When it comes to your supply chain, maybe you should focus more attention on responding than planning.
Although planning is still an important part of creating and maintaining a global supply chain, companies have been falling short when it comes to responding to their customers.
Planning isn’t designed for today’s fast-changing environment. You can try to plan for every detail, every situation, but by the time you get done with your planning session, the factors you were working with may have already changed.
“Companies would meet and plan for the next week or the next month. Then a problem would arise, but they wouldn’t be scheduled to meet for another week or month,” explains Doug Colbeth, CEO of Kinaxis. “Planning worked about ten years ago, when things were reasonably predictable.”
“Companies get to be market leaders because they know how to plan,” added Randy Littleson, Vice President of Marketing at Kinaxis. “But with the addition of global supply chains, it just isn’t enough anymore. You may have several different partners or suppliers, but the product ultimately has your name on it, making you responsible for any problems that arise.”
With the introduction of technology like the World Wide Web, consumer behavior has changed. Your customers are used to a high-speed world. They may change their mind on product specifications and expect you to make adjustments in a flash.
Moreover, with outsourcing and ever-shrinking product lifecycle times, unexpected issues can catch the brand owner by surprise.
“Supply chain participants find themselves in a constant state of ‘stop and go’ reaction mode, and the results of the actions taken are often amplified as it travels through the supply chain,” according to Kinaxis. “For example, a new demand signal can frequently end up exaggerated by the time it moves up the supply chain and reaches the contract manufacturer responsible for building the product.”
When a customer makes changes to their order, the customer service individuals on the frontline need to know if something is possible, what options are available if it isn’t, and what the impact of those options will be.
At this point, collaboration is essential because the response process is decentralized. And although companies frequently use system to system collaboration, like integrating ERP, they need to work on people to people collaboration.
“It’s no longer the planning group deciding what to do. Response management is about empowering the people in the trenches who need to communicate with the engineers or the suppliers to come up with a plan of action,” Littleson said. “If you don’t work to respond quickly, you risk inefficiency costs and markets intolerance because people want it now and want it their way.”
When it comes to that quick response, companies are struggling. The frequency of issues is higher and there are harsher implications, and the challenges of course corrections are more complex.
“Companies that rely on tools like Excel for response management can’t load their entire demand information or bill of materials. They can’t have hundreds of people collaborate in response action plans,” Colbeth says. “In today’s world, you need to engage a lot of people -- from the shop floor to buyers and planners -- for an effective response to change.”
To improve in the area of response management, Colbeth notes a trend in companies combining demand and supply planning, rather than having separate organizations for each. He also sees companies acquiring tools that enhance collaboration with suppliers or with customers.
“When it comes to tools, it’s like planning a trip with a travel agent,” he added. “You may have everything booked in advance, but you still need a cell phone in case you run into a problem. A response management tool is a cell phone for your supply chain.”