Archive for February, 2011

Coping with catastrophe. Can your supply chain recover?

Published February 25th, 2011 by John Westerveld 6 Comments

I spotted this article from the Wall Street Journal a few weeks ago and a couple of points caught my eye.  First, 2010 was a record breaking year for natural and man-made disasters. We had a virtual smorgasbord of catastrophes from flooding, to fire, to snowstorms. We had Volcanoes grounding air travel and earthquakes devastating an entire country. And of course, a major oil spill, the impact of which we will be feeling for years to come. According to the article, the economic losses from the disasters reached $222 billion US (three times that of 2009), which is only outdone by the human cost; 260,000 lives.

The other interesting point is that today’s interconnected world makes us far more aware and susceptible to the impact of these natural disasters. Instantaneous news through Twitter, Facebook, YouTube and blogs puts a human face on these events that simply couldn’t be done in a 15 minute segment on the evening news. The economic impact of a catastrophe on today’s global business is also far greater. Almost every large company has a distributed manufacturing base. Further, the suppliers which feed that manufacturing system also are spread around the world. This means that a disaster in some faraway place could have a devastating impact to a company’s ability to ship their product.

The article outlines a few suggestions on how to protect yourself from disasters at home and around the world;

1)      Create a business continuity plan – A business continuity identifies the activities/people that are critical to running the business, and ensures that these are protected.  As Wikipedia puts it; a business continuity plan works out how to stay in business in the face of a disaster.

2)      Supply Chain Risk Management – Specific to the supply chain (and typically part of the Business Continuity Plan) you need to assess your supply chain to determine which suppliers are critical and for those suppliers, identify workarounds should this supplier not be available. Of course, this applies to both external and internal suppliers. A plan, while critical, is not enough. My position has always been that responding to unplanned events is a key component of supply chain risk management. You can assess all aspects of your supply chain, create mitigation strategies for any possible events and still be surprised by some unexpected and unplanned situation. Your ability to respond will mean the difference between a financial catastrophe and a minor blip (for more reading on this, download my whitepaper here.)

3)      Insurance / Catastrophe Bonds – The Wall Street Journal article identified that companies can take out disaster insurance or catastrophe bonds. Of course, Insurance should never be your only disaster recovery plan. This white paper aptly describes disaster insurance as “the disaster recovery plan of last resort.” Like home insurance, you would take many steps to ensure that a disaster doesn’t impact your home (removal of dangerous trees, installing smoke / fire detectors, buying fire extinguishers), but if something DOES happen, you are glad to have the insurance to fall back on.

While I hope 2011 will be less “exciting” from a disaster perspective, I wouldn’t count on it.  Already we’ve had a few winter storms across the US that people have classed as “snowmaggeden” events that basically stopped all movement across the central and eastern US for several days. Further, the trend towards globalization will continue and as such our sensitivity to regional disasters will continue to increase. So with that in mind, do you have a disaster recovery plan? Does it include supply chain risk?  Comment back and keep the discussion going!

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Posted in Best practices, Response Management, Supply chain risk management


A great school assignment due in Oct. but submitted in Dec. fails! It’s the same in supply chain

Published February 23rd, 2011 by John Westerveld 1 Comment

We all need to get results in our day to day activities. But if you think about it, getting results almost always has a time component to it. Think back to your school days.  Finishing an assignment was a result. But if the assignment was due on October 10th and you handed it in at the end of December, it didn’t matter how good the work was, you failed.

Supply chain is like that, only more so. Your customers want their orders confirmed and their goods delivered on-time…or you fail. I think we all can agree that the timeframe in which customers expect their answers is shrinking too. They expect to know within the day, sometimes within the hour if you can accept the order. To succeed you need to get results fast, you need to get rapid results!

Let’s say it’s Monday morning and your ERP system has just run and you have a fresh new plan.  Then the phone rings and it’s a new potential customer with a large order that could turn into an ongoing relationship. The only catch? They want the items inside of lead time and they need to know today if you can handle the order. How do you solve this problem? You simply can’t solve this using your ERP system. Why?

1)    You don’t want to load the order in your production ERP system because you don’t yet know if you want to accept the order.  You certainly don’t want to trigger new Purchase orders to support an order you don’t know if you can accept! Even if your system supports what-if analysis, it takes hours to set up the new scenario before you can even begin your analysis.
2)    If the product in question has a complex BOM, you must do a full MRP run to truly understand the implications of the change.  Most ERP systems run MRP on a nightly or (**GASP**) weekly basis because MRP takes so long to run.
3)    Once the analysis is done, how do you know what the impact is due to the order you just added.  First, the traditional ERP interface is designed to work on a part by part, screen by screen basis.  Evaluating a complex change this way can take hours or days.

