Take out the fat. Get lean. Drive the efficient supply chain of the future. Are you shaking your head yes in violent agreement? Let me challenge your assumptions.
Let me start with a personal story. In 2010, I stood on the Council of Supply Chain Management show floor 35 pounds heavier. (Yes, that is me in the pink shirt hugging the robot.) Yesterday a slimmer me got a hug from the show robot in the lower picture. Over the year, I decreased my body mass index by 12%. I did it the old fashioned way: quantity and quality of food, a personal trainer and lots of time in the gym.
I jokingly tell my friends that I am training for the last trimester of life. I hope to run a 1/2 marathon in January. To train, I run and lift weights on Monday, Wednesday and Friday and swim a mile on Tuesday, Thursday and Saturday. It is hard work.
Why is this story relevant? Let me share. It is hard to reshape fat, and the more I work out, the less flexible I become. The tightness in my hamstrings echos my supply chain client experiences. When I go to clients and hear about the inflexibility of their supply chain processes following a massive Enterprise Resource Planning (ERP) system that tightly integrates Advanced Planning (APS), I wince. Until I discovered yoga and went back to ballet, some days, I could barely walk. There are parallels. We have to cut the fat, it has been hard work, but it is not working very well. So, my question to you is “have you hamstrung your supply chain?”
My Point of View (POV)
This was a week for A LOT of conferences (Apple, Oracle, Teradata, etc). Twitter reports were rampant. I bypassed the technology vendor conferences, to attend the Council of Supply Chain Management Professionals Conference (CSCMP) primarily for the networking. Being a research gal, I get the most value out of the research track. You would have seen me there tweeting on the future of supply chain management. I typically stand in the back of the room.
For the past two years, the Council has sponsored a showcase of the Supply Chain of the Future exhibit. The display features warehouse robotics, temperature controlled vehicles and flexible packaging,. Flashy and fun, the robots run about the floor and the logistics-centered audience talks about trucks, lanes and 3PLs. However, the conference is surprisingly quiet on what I think are five future trends. Here I share my take on future trends and what we need to do to put flexibility back into the supply chain.
1) Big Data Supply Chains. Traditional Supply Chain Management(SCM) focuses on transactional efficiency: order to cash and procure to pay. eCommerce spawned catalog and shopping cart technologies. This is not sufficient. These early versions of technologies drive an efficient, but most often a STUPID response. Lean practices can make stupid happen with less waste. These processes are inside-out (enterprise to trading partner or market) not outside-in (market to enterprise systems). They focus on vertical silo efficiency not on supply chain trade-offs and alignment.
We have a new world of opportunity. As we enter the world of big data supply chains, we have the opportunity to combine the internet of things–where physical objects like inventory, machines and documents have presence and transmit a signal– with the omnipresence of mobility (anytime and anywhere) with awareness of location and the sensing of true customer wants and needs through the open and interest graph. New capabilities in analytics –in process memory and new techniques for predictive analytics–enable convergence of these technologies. It is up to supply chain professionals to reskill and think about more than speeds, feeds and cases in the warehouse to redefine supply chain processes to take advantage of new technologies. I tried to tell this to the robot on the floor, but he ran away to chase boxes….
2) Market-driven Supply Chains that Sense. Today’s supply chains respond. They do not sense. Despite the exponential investment in sensing technologies like RFID, 2-D bar codes, temperature sensors, GPS, and QR codes, today’s supply chain focuses on orders and shipments. Traditional applications cannot scale to use the exploding volume of unstructured data and combine it with the output from the number of sensors being installed.
Additionally, supply chain latency is accepted and not questioned. We have not conquered the bullwhip effect, and the translation of demand from retail shelf to a manufacturer remains unchanged. I am frustrated that we have not even tried. Despite years of playing the BEER GAME, it is 7-14 days for a consumer products manufacturer and 28-35 days for a chemical supply chain. We have built long supply chains that translate, not sense demand. The use of sensor data, market data, temporal data (weather, traffic, etc.) to sense and reduce latency remains an opportunity. Social/mobile/digital/ecommerce convergence is changing the “heart” of the supply chain. Leaders will combine transactional data with unstructured data to sense market to market outside-in with near real-time latency while laggards get squeezed from both ends.
3) Horizontal Processes. We are just beginning to build horizontal supply chain processes that allow us to span the end to end supply chain. While we have talked for a decade about the building of the end to end supply chain, we now know that it is about MUCH more than the connection of your ERP to my ERP like a Lego set. The processes of demand sensing and shaping, demand orchestration, revenue management, supplier development and Sales & Operations Planning (S&OP) are the start of the building of horizontal processes. The winning supply chains of the future will turn the supply chain on its ear.
4) Listen, Test and Act. Learning Systems. Supply chains do not listen and they also do not play by fixed rules. Yet, technologies like Business Process Monitoring (BPM) and linear optimization try to force this outcome. Advanced pattern recognition and the use of rule-based ontologies are fueling the first generation of supply chain systems that can learn. It was great to see Progress Software showcasing a supply chain event monitoring application built on pattern recognition of streaming data for a supply chain control tower application. (Progress has traditionally focused on financial data. It is good to see them with a new focus.) Enterra Solutions, IBM, and Transbase are also focusing on learning systems. We are very early in the building of learning systems, but I find it VERY EXCITING.
5) Changing Cycles. Demand cycles are shortening. Supply cycles are lengthening. Commodities are scarce. Volatility abounds. The design of the supply chain needs to change and adapt frequently. It is not. I think that this is the future. The enlightened thinkers know this. The laggards are just beginning this journey. While the discussion at CSCMP is to 3PL or not 3PL, I was struck by the 57 point gap between shipper expectations and 3PL capabilities in the annual 3PL survey on network design capabilities. In my opinion, the opportunity for inventory policy, network design, and adaptive supply chain processes are still ONLY understood by supply chain leaders. This is not supply chains as usual, and the 3PLs, as they say in politics, need to man up! (And yes, most of the 3PLs are still overwhelmingly represented by men.)
So, as I hugged the robot, I winced. This is not the supply chain of the future that I see. I want to help all these hamstrung supply chains. New technology capabilities allow us to raise the bar to reduce fat AND improve flexibility. But, this can only happen if we adapt practices and adopt new technologies. As for me? I am off to swim and then do yoga. I have learned that an old body cannot successfully reduce fat without focusing on building true flexibility. And, yes, it is hard work.