A perfect supply chain?

MattBenson

Dabbawala supply chainIf your 3PL supply chain problem was to deliver 400,000 items daily from supplier to customer and your on-time in full metric was a six-sigma target standard of 1 failure per million, how would you do it?

What If I was to also constrain the resources you had at your disposal and said you only had 5000 transportation vehicles and your delivery slot was just 1 hour and that your delivery window was always 12pm until 1pm? What if I was then to say that you had no technology at your disposal to manage it and your only transportation methods were bicycles, trains and feet and you had to do it on a budget of 33 cents per delivery?

Well, that’s what the Dabbawalas in India have been doing in Mumbai for over 100 years – delivering meals direct to workers and school desks from the family home with an OTIF of 99.99 %. They don’t use technology but what they do have is a tried and trusted set of highly efficient robust procedures that govern how they manage their work. It’s a methodology that has been established and passed down from generation to generation and has stood the test of time.

So, why don’t organisations with similar problems just invest time in improving their working procedures? Why do we even need technology? Well, the answer in reality is that we really do need both – not all of our problems are only 3PL issues with supply chains having such stable demand signals – same item, same quantity, to the same customer, pretty much every day. Not all of our supply chains have a zero inventory, stable sub-contracted supply – it’s a relatively quick production process to make an Indian meal (2-3 hours), freshly cooked every day often using Tandoor ovens. In addition, the majority of our distribution networks are geographically wider and much more complex.

Away from Mumbai we’re at the PIMS conference this week in London discussing Pharmaceutical supply chain problems with some key players in the market. The common themes we are hearing are:

At Kinaxis, we’re supporting all of the above by enabling multiple disconnected, multi-platform data sources to come together in a single data model. This gives our customers a single view of the entire organizational data model. This means that cross-organisation planning can take place, active ingredient production can support manufacturing, filling and packing operations at other sites, component items and raw material suppliers can be integrated into the single model and collaboration between supplier and customer can take place with a single view of the plan. Because we get visibility, because it’s real time, it removes uncertainty. Removing uncertainty and gaining confidence removes buffers – specifically it removes inventory and lowers safety stock targets – Kinaxis MEIO application simultaneously calculates what is needed at each echelon in the supply chain network and takes cost out, freeing up huge amounts of working capital.

If we then couple those primary short to medium term cost reducing objectives with establishing a level of planning for the future, we can begin to shape the organization to best fit the known environment. In other words, we can establish a robust Sales and Operations Planning process, supported by accurate data, a demand model supported by forecasting algorithms and a supply view that includes capacity balanced resources and key supplier delivery information. The result, a Supply and Demand balanced picture that allows you to make resourcing or promotional decisions to assist in that balancing process and those decisions can be tested using Kinaxis RapidResponse scenario capability. Run unlimited ‘What-if’ analysis, compare those results with other scenarios, share scenarios with colleagues, make accurate decisions and commit the changes to the plan.

Would Kinaxis work with Dabbawalas? Possibly. Do they need it? Probably not.

Do you have a Dabawalla process and a simple supply chain? If you don’t, are you looking to improve your decision making ability within your planning processes? Please keep the conversation going in the comments below.

MattBenson

With 25 years of senior supply chain management industry experience and consultancy organization experience, Matt aligns real world supply chain problems with process and technology solutions. In his current role as EMEA Business consultant with Kinaxis, Matt looks at the evolution of S&OP and how new thinking and technology is changing the planning landscape.

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