Typically, users give up on their ERP system and revert to spreadsheets to try to guestimate whether or not they can accept the order. They manually try to figure out what they can or can’t make.  They call or fax suppliers to see if they can expedite orders. Hours (often days) later they have a “best guess” as to whether or not they should accept the order.

Some companies try to avoid these issues by holding lots of inventory. Of course we know that this comes at a significant cost and typically, you end up with too much inventory of the wrong part. Other companies simply prescribe to the “Load and Pray” approach of accepting the order and praying that it gets done. These companies can be recognized by their sub 60 percent on-time delivery metrics and the line of angry customers outside their doors.

So let’s look at how to get rapid results.

There are numerous capabilities that are required by any planning system to enable rapid results;

1)    Instant what-if capability. This is the ability to instantly create a scenario, make a change and see the impact of that change.
2)    Alerting. A rapid result system needs to alert users to a situation that needs to be addressed. This is more than alerting that you have a new order.  It’s letting you know that this new order is going to be late…or drive significant new purchase orders…or will cause another order to be late.
3)    Powerful real-time analytics. A rapid result system needs to replicate the same calculations that your ERP system is doing, but do it in seconds rather than hours. The results of these analytics needs to be displayed through an interface that makes it simple to see the impact of your change.
4)   Collaboration. Many supply chain problems cannot be solved by a person working alone. A rapid result system needs to enable the sharing of information with a team of users and manage the responses from those users providing a clear picture of the final result.
5)    Alternative comparisons. There are many ways to solve a problem, however it often isn’t clear which approach is best;  one approach may meet the revenue targets, while another reduces manufacturing costs. A rapid result system will compare the possible resolution scenarios, scoring them against corporate goals and will clearly show which approach is best.

So if you had a system as I’ve describe here, how would our new order scenario go? Probably something like this;

It’s Monday morning and the phone rings. It’s a new potential customer with a large order that could turn into an ongoing relationship. You log into the system and create a what-if scenario. You add the order and instantly see that the order is currently planned to be six days late. You drill into the causes for lateness and see that you have three late purchase components and a capacity constraint preventing on-time delivery of this new order. You share the scenario with the capacity planner and the buyers for the late parts. They receive a notification that they have been invited to help. Within minutes, you hear back from the capacity planner to say that the constrained resource can be rescheduled to meet your demand. Minutes after that, the first buyer is back to you to say that they can expedite a component, or alternatively they can get an alternate. Within the hour, you’ve heard back from the other buyers. You have two possible resolutions to look at: One, solves the problem using expedites, the other using alternates. You compare the scenarios and decide that expediting has the least impact on overall cost and you place the order.  An hour after your customer has called, you’ve called them back and can confidently promise their order will be delivered.   The start of a beautiful relationship!

Are you getting rapid results? Or are you locked in the ERP dungeon of best guesses, spreadsheets, and excess inventory. Break out!

On the lighter side check out this week’s New Kinexions episode – it’s about Rapid Results…hey what a coincidence!

That’s a wrap folks! We’ve posted all six New Kinexions episodes on our Supply Chain Expert Community. If you haven’t watched all of the episodes yet, check out our Just for Laughs section.

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Posted in Response Management, Supply chain management


Inventory management – What are the best practices?

Published February 22nd, 2011 by Trevor Miles @milesahead 1 Comment

My colleague Max Jeffrey recently posted a blog titled “Should Safety Stock be added to forecasted FG demand?” which he also published in our Supply Chain Expert Community, both of which generated quite a lot of discussion in which Max suggests that a ‘safety forecast’ makes more sense than a ‘safety stock.’ In other words, isn’t it better to add a quantity to the forecast that represents an upside against which to hedge your bets, especially for finished goods (FG)? The premise behind Max’s question is that in most systems safety stock (SS) is a quantity, and is only updated occasionally, which means that in many situations too much safety stock is being kept. This is especially true in multi-tier distribution systems when the SS is set at each node rather than being considered across all tiers of distribution.

