This post is a continuation from a previous blog: check out part 1.
A Single Rapid Analysis Capability across Planning and Event Management.
Because Intelligent Business Operations (IBO) deals with important exceptions, a very rapid analysis capability is required — something which is not typically associated with supply chain planning solutions. IBO deals with important exceptions, a very rapid analysis capability is required — something which is not typically associated with supply chain planning solutions. The speed of cycling through the full set of OODA Loop steps of Observe, Orient, Decide, Act, is the key to gaining sustained competitive advantage. As a result, much faster planning tools based upon in-memory technologies are required to take full advantage of the OODA loop, replacing traditional APS suites made up of loosely coupled applications that try to support both the initial plan creation and the OODA loop. The shortcoming of SCEM was that the Observe and Orient steps were supported by different technology than the Decide or Planning steps. And yet many of the same analytics used in planning are required to evaluate the impact of an event, making the support of these steps by different technologies impractical and ineffective.
Collaborative Decision Making for Complex Environments
Another aspect to consider is the context in which IBO is best used to assist people to make decisions. The Cynefin Framework is very useful for understanding this. As seen from the diagram, the Cynefin Framework splits out the decision context into Simple, Complicated, Complex, and Chaotic, and also characterizes the approach most suitable for making decisions in each of the contexts. The fifth context, Disorder, the worst of the lot, is when a person does not know the context in which they are operating. The tendency in Supply Chain Management and Operations in general, is to try to force all processes into the Simple context through Lean, Six Sigma, and ISO9000 by deploying Scientific Management methods first developed by Frederick Winslow Taylor in 1911. Key to Taylor’s Scientific Management approach is breaking down processes into several small repeatable tasks that can be distributed across a team of people with little training and skill. APS systems were designed to support this approach by providing application to satisfy specific functional needs, such as Demand Planning, without considering the overall process requirements. However, the rapid increase in globalization, outsourcing, and product portfolios over the past 30 years has added tremendously to the volatility, uncertainty, complexity, and ambiguity in supply chains.
While Best Practice (applicable for the Simple Context) will always have a role to play because of the scale and efficiency it offers, many of the issues being faced in our global supply chains today require more agile and nuanced decisions, which are more suitable to the Complex quadrant of the Cynefin Framework, and more aptly addressed by IBO. Complex decisions inherently require a more collaborative decision approach across functions and trading partners supported by systems defined in IBO that enable rapid what-if analysis and simulation. Of course IBO supports all stages of the Cynefin Framework, including the Simple, Complicated, and, when necessary, the Chaotic. In fact, a key aspect of IBO is to enable companies to manage their business processes (and in the case of this discussion, their supply chains) in the Complex context and preventing them from tipping over into the Chaotic context frequently.
Know Sooner; Act Faster
The tenets of Know Sooner; Act Faster are rooted in both the need to manage the more complex and volatile contexts effectively, and the capabilities required to facilitate more effective decision making. Kinaxis has embedded the concepts of IBO in RapidResponse, enabling companies to establish processes across functions and even across trading partners, addressing both long term and short term decisions. Our focus is on helping companies radically shrink the decision cycles in planning and in response to events. The breakthrough of being able to Plan + Monitor + Respondin a single environment has enabled our customers to know sooner when reality is different from the plan, and to respond quickly and profitably as a result. In other words, they develop the skills and capability to act rather than react. To learn more about this topic, feel free to view the complimentary Gartner Research report featured in the Kinaxis newsletter: How to Use Intelligent Business Operations to Create Business Advantage (Sinur J., Schulte R., Gartner Research, 20 March 2013).