Step Three - Connecting the Dots
How many of you are familiar with the game Simon? While Simon is really a memory game, what I really want to emphasize is that it is unpredictable. You start by pressing on one color and with every selection you are presented with a random sequence of colors that you must remember and repeat. It is random; not sequential and your decisions have to be made quickly as the game speeds up at every turn. It is just like your supply chain. So how do you manage an integrated supply chain when you don’t know the sequence of events from day-to-day and any decision you make can impact your next action and also others in the organization? I like to call this ‘Connecting the Dots’. I remember starting in supply chain many years ago in procurement, negotiating pricing and managing suppliers. At the beginning, about a month after I had placed a large purchase order I was approached by accounting. It turns out that the supplier didn’t acknowledge the price and invoiced differently than the purchase order. This is one example of many accounting issues that we all know can occur but it taught me very early that everything I do can potentially impact some other part of the business and often you find out much later, often too late. Have you ever made a bad decision? How many of you have made quick decisions on meeting forecasts only to find out that you lost a good part of your margin on expedited freight, overtime and premium material costs? Connecting the dots is very important for a SCP SOR because everything is related to cause and effect - understanding the impact of your decisions before you execute. The siloed approach This is where the traditional SCP SOR vendors have failed. Many organizations are working with the siloed approach with separately integrated modules. The concept of demand understanding how they have impacted supply or vice versa is unheard of. How to achieve transparency Achieving transparency within and outside your four walls is going to require the following:
- A truly integrated system where you have everyone working with the same data and the moment someone pulls a lever it is possible to identify everyone affected and alert them to any risk or opportunity.
- Full representation of the supply chain in one system. This includes your vertical and horizontal supply chain, including key suppliers.
- Speed of information. If the data is not recalculating fast enough users will revert back to old means, that typically being their favorite personal productivity tool “Excel” which is often the risky backbone for many mission critical supply chain processes.
- How common is it for you to know all the people in your supply chain that you affect or that affect you? The SCP SOR must be intelligent enough to help you connect with the right people and facilitate collaboration. Technology is an enabler to making the best decisions. People, and human judgement will always be required.
- Flow of data to and from the ERP data source. The data must flow to the SCP SOR and any planning changes need to flow back to the ERP for timely execution
In the next blog I will speak more about collaboration. Look for Step Four to Stage Five SCP SOR ‘Collaborative Management’. Looking for more information about Supply Chain Planning System of Record? Check out the rest of the series!