Supply Chain Transformation — The Important Element of Information Strategy

The following guest blog commentary is contributed by Bob Ferrari, Founder and Executive Editor of the Supply Chain Matters blog and Managing Director of the Ferrari Consulting and Research Group LLC.

We often context and plan supply chain transformation initiatives under the three-pronged perspectives of People, Process and Technology enablers. I would urge transformation teams to seriously consider a fourth component, that being Information, including the velocity, context and clarity of information. While some may be of the mistaken belief that the element of Information is solely the perspective of IT, it is rather a jointly-owned, cross-functional element of transformation.

Across various industry supply chains, a lot of executive level visionary thought and leadership energy is becoming focused on supply chain transformation efforts, namely moving the needle towards more agile or resilient supply chain response capabilities. The reasons are many and varied.

Today’s clock speed of rapid and continuous business change requires that industry supply chains be more agile and able to anticipate changes in customer, product, or fulfillment segment needs, quicker than competitors. The complexity and sheer speed of events occurring across the global supply chain implies an exceptions-based focus, allowing advanced technology to monitor and oversee day-to-day customer focused fulfillment. Having a bold vision to the end-state capabilities required across the value-chain is essential.

With the increasing demands of online and omni-channel customer fulfillment, the end-state is often defined as the supply chain being more predictive and exceptions-driven in terms of response. Many of today’s industry supply chain and sales and operations planning (S&OP) teams however, find themselves drowning in too much data while lacking in important insights. Hence transformation efforts can start on the wrong footing.

The “Case-in-Point: Avaya’s Supply Chain Transformation” case study references the Value Pyramid, specifically the high value pyramid that inverts the paradigm of data and information to stress less time spent on low value and time-consuming data and information tasks and more time spent on higher value predictive and prescriptive analysis, capabilities and actions. As an example, less time and attention consumed in achieving forecast accuracy and more time allocated to sensing and predicting various demand patterns for products based on customer needs. Achieving these transformative capabilities takes time and clear perspective, particularly the focus on information and planning competencies. Like the other components of transformation, the Information component requires cross-functional perspective not only including a close collaboration with IT support teams but a supply chain focus on the elements of analytics capabilities.

Efforts include development and adherence to overall information architecture that umbrellas broader forms of information, both structured and unstructured in nature. It should include an outside-in information lens, with information streams tied to key business process streams. It implies not only accurate data, but data and information streams that feed higher levels of understanding as to why events are occurring and what events to anticipate.

Planning capabilities should be transformed from historic forecast-driven to more demand sensing and market intelligence driven, tying casual information data points into insights. As an example, consider how specific climatic weather patterns or events affect demand for products, either continuous or seasonal. What about demographics of a particular market tied to social media buying trends or customer responses to new products? Consider how related products have been trending and whether that has an effect on other specific products.

Information cannot solely be planning related, but needs to include broad elements of fulfillment execution. The implication is, of course, that rather than hierarchical planning and execution processes, the perspective turns to net-change continuous planning and execution capabilities supported by more advanced technology. Rather than the moniker of a “Big Data” approach, consider an emphasis on a smarter, more insightful data approach grounded in analytics- and insights-driven decision-making. These capabilities imply a singular streaming data and information model that feeds integrated business or sales and operations planning and decision-making needs over time.

In supply chain transformation, the element of Information adds to the dimensions related to People. Do not neglect the skills impact implied with the transformation to more predictive, prescriptive or insights-driven value-chain response. It is a different mindset, one that is grounded in analytical thinking, comfort with advanced technology and a deep knowledge of all of the various internal and externally focused processes that make-up the current or planned future value chain. Allow time for the organization to mature or nurture these skills in incremental crawl, walk and finally run segments of maturity.

Interested in learning more about supply chain transformation? You can view a live webcast on April 30 where Kinaxis will host a detailed discussion on the drivers for change at Avaya; the five-phase approach used to transform their supply chain organization; and how they combined people, process and technology to achieve far-reaching success.

Additional Resources

• Supply chain transformation frequently asked questions