Supply Chain Planning and Operations – Are you Still Stuck in the 80’s?

Despite incredible advances in technology and social behavior over the last two decades and the use of algorithms to influence every aspect of our lives from healthcare to shopping, and finance to autonomous transportation, when it comes to supply chain operations, almost all companies, big and small, are stuck in the 80’s, when it comes to planning their supply chain. We are well aware of their adaption and use of latest supply chain planning and S&OP systems. However, these systems are driven by their business processes; and the design of most such systems limit the critical changes in their business processes.

Systems can only speed up your business process. They only amplify your process, good becomes better and bad becomes worse. Using the sequential business processes of 4 decades ago to plan and execute is not going to make your supply chain operations to be as effective as it can be. It might be given you visibility but no real solutions offered. If you examine the way most companies are performing planning and execution using today’s technology, they plan at a high level while making a lot of erroneous assumptions that have been around for years. Examples of such assumptions are supplier delivery lead-times and absence of disruptions which are now more of a norm than exception. The real challenge begins when they try to execute that plan which was inaccurate to start with. As a result, they keep adjusting it manually just to make it work not knowing what other issues they could be causing down the line.

Moreover, as if they did not have enough data, companies are now gearing to receive more, exponentially more. Messages from suppliers, shipping vessels, and regions regarding storms, weather channels, customers and so on. Human intelligence has limitations and cannot deal with such a distributed and complex type of operation to decide what should be done, let alone in real-time. You can throw as many people to this as you like, however the decisions cannot be made in isolation from one another. A quick and dirty solution is found, kicking the can down the road!

Planning and execution should NOT be sequential, they are two sides of the same coin. The only distinction is the time horizon they deal with. Planning and execution are a process of predicting and responding. The more we predict the less we need to respond and vice versa. An alert that comes in may impact execution as well as the future plan. On the other hand, if the same kind of alert is experienced frequently, then the system can learn and build it into the plan mitigating risk and disruption to the operations. Disruption on the execution side can impact delivery to a number of customers which may further impact future plans and use of inventory. Hence, planning and execution are not two separate processes. They are tightly joined together and can influence each other continuously.

Your brain and arms are constantly working together, planning and executing. The brain predicts and informs while arms execute with constant brain interaction and learning during the execution. Billions of years in evolution is surely something we can learn from! Separating the two processes creates data and decision latency and misalignment.

Supply chain leaders should consider designing processes that involves planning and execution jointly. In conjunction consider systems that can receive, act and learn from the messages and alerts in real-time. The process and system can be deployed for a whole new paradigm of supply chain efficiency, resiliency and agility that is demanded for the decades to come.

The technology is available today to remove such disjointed processes and building a supply chain that is in line with all the innovations that we have been experiencing in the last few decades. For more information on how systems can help to accomplish this click Here

supply chain stuck in the 80s

Current S&OP and S&OE processes are disjointed and based on the spreadsheet technology of the 80’s. Time to change and make effective use of what today’s technology has to offer.