I found this really good article here at Chief Executive talking about some of the real challenges in today’s supply chains. The last paragraph caught my attention:
“The main problem in supply chains is that many more things can go wrong because there are many more participants, and it takes more time to get something to market,” he asserts. “Furthermore, you have to forecast the need of the consumer weeks or months ahead of the buying period, and by the time you make the stuff, ship, store, ship again, store again, get it to the store shelf, the consumer wants something else.”
This is right on the mark. Many more things ARE going wrong today – it’s the nature of the beast. The problem is that most organizations are still built around a model that assumes most things won’t go wrong, that things will largely run as planned. For years companies have built their supply chains around the familiar paradigm that stressed excellence in supply chain planning and supply chain execution. They’ve built processes, systems, trained staff, etc. with an expectation that the assumptions going into the plan would largely play out as you executed the plan.
But as the article accurately notes, that just isn’t the case anymore. Most organizations, though, haven’t adjusted to this new reality. Here’s a simple test – if you find that you have an increasing number of unplanned events (these could be demand volatility, supply disruptions, shortening product lifecycles) and increasingly your people are relying on spreadsheets to try to cope with them, there’s a good chance that you’re at significant risk and missing out on opportunities every day.
The influx in spreadsheet use is because people need to be trying to find the unplanned events (about 95% of unplanned events just happen, with no notice) and manage them. And there are no systems in place to do this – so they are left to be in constant triage mode. The costs to the organization are significant, from missed revenue opportunities to substantial operating costs as the inability to respond to unplanned events increasingly becomes the norm.
Shocks to the supply chain are increasingly the norm. As companies have increased the amount of outsourcing they’ve done, their role shifts from the “planner and executor” to the coordinator of response to these unplanned events. This requires new thinking and new tools to support this reality.
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Your response is also on the mark, so now what? We have as you say created many effective tools to manage and predict these problems offline, with a focus on driving all solutions and processes into our ERP system. Which is not designed to handle all of the complexities of todays supply chain. Is there a system driven solution that allows you to “trust but verify” at all of the steps in the process. We are considering several bolt on applications but those will have to tweaked to meet the needs of the organization also.
This post is spot on. Excellence in Supply Chain Management seems to require a perfect world, a world that does not exist, because the real world is largely unpredictable and most of the time, extremely volatile. And as you correctly state, the current trend towards globalization and outsourcing only makes matters worse. Hopefully both your post and the article you cite will help raise awareness of this issue.