While trying to address a real issue that has huge financial impact, I believe Max’s suggested cure is worse than the original symptom because of the distortion to the forecast. Getting a forecast that is as accurate as possible is vitally important and we should not be adding distortions. I also think that using a ‘periods of cover’ inventory policy instead of a fixed quantity SS is a very good way of providing a more dynamic SS. In commenting on the use of ‘periods of cover’ I state that:

The policy may be to keep 3 weeks of demand in stock because that is the supply lead time to the stocking point.  If the forecasted weekly demand is 10, 20, 20, 30, 10, 10 then the SS would be 50, 70, 60, 50 over the next 4 week.  In other words the safety stock fluctuates with the anticipated demand.

I always find it difficult to separate out the topics of inventory policy and postponement. In fact I don’t see how one can separate out these topics because they are so tightly related. In addition, postponement is often thought of in terms of manufacturing or assembly postponement, but it is equally valid to think of inventory or distribution postponement.  Your ability to postpone either manufacture or distribution of FG determined by the markets order-to-delivery (OTD) lead time expectations and your supply chains supply lead time and agility.  If the market expects a 1 day OTD lead time and your supply lead time is three weeks, there is very little opportunity for postponement, and SS must be kept as FG at the most forward stocking location.  If on the other hand the OTD lead time expectation is one week, SS could be kept as FG at the factory.  If the OTD lead time expectation is five weeks, then the SS can be kept as raw materials before manufacturing or assembly.

But the discussion above is fairly simplistic and describes principles. Hewlett Packard (HP) adopted an approach, much of it pioneered by Hau Lee and Corey Billington in the 1990’s, that, in my opinion, makes them a leader in inventory management.  Currently they may not have the ‘cool’ products that Apple has, but they have some great supply chain ideas. They focus a lot on both demand segmentation and product segmentation. For product segmentation they use the terms ‘No Touch’ (completely outsourced), ‘Low Touch’ (sub-assemblies outsourced), and ‘High Touch’ (mostly insourced). Actually they have five classifications in total. While demand volatility is one of the factors considered in outsourcing decisions, outsourcing has more to do with IP and core competencies.

In a webinar titled “Using Segmentation Strategies for Better Demand and Supply Balancing in the Mid-Market” (registration required) Jeff Range of March Networks discusses a very similar concept. March uses the categories of ‘Runners’, ‘Repeaters’, and ‘Rogues’ to segment products, and the categories ‘Fixed’, ‘Flex’, and ‘Forecast’ to segment demand within each of these categories. Supply chain agility, or postponement, and inventory policy decisions are made for each of these intersections. This is very different from most approaches which tend to set inventory policy by product group only.

While slightly different, the diagram below, from a presentation made at Stanford University, shows how HP segments demand. For the ‘Lo scenario’ they put in place long term minimum cost contracts based upon regular and guaranteed quantities and a guaranteed, but longer, lead time. For the ‘Base scenario’ they put in place shorter term contracts that balance flexibility and price, definitely at a higher unit cost than the ‘Lo scenario’ and also possibly a more variable, but shorter, lead time. The ‘Hi scenario’ is essentially a spot buy, greatest flexibility (uncommitted) but also greatest cost and possibly the most variable lead time, which can also be offset with higher cost through the use of ‘expedited’ transport to reduce lead time even further.


What is hidden in all of this is postponement.  The presentation is title Procurement Risk Management (PRM). For the ‘No Touch’ products clearly procurement means of FG, for ‘Low Touch’ it means for sub-assemblies, and for ‘High Touch’ it means for components. Of course I am making broad generalizations and the decisions are more subtle than I describe. But for all these product classifications there is still the question of the difference between supply lead time and order-to-delivery lead time.  Postponement can only be used as long at the supply lead time from the point of postponement is shorter than the expected order-to-delivery lead time. If the expected order-to-delivery lead time is a lot shorter than the supply lead time, then the safety stock buffer has to be in FG. If the supply lead time is shorter than the order-to-delivery lead time, then the safety stock buffer has to be kept in the raw materials or components.

To get back to Max’s question, how should you calculate safety stock? Should you even have safety stock, or should this be dealt with in the manner that HP does? First of all I think phrasing the question in terms of FG doesn’t get to the heart of the issue because it all depends on the level of postponement. So let’s generalize the question to ask if this if forecast consumption is not more sensible than the use of safety stock at the point of postponement.

