Just When You Thought School Was Out, Here’s Another Supply Chain Lesson

As a supply chain professional attending a recent graduation ceremony, I couldn't help but think of the state of our industry as I listened to the commencement speaker challenge the graduating seniors to pursue lifelong learning, challenge the status quo, and never stop searching for the "paradigm shift". Working in a supply chain environment creates opportunities to help our organizations grow and adapt to massive changes in the global economy. To really have a continuing positive impact, we need to acknowledge the increased complexity and velocity of today's business climate.

Despite the fact that  globalization and other market trends have redefined the way businesses operate, the conventional structure of the supply chain has not strayed far from its origins. To many in the field, it still means:

• we plan and then execute;
• organizations and their respective processes operate as silos of people, data and applications;
• collaboration and coordination is limited in scope and speed as a result of the disconnected nature of operations;
• And, planning processes, like S&OP, are largely sequential and therefore can take weeks or months to complete.

The status quo might have been good enough if the world around us had not changed since those early days of supply chain, with its vertically integrated, build-to-stock model. The biggest change is most likely the amount of volatility and complexity one must deal with, as a result of such things as shortened product life cycles, outsourcing, and unexpected supply chain disruptions, such as natural disasters. This list could go on. I would recommend a number of my colleague, Trevor Miles' posts on the 21^st century supply chain blog including "Embrace Complexity - Revisited" and  "Visibility, Agility and Alignment".  Trevor touches on the organizational and technology "status quo" and the results of managing the supply chain with an eye toward change. I called out the latter post from Trevor because it deals with the loss of visibility and coordination across global operations. That brings us to our esteemed commencement speaker's suggestion to look for the paradigm shift. I think the paradigm shift for the supply chain is that the ‘plan and then execute' model is killing business, and has given rise to a different approach. Let's face it, while we're in the midst of planning (or executing), stuff happens. Like the football coach who throws his game plan out after the first whistle blows, we tend to start dealing with a variance to the plan as soon as that plan is approved. Instead of "plan and execute" the paradigm has shifted to "plan, monitor and respond", with the expectation that all three have equal importance and occur concurrently through a collective, integrated effort. Planning, monitoring, and responding can't happen in isolation or in succession. People, data and applications that make up an organizational team can no longer be segregated, even when they are spread across the globe. One group can no longer wait for another to finish their activities before they start theirs. Today, companies are competing against time.  So the paradigm shift is concurrent planning, where decision makers are able to see impact and risk across the organization instantly and work as a team to maintain the demand supply balance over both the short and long term. Importantly, this means understanding who is impacted by a change (or  the subsequent course correction) is just as important as the products, parts, resources and KPIs impacted. The new paradigm of parallel planning, monitoring, and responding must include the human collaboration element. ERP systems are not designed or implemented in a way that provides immediate visibility to key data and the projected impact of events across roles. With a rigid ERP system, an organization can experience inferior and sluggish decision making.  The traditional options of ERP and its bolt-on modules; or standalone software applications that solve point agendas; or, alternatively, a proliferating collection of Excel spreadsheets that offer flexibility but suffer from serious limitations in reliability, scalability, and collaboration, are no longer sufficient.  The information flow latency-and therefore decision latency-in these environments is enormous. In today's dynamic market, you must be able to evaluate situations in seconds, not hours or days. When analysis is too difficult to perform and takes too long, it simply doesn't happen. The end result is that you struggle to get alignment of demand and supply, because agility and adaptability are nearly impossible to achieve. Business success depends on how quickly companies adjust plans to maintain the demand and supply balance. When issues arise, as they always will, there is no time to dig for data, wait for reports to run, or perform ad hoc, informal analysis using spreadsheets. What is required is fast, accurate and comprehensive analysis. And that is what Kinaxis RapidResponse provides. Most manufacturers we work with have standardized on an ERP system as their execution-backbone. Yet, they all face growing volatility, increasing supply chain complexity, and the realization that they have entered a new era of surprise and compromise. As a result, forward thinking organizations are now placing a high priority on enterprise-wide planning, monitoring and response coordination. Their core needs typically include increasing agility and analytical capabilities, improving operational flexibility, and investing in long term scalability of their execution platform. Leveraging their investments in ERP, companies that adopt RapidResponse do so to:

• gain new and agile supply chain planning and analytical capabilities not possible otherwise
• increase flexibility to better support varying corporate, functional, and user specific needs
• establish a platform that can scale with the organization over the long term
• drive tangible business outcomes by both improving and accelerating planning and execution within and across supply chain functions

Hopefully the next commencement address you hear provides a bit of inspiration, no matter when you last put on a cap and gown. For both the new graduate and the veteran supply chain professional, some lessons shouldn't go out of style: never stop learning; challenge the status quo; and look for the paradigm shift. As our supply chains continue to get more complex, this advice won't just be a passing remark, but a key factor for long term success.