The Result is Faster and More Effective End-to-End Supply Chain Management
In my first two blogs on this topic, I explained how supply chain management is a collective activity. It requires collaboration, consensus, and compromise across functions for optimal decision making. With growing globalization and complexity, it is becoming more important than ever that your supply chain has all of these aspects. The Sensing + Intelligent + Social Supply Chain provides a way to harmoniously connect data, process and people to make better decisions faster and achieve an effective end-to-end supply chain management. I outlined how decisions made by one functional group often have a ripple effect on other departments. Today’s velocity of change is only magnifying this cause-and-effect relationship. It can’t just be about individual issues. There has to be an eye on the bigger picture. But today’s environment of modular, functional supply chain planning is failing to provide that view. Companies can’t see, understand and orchestra end-to-end. As highlighted in my previous blog on why you need a Sensing + Intelligent + Social Supply Chain, this new way forward can provide big benefits. But how can you implement one? That will be the focus of this final blog in the series.
Visibility into the End-to-End Supply Chain
When it comes to implementing a Sensing + Intelligent + Social Supply Chain, it starts with believing in the change. The past few years have seen a significant focus on supply chain visibility. The reality though, is that gaining visibility is only a first step. To really improve supply chain performance, companies need a consolidated view of the end-to-end supply chain, and the ability to leverage that visibility for deep analysis and quick action. That means finding the right way to connect data, processes and people. If all data used for supply chain decision support exists in one place, planning becomes significantly faster and more effective. In fact, the time it takes to collect and consolidate data can be reduced from days (and even weeks) to hours or even minutes. Adding automated integration of data from multiple sources, sites, regions and countries allows planners to accelerate decision making without having to wait. By offering one place for data, you can immediately reduce cycle time for collaborative supply chain processes where multiple people need to be involved. Having a supply chain management software solution that can accomplish this means one that can bring all supply chain data elements from any source into a single place for convenient, easy, instant access. True value is achieved with the ability to interact with data in a collaborative way, performing real-time calculations, data modeling, and simulations to project results. Being able to interact and analyze data from across the extended supply chain network—rather than only seeing it—enables companies to dramatically improve responsiveness. Once you have all related supply chain data, plus the ability to run your processes in one place, your supply chain community can begin to have meaningful conversations that result in timely planning decisions. When an organization can concurrently and continuously plan, monitor and respond in a single environment, people are able to know sooner and act faster. These companies substantially reduce supply chain planning cycles and response times, while simultaneously improving the accuracy of analysis and the profitability of actions. Driving the ability to know sooner and act faster are several key capabilities including visibility across the supply chain. This allows the ability to properly assess risk and respond to unanticipated events. The greatest technical challenge of a highly outsourced supply chain is to gain access to data—including forecast, inventory, in-transit, committed supply, and capacity—necessary to make critical decisions. Getting data from many different ERP systems, including those at contract manufacturers, suppliers and even customers, is a matter of necessity.
Seamless Integration of Data and Analytics to Support Supply Chain Processes
But don’t forget visibility to data is only the first step. It has to be integrated seamlessly from all sources. Beyond achieving a historical or current view of the state of the supply chain, you also need the capability for forward-looking, predicative views of a future state. Along with the data, you should also be able to model the behavior or analytics required to support many supply chain processes. For example, if a customer calls and places a new order, you can immediately get the answers to all the questions you would have about the new demand. When can I tell the customer it will ship? Do I have the inventory and capacity to support? What’s the impact of this order on revenue and margin? Developing a solution that supports supply chain processes with process orchestration and task flow capabilities that allow you to document and monitor your processes is critical. With data and analytics brought together in one place, you have the ability to do concurrent planning. There’s no need to pass data from one silo to the next to get the answer you’re looking for. Beyond visibility, it’s also vital to have event detection and alerting. The sooner a supply chain disruption is recognized, the faster the response. To be truly influential, alerts should be triggered based on the anticipated impact of the event rather than the event itself. For instance, a late delivery from a supplier may not warrant an alert because even though it is late, it will not impact shipment to customers. In this case, the system is intelligent enough to know that an alert does not need to be triggered. ERP systems, on the other hand, will flag all late supply but can’t tie the late supply to an impact on delivery, revenue, or margin. Contrast that with the value of automatically sending an alert to a customer service representative when an order is going to be late due to a delayed supplier delivery to a contract manufacturer. It becomes even more valuable when those people who may need to act on the issue are identified and included in the alert as well. In today’s fast-paced, global environment, it is never enough to simply know when something unexpected has occurred. The real value comes from recognizing the event, quickly and accurately understanding its context and impact, and identifying the necessary next steps. That is why analytics are so important. When an event happens, they’re used to model and determine consequences, as well as identify the impact of various potential decisions and actions taken in response to the event. These analytics need to be performed in real-time. Companies can’t afford to wait days or weeks to analyze the impact of an event or to identify resolution alternatives.
What-If Analysis to Mitigate Supply Chain Risk
When responding to an unanticipated supply chain event, ‘what-if’ analysis simulation is used to model and compare the various response alternatives. It’s important to note it also plays an equally important role in risk management. When assessing risks, ‘what-if’ simulations help to model the various scenarios, and once mitigation strategies are identified, they’re used to ensure the strategies are sound. There is significant value from enabling anyone, at any time, to simulate anything in a private scenario to test, compare and share, the impact of various planning and response options. For instance, ‘what-if’ scenarios allow supply chain teams to perform an analysis of the projected outcome of a set of choices, such as testing alternative versions of a particular plan, testing business strategies against a number of alternative futures, evaluating the likelihood of achieving an outcome, or evaluating the operational and financial impact of decision alternatives.
Supply Chains Must Know Sooner and Act Faster
At the end of the day, the best plan is still just a plan. Events, both big and small, will happen—and when they do, a company’s response must take place quickly and confidently. Traditional ERP systems weren’t designed for responding to supply chain exceptions because it takes too long to model an event, calculate the impact and analyze the results. Spreadsheets can’t be used as a stop gap. They are at best an approximation of what’s actually going on. The ability to respond effectively requires a combination of capabilities that enable organizations to know sooner and act faster. That is only possible when the company is able to:
- Detect when an event occurs or will occur.
- Trigger an alert so personnel who need to respond receive immediate notification.
- Allow fast ‘what-if’ modeling of different resolution options.
- Promote collaboration and communication (across multiple functions, even multiple tiers of the business) among key personnel.
- Provide clear guidance as to which resolution provides the best results by evaluating and comparing scenario results against key performance metrics.
So how can you achieve a Sensing + Intelligent + Social Supply Chain? By combining those key capabilities and recognizing it’s time to look to the future of supply chain management, not the past.