we can see through the Girl Scouts, inventory stimulates demand. As a result of the change in 2013, Girl Scout cookie sales skyrocketed.
Yet, that wasn’t the only movement that happened. Shifting to a push model also inspired top sellers to up their games, as they now had a new motivator: selling all their inventory so they weren’t left with wasted money.
This created the ultimate trifecta: Sales went up, scouts worked harder, and customer satisfaction improved.
However, it didn’t happen overnight. Like all organizations, the Girl Scouts had to obtain executive buy-in before designing new workflows. The organization also had to prepare employees, troop leaders, and troop members for the transformation.
Guiding Scouts (and Employees) Through a Strategic Transformation
One of the chief factors behind the success of the Girl Scouts’ new business model was that there were mentors and leaders dedicated to helping troop members understand how the system worked.
They educated members on the mission of the Girl Scouts and explained the significance of the new program. They gave insight into which varieties were the most popular and made sure they understood how to set up their activities to sell more effectively.
This would not have been possible if the organization hadn’t created a culture of change that was both inspiring and unifying. As executives equipped employees to turn troop leaders into change leaders, troop leaders equipped troop members to adopt the changes.
How to Optimize Your Supply Chain
Imagine if all the principles the Girl Scouts applied were applied in your company? Developing a similar strategy would enable you to shift to a different supply chain model while ensuring optimal benefits realization
If you decide to optimize your supply chain, be sure to remember the following best practices:
- Don’t assume a pull system (or just-in-time inventory management) is the best choice for your company.
- Determine your organizational goals and determine how supply chain optimization could help you achieve those.
- Obtain executive buy-in upfront and ensure their involvement throughout the project.
- Ensure all stakeholders understand the organizational goals and are invested in achieving them.
- Prepare all stakeholders for the organizational changes ahead and enable them to use any new tools and adopt any new workflows.
Supply Chains Will Continue to Operate Under a Degree of Uncertainty
During these uncertain times, a pull system could leave your customers stranded if there are unexpected delays, disruptions, or shifts in demand.
As you brainstorm ways to optimize your supply chain in such an environment, it’s worth taking a closer look at the Girl Scouts’ operating model. While a push system may incur more costs, it enables companies to remain resilient in the face of supply chain disruption.
To learn more about supply chain optimization and the associated technologies (like ERP and SCM systems), contact our enterprise software consultants below.