I just came across this article at Supply Chain Digest featuring comments from Patrick Connaughton, an analyst at Forrester Research.  Connaughton says that “Saddled with inflexible and heavily customized legacy systems, countless supply chain operations are urgently in need of a large-scale IT modernization and transformation effort. Some have flat out reached a point where they can no longer compete or expand globally without a complete rip and replace of their systems.”

For years companies have invested large sums of money in legacy demand planning and supply chain planning systems in hopes of improving their operations performance.  While there have been some successes, increasingly companies are finding that legacy supply chain planning systems are failing today’s supply chains.

Today’s supply chain is defined by pervasive, global outsourcing, increasing demand volatility and shrinking product lifecycles.  The result is that the best possible plans are made…but then everything unravels.  Legacy supply chain planning systems were not designed for this environment.  Instead, they are:

• Used by a small number of highly trained planners
• Designed around a single enterprise focus
• Produce plans that are always “wrong” (the math is correct, but the assumptions that went into the planning model have changed by the time the optimization is completed – resulting in the wrong optimized plan)
• Result in planners and front-line decision makers having to rely on spreadsheets to run multi-billion dollar businesses

Optimization solutions can provide value at a very local level – in factory planning, for example, where you want to optimize what is built the next day – but are failing today’s multi-enterprise supply chains.

Today’s realities present new challenges that require new solutions – a new paradigm for a new world.  Solutions must embrace the reality that today’s supply chains are multi-enterprise in nature and, thus, must provide clear visibility into the extended supply chain and tools that understand this virtual enterprise and its nuances.  Today’s solutions must embrace and leverage human judgment since the number of unplanned events with high risk to the business are on the rise.  Front line staff need to be armed with tools for risk tradeoff and response to deal with these situations quickly and appropriately to ensure a profitable response is put into action.  These solutions must foster team-based decisions that tab the collective insight of the right people in the organization – those that understand the potential impact of any unplanned event and proposed action alternative.  These people need to be able to tap into a single system with one set of data, no matter what the problem – whether it be a demand, supply or product issue that needs to be addressed.

To deal with today’s increasingly complex supply chains, manufacturers need an integrated solution that empowers their staff with planning, monitoring and response capabilities.  Legacy supply chain planning systems were not designed for today’s complexities and can actually contributing to making the problems worse as a result.

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Tags: Supply chain planning
Posted in Response Management, Supply chain management
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