The most common way to calculate safety stock and the reorder point to satisfy a certain customer service level expectation, where Lead Time is the supply lead time to the buffer, is as follows:

1. Z: NORMSINV(Service level) , for example Z=1.64 for a 95% service level
2. Safety stock: {Z*SQRT(Avg. Lead Time * Standard Deviation of Demand^2 + Avg. Demand^2 * Standard Deviation of Lead Time^2)}
3. Re-order Point (ROP): Average Lead Time*Average Demand + Z*SQRT(Avg. Lead Time * Standard Deviation of Demand^2 + Avg. Demand^2 * Standard Deviation of Lead Time^2)

In other words, if demand is fairly stable (relative to volume) and the supply lead time is fairly stable, very little safety stock is required. This is where HP was really innovative. For the ‘Lo scenario’ they were able to reduce inventory throughout the supply chain by putting in long term contracts that reduced variability of supply and for the demand for which they could assume zero variability, therefore effectively reducing safety stock to zero, but taking a bit of a hit on ROP since their average supply lead time was a bit longer. On the other hand for the ‘base scenario’ they accepted greater variability but focused instead on reducing supply lead time, which reduces both safety stock and ROP. Of course this strategy works best for mature products with low demand variability relative to volume. For early stage NPI nearly all demand will be ‘Uncommitted.’  As far as I am aware HP still put in place long term contracts based upon their estimates of total available market and expectations of market share.

In summary, I think Max is bringing up the right question. But I think the answer lies in deep analysis of both demand and products to determine differentiated inventory policies – which includes postponement, SS, and ROP – to best arrive at what Hau Lee calls a Triple-A supply chain: Agile, Adaptable, and Aligned.

What do you think? Is this too complex? Should we instead just add some quantity to the demand as Max suggests? It would be great to hear from practitioners on how they are solving this issue.

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Posted in Inventory management, Milesahead


The lighter side of supply chain collaboration.

Published February 16th, 2011 by Lori Smith 1 Comment

It’s hard to believe it has been a month since we launched Episode 1 of ‘New Kinexions’ – a six part comedy series which draws parallels between dysfunctional software and an annoying ex. If you haven’t watched them yet, make sure to check out Episodes 1-5 in the Just for Laughs section of the Supply Chain Expert Community.

Also, don’t forget to enter our New Kinexions contest for an XBox 360 and Kinect! The winner will be the person who best completes this sentence:

Bad software is like an annoying ex because…

Visit the contest page for details, to enter, and to view other hilarious entries.

This week’s episode focuses on collaboration, which according to Google is defined as: A recursive process where two or more people or organizations work together in an intersection of common goals. Unfortunately, this is not a concept that Ari Cole can understand as he continues to do what he thinks is ‘best’ for the relationship.

On a serious note, to learn more about supply chain collaboration check out this research report by Aberdeen Group titled: Enabling Supply Chain Visibility and Collaboration in the Cloud.

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Posted in Supply chain collaboration


2011 – The year for supply chain transformation?

Published February 15th, 2011 by Carol McIntosh 1 Comment

Is it something in the water? Or are competitors eating your lunch? Fickle customers, no brand loyalty? What to do??

There appears to be a high level of interest in supply chain transformation this year. The economy is showing signs of improvement and companies are recognizing that there needs to be a renewed focus on business, technology and process improvement. Did anyone read the Wall Street Journal last week  http://online.wsj.com/article/SB10001424052748704858404576128531221475772.html and see the article about Nokia Corp and Chief Executive Stephen Elop’s plans to turn around the ailing handset maker? Comparing Nokia to a man standing on a burning oil platform who jumps into icy waters to escape the flames, Mr. Elop says dramatic action is needed to reverse a decline that has left the Finnish company “years behind” the competition.
I realize that Mr. Elop is referring to more than the supply chain, but a best in class supply chain will ensure that the right products are available at the right time to deliver to the customer.
There appear to be three classes of companies. Leaders, LeaderWannaBe’s and Laggards. In my humble opinion I would characterize them this way:

Leaders:

  • Visionary executives
  • Manage risk
  • Embrace change
  • Empower the organization
  • Never satisfied
  • Consensus, collaborative decision makers

LeaderWannaBe’s:

  • Not yet a leader but recognizes the opportunity and need for improvement

Laggards:

  • Stuck in status quo
  • Don’t take any risk
  • Question and challenge change
  • Still using 80’s processes and technology
  • Make decisions in silos

I have the privilege of working with many companies, predominately high tech electronics, pharma, industrial, and aerospace and it typically isn’t too difficult to label the organization.

