Setting the Table For Successful Supply Chain Management
For supply chain professionals, the challenges multiply with each passing day. Like everyone else, I see disruptive events such as natural disasters, security breaches, technology failures, political unrest and economic instability in the news 24/7, and these events are greatly affecting today’s global supply chains.
Over the past decade, I’ve watched as globalization, competition and digitalization have forever changed the business landscape. Throw in the fact that current, and potential, customers now have higher expectations, and more buying power, than ever before and you have very little room left for error when it comes to supply chain planning, process management and execution.
With changing markets, volatile demand and a dependency on partners who can only be indirectly managed by contracts and influence, brand owners require constant access to timely, complete information. They need the ability to plan and see across the network and work collaboratively with partners to resolve the frequent disruptions that can hinder the achievement of customer service and margin goals. Unfortunately, the enabling technologies for visibility, management, and decision support in this environment have not kept up with the pace. As a result, supply chain professionals struggle to make their most important decisions based on information that is fragmented across their network of partners.
Successful Supply Chain Management (SCM) is, in a way, like a hearty holiday meal. A lot of time and effort goes on in the background before you set the table. Your meal won’t be a hit with your family and friends if everything doesn’t come together in a timely fashion. So, let’s take a look at a few of the key ingredients that your business requires to set the table for successful SCM:
A Collaborative, Business Network
In my time at E2open, I’ve learned that what supply chain professionals really want is a single source of truth so that they can make better, faster and more informed decisions. In simple terms: they want the ability to commit with confidence. This requires technology enablement to connect trading partners in the network, to unify and manage multi-enterprise business processes, and to plan and make decisions— all in the network.
The technology solution for the trading partner network is a business network, a collaborative platform that serves as a single version of the truth for the brand owner and all of their trading partners. Think of a business network as a supply chain control tower, a network of networks enabling a brand owner to orchestrate trading partners and manage change—to continually make course corrections—so, collectively, they can achieve their operational and financial plans.
Big (Fast) Data
Better information leads to better decision-making. But incomplete, inaccurate, or untimely information can be worse than useless—it can be actively damaging to your business. Demand instability is a perfect case in point. In this environment, success hinges on the ability of the entire trading partner network, not just the brand owner, to reliably and cost-effectively manage demand volatility.
The most critical element is good, clean, accurate and timely data from as much of your trading partner network as possible. This data is the basis for creating a single source of truth for your company and your trading partners. Good data is the basis for good decision-making and essential for having a clear picture of your actual situation.
The primary challenge posed by distributed, network-organized supply chains is the question of how do you manage demand you can’t predict and supply you don’t control? The answer is relatively simple. Businesses need to develop the ability to see at a distance, see multiple tiers into their supply chain, so they can commit with confidence to their customers. To ensure that the data they are getting from their trading partners is timely and accurate, they need to be getting it digitally. Because not every one of their trading partners has the same level of capability, businesses of all sizes will need the ability to connect with them in a variety of ways, matching communication tools with their technical sophistication.
Having this array of data from all partners is what qualifies it as “big data.” To be most effective, the data should be near-real-time, so you are dealing with the world as it is right now, rather than how it was yesterday or last week. This qualification of multiple nodes, feeding frequent, yet not always periodic, updates, is what makes it “fast data.”
Concurrent computations? I don’t know about you, but to me that always sounds like something right out of a math class. But in reality, concurrent computations are calculations performed on new data as it arrives into your business network. The network communicates data in real time from all of the connected trading partners, which is then used to calculate current and projected values of critical metrics and trigger alerts when those thresholds are exceeded. This provides you with predictive visibility in near real time. The business network provides integration of the data, but it is process harmonization and concurrent computations that put the data into alignment and give users the insight they need as to the health of their operations.
With predictive visibility, businesses can see the potential impact that an event is going to have in the future—for example, a delayed shipment today leading to a shortage of a critical component in a couple of weeks—right now. It’s very similar to what you’re doing when driving down the freeway: constantly taking in information, calculating the current and projected implications of that information, and taking action in response.
So, combine big, fast data from throughout the network, put it in context through process harmonization, and determine its significance and potential impact with network concurrency. Now you have the virtual equivalent of asking a colleague what the latest status of some critical shipment is and understanding what it means to you. This early warning system can reduce risk by giving you and your trading partners more time to react to problems and opportunities, while staying a step ahead of your competition.
