Response Management History - 101

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Let’s go back a few years just before the term Response Management first showed up in supply chain. It really wasn’t that long ago; let’s say the mid 90’s. You were listening to cd’s, your children still used the home phone, and your internet connection sounded like a fax machine. Many companies had already been through their second ERP implementation, plans were generated and executed. When it was business as usual and things went like clockwork, everything was fine. In the case that there were deviations to the plan, for example scrap, late supply, machine breakdown or an unexpected customer request, planners would somehow manage. In many cases they would turn to Excel for supply chain analysis. Sound familiar? The answer may be yes because for some companies the use of Excel, or supply chain’s version of manual labor is still good enough. But for most companies the growing complexities of the supply chain required something that could handle the volatility that supply chains had never seen before. People turned to Advanced Planning and Scheduling (APS) systems because some had primitive simulation capabilities required to respond to change. For the most part though, they were still planning and scheduling systems. There was still a gap when things didn’t run like clockwork and it was not business as usual. This was a fascinating time for supply chain. High tech electronics led the way with increasingly shorter life cycles for products aimed at a customer base that was quickly becoming more educated and demanding. The early stages of Response Management as its own category were set (with Kinaxis coining the term and defining the category by the way). There emerged the first of two components of Response Management: “sense and respond.” For the most part this was all about anticipating demand because at this point historical analysis was of no use. Companies needed to get even closer to the customer, product life cycles became more difficult to manage, and it was the contract manufacturers who took the lead with emerging Response Management capabilities. From a functional standpoint, the requirements for a world class Response Management system were being defined:

  • One place for all global supply chain data and information. More often than not this is coming from many different systems in different formats and different time zones
  • “What-if” simulation anytime. For example what if demand dropped earlier than expected? What if this product was promoted? People could no longer wait for answers. They needed to know the risks and how best to respond or it could ultimately mean a loss of market share.
  • One place for all supply chain participants. Demand and supply managers could no longer do things in silos. They needed to collaborate efficiently to effectively respond to change.

Even through all this, the term Response Management was still slow to catch on (though there were some industry analysts that understood and bought in See report: Response Management: Next Wave of Supply Chain Innovation?) The second component of Response Management began to make headlines. The first component, “sense and respond,” I think was exciting. New product introductions, emerging markets, anticipating demand. Highly competitive aspects of supply chain and the companies that were the leaders started to be recognized, for example today you can go to The Gartner Supply Chain Top 25. This second component though does not yet have a catch phrase associated with it and is much different than “sense and respond.” Trying to think of something that is respectful of the human tragedies associated with this component of Response Management you might call it “respond responsible.” We are talking about the catastrophes nobody can “sense.” You don’t have to look too far for examples but since 9/11 they seem to be more frequent. I’ll just point you to my last blog, “Top 5: What Else Could Go Wrong?” for other examples. On top of the human element, supply chain professionals still need to source supply, allocate limited inventories and respond with confidence to their customers. It has taken these events for many companies including the big ERP vendors to recognize that there is a need for something between planning and execution. Something when things don’t run like clockwork, when demand is unpredictable, or when you get hit with the unexpected. Response Management has arrived as an official category that companies will start, or for some continue to build strategies around.

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