Leaders and LeaderWannaBe’s see opportunity and are focused on continuous improvement to widen the gap between them and the competition. Unfortunately, Laggards have their blinders on.

So I ask you …. How would you categorize your company and how can you influence the behavior? Nokia recognizes that it is time to act. Do you?

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Posted in Best practices


Should safety stock be added to forecasted FG demand?

Published February 11th, 2011 by Max Jeffrey 4 Comments

Is it appropriate to add safety stock to forecasted finished goods demand? In different words, should safety or buffer stock be included in the forecasted demand for products, or be driven separately in the planning system? Seems like a simple question, but I am not sure of the answer, and possibly the answer depends on many factors.

Typically, a forecast is developed first by applying statistical model(s) to sales history with the result referred to as the ‘statistical’ forecast. The technical statistical forecast is then adjusted by various other fundamental factors such as product life cycle phase, seasonality, or marketing or sales promotions, usually as part of the Sales and Operations Planning (S&OP) process. The resulting forecast is typically known as the ‘consensus’ version of the forecast. However, related to planning, and to account for potential upsides in sales and to maximize customer service, some buffer or uplift may be added to the forecast. Moreover, this uplift can be driven in the planning system by being added to the forecast or as safety stock.

From my perspective, the basic difference between adding a buffer quantity to the forecast versus driving safety stock in the planning system is that a buffer quantity in the forecast could be consumed by actual customer orders if the buffer is realized by actual customer orders. On the other hand, safety stock (depending on the approach utilized) will plan to keep a certain level of inventory regardless of customer order levels. Conceptually, I am wondering what the best approach is for this. To summarize it seems that there are three options:

1. Forecast should inherently account for potential upsides in customer demand based on the statistics used and the fundamental factors or adjustments applied.
2. Additional ‘buffer’ should be added to the forecast – advantage is that the forecast can be consumed by actual sales orders and the disadvantage is that this buffer needs to be separately maintained.
3. Safety stock should be planned in addition to the forecast – advantage is that the buffer does not need to maintained and can be calculated by the planning system, whereas the primary disadvantage is that additional or excess inventory may result.

Intuitively, to me it seems that the option 1 above should be used – let the forecast drive demand in the planning system and not attempt to plan any buffer or safety stock. However, as we know, the first rule regarding forecast is that they will be wrong. Therefore, to complement, a way to get early signals that there will be customer demand greater than the forecast and have a system to rapidly respond to potential shortages in supply needs to be present.
Do you have any experience or insights into this? Please let me know your thoughts.

Note: I posted an excerpt of this piece on the Supply Chain Expert Community – Join the discussion!

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Posted in Demand management, Supply chain management


The top reasons why SaaS rocks when it comes to upgrades!

Published February 9th, 2011 by Rob Bell 4 Comments

As a veteran (26 years) of software development and quality assurance, I am a huge proponent of Software as a Service (SaaS). It is a win-win for vendors and customers. Mainly because vendors always want customers running on their latest versions software (best quality, most features) and although customers want the same thing, they don’t want the pain of upgrades. Upgrades for great SaaS vendors become a feature of the software, leading to simpler and much less risky upgrade events and they have to because they are performed on the vendor’s dollar. It’s that simple! Here are some key points to keep in mind:

  • You only get full value from your software investment if upgrades are applied continuously.
  • All software has bugs… continuous upgrades help you avoid them by having access to the most corrective content.
  • With SaaS, you never have to wait for your IT staff to upgrade.
  • All great SaaS companies include upgrades as part of your normal fee and no hidden charges.

Have you ever ‘shot’ a software product because it just couldn’t deliver? Was it the most recent version of the product? Not likely. With on-premises software upgrades constantly being delayed for internal budgetary reasons, they simply never happen, leading to outdated ‘legacy’ software in production. And very often, it just doesn’t compare well to the latest versions of competitive products. But does it make sense to start over from scratch?

One of the biggest breakthroughs with SaaS is that upgrades are expected to be part of the service. This gives the vendor the opportunity to keep the very best software always at your disposal. And since you are renewing your subscription on a frequent basis, there’s plenty of opportunity to gently remind them of any concerns or issues you may have with their service.

Have you ever called your vendor for help on a critical bug only to be told that it’s already fixed in the next version? With continuous upgrades, you’re always running the best code available and you’ll most likely never hit that bug in the first place. That is real value.