Network Planning and Response
I’ve witnessed firsthand how changes in the organization of the global economy have introduced latency and friction into today’s supply chain. In this complex, network-production world, you can’t just collar a colleague in the coffee room to find out what is going on and then work together to devise a solution to the problems you have found. There are also limits to how much volatility you can buffer with additional inventory without getting into trouble with your CFO.
Fortunately, I’ve also seen that there are technological and process innovations available that can be harnessed to recapture the immediacy and connection that was the hallmark of the best-run traditional supply chains in the days before outsourcing. With the business network and procedures in place, you and your partners have the ability to gather around a virtual conference table to work together to solve problems as if you were in the same room, even when you are scattered across the globe. This is what we call network planning and response.
Cloud connectivity with your trading partners enables decision making in the network and is the hallmark of a supply chain control tower. Because both you and your partners are seeing the same information in alignment, you can agree on the nature of the problems you face. Furthermore, because those problems often originate several tiers out in the supply chain, having a shared understanding of both the problem and your goals can empower those partners to make better decisions, collaboratively, with you to solve those problems.
Collaborative Planning and Execution
So, now that you’ve put in place the base ingredients and the keystone ingredient (network planning and response) and have achieved an educated understanding of the best way to deal with whatever disruptions to your plan…what’s next?
You can now use the very same tools and techniques you used to reach agreement to implement the course of action moving forward. For example, the very same connectivity and process harmonization that pulls data in, and puts it in a simple to use context, also works in the opposite direction. This will allow you to execute agreed-upon actions with minimum latency and a shared understanding of what exactly needs to be done, by whom, thus eliminating the scope for many common errors.
The iterative, two-way communication you use to collaborate with your trading partners to solve a problem is just the ticket for ensuring that decisions are carried out correctly and in a timely fashion. Revised orders can be agreed upon, placed, and acknowledged with minimum latency and maximum clarity; it’s all there on the platform, where everyone can see what was agreed to, and conformation to the new plan can be monitored and enforced.
Commit with Confidence
“Commit with Confidence”. It’s a term I use frequently in conversations with my staff, as well as each and every one of my customers. But, it might not be a phrase that’s in your everyday vocabulary (if it isn’t, it should be). At E2open, we’ve made it our goal and our promise, to empower those up, down and across the supply chain to commit with confidence. This includes our entire customer base.
How can you commit to a customer when you don’t have the confidence of making the ship date? What does that say about your customer service, and inevitably, your customer loyalty? It wouldn’t make me very comfortable to go to any of my customers and say “Well…I think you’ll make it.” Not very strong words. Not very confident. And it’s not like you can say “Let me get back to you on that.”
Frankly, saying I’ll get back to you later is not going to cut it in today’s cloud-based world. By having a 360 degree view into your constrained supply in the network, and all of your customer demand translated into details by segments, profitability, promotions and timeframes, can enable you to ‘commitment with confidence’, thus making the customer experience exceptional. This sets the table for future growth and prosperity.
Putting it All Together
By utilizing the key ingredients mentioned above, you can quickly increase revenue via profitable demand management, manage assets better with continuity of supply, and reduce working capital…all while better meeting your customers’ demanding requirements. You do this by making your most important supply chain decisions with confidence.
When done right, collaboration allows companies to respond more rapidly to possible inventory shortages and shipment delays. It also allows you to ward off and deal with supply chain disruptions, create and share supply and demand signals and coordinate with literally thousands of suppliers at one time. By aligning and collaborating with such a wide range of suppliers, supply chain managers gain the visibility they need to respond to any supply chain challenge that’s put in front of them in today’s competitive business environment.
With network information integrated and in alignment, everyone—trading partners, procurement, planning, customer service, CSCOs, CFOs, all the way up to CEOs—can commit with confidence not only to plans, but also to those last-minute course corrections that can make the difference between profit and loss.
About the Author
Michael Schmitt joined E2open in 2011 as Senior Vice President of Marketing. In his current role of Chief Marketing Officer, Schmitt is responsible for managing marketing communications, product marketing, and sales development functions on a global basis.