Keep things SIMPLE and take hidden risks (and fear!) out of upgrades by using SaaS solutions. And for a laugh, check out this week’s ‘New Kinexions’ video on easy upgrade. In this week’s episode, Sally Ann Perkins has trouble ‘upgrading’ for a night out.

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Posted in On-demand (SaaS)


“Who should know?” The key to the use of social networks in the supply chain.

Published February 8th, 2011 by Trevor Miles @milesahead 3 Comments

In January I wrote a blog titled “Social networks and supply chains: It’s a question of maturity” in which I commented on the incorporation of social media concepts in supply chain management in which I referred to a research report by Nari Viswanathan at Aberdeen. In a follow-up to the report, dealing largely with the early stage of maturity, titled “Enabling Supply Chain Visibility and Collaboration in the Cloud” Nari writes that;

Best-in-class companies have gained significant improvements … when it comes to collaborative processes…This ensures that they will continue moving toward integrated demand-supply networks.  This trend is bolstered by the rising importance of this process [collaboration] for succeeding in the multi-enterprise supply chain.

But the early stage of maturity, B2B integration, is a very necessary step toward collaboration. Without the data there can be no visibility or collaboration.  However, pure visibility is over-whelming because of the volume of data.  There must be a filter mechanism that not only identifies the important information, but also who should know about this information. It is important to recognize that the importance of the information is going to change according to a person’s role and responsibility. Not only that, but often the consequence of an event is more important than the event itself.

Let me give an example. Say a supplier cannot meet a delivery date and instead will deliver the order 1 week later than previously agreed. Who should know? Clearly the purchasing agent responsible. Do we know who that is and can we alert them? Or does the purchasing agent need to find this information themselves? (Often they do.)

Does anyone else need to know? What about the manufacturing manager whose line is about to run out of materials?  If the line is stopped for only for an hour does the manufacturing manager want to know? Possibly, but if it is for a day then definitely. But does the manufacturing manager need to know the details about the late supply? Probably not. Similarly a customer service rep may only want or need to know if an order for an important customer will be delayed by more than two days, but they are unlikely to be interested in either the line stoppage or the late delivery. What about the VP of Sales?  Does he/she need to know about the late order? Probably not, unless it represents a significant portion of the sales for the quarter. Even then the Sales VP will be a lot more interested in this information at the end of the quarter rather than at the beginning of the quarter. Of course in this discussion I am assuming that security exists that identifies who is allowed to know.

In other words a notion of responsibility is necessary to take the raw data provided by visibility and convert it into actionable information. The questions that need to be asked are:

  • Who should know?
  • Why should they know?
  • What should they know?

This is very different from current concepts of social media and social networks in which every piece of information is treated as having equal importance and all the information is sent to everyone who is ‘following’ the publisher. Even within the world of Facebook and Twitter the issue of volume of information and relative importance of information is receiving some attention. But in a multi-tier, outsourced, off-shore supply chain the notion of responsibility is absolutely crucial to separating the important from the trivial and to sending the information to the right people, namely those who are affected and those who can affect the consequences.

In a blog titled “Social media to improve supply chain?” Matt Davis of Gartner, in discussing examples of the use of social media in supply chain management, concludes that;


But so far, these examples are all, shall we say, supply chain adjacent.  Supply chain leaders will use demand insights to orchestrate their environment. Both into the sales channel as well as back to their suppliers. Examples of this capability are still few and far between in traditional supply chain, let alone through social media. Will companies ever use a social media platform to manage factory capacity or expedite raw material shipments? That remains to be seen. But I am seeing where social media helps bridge the functional divide between the demand drivers (sales and marketing) and supply chain responders.  As demand requirements from customers are better understood, the first question asked is often, “how are we going to do this?”  And that connects the demand sensing to the supply chain execution.

So Matt touches on the notion of consequence – that connects the demand sensing to the supply chain execution – but does not address the notion of responsibility. As importantly though, Matt identifies where social media can break down the barriers between functions and organizations to facilitate collaboration and more agile and responsive supply chains. The notion of responsibility is necessary to make the use of social media in supply chains effective rather than overwhelming.

The value of social media in the supply chain really kicks in once the group that is required to collaborate to reach consensus/compromise has been identified. The secret sauce is in identifying who belongs in the group.

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Posted in Milesahead, Miscellanea, Supply chain management