Moore’s Law and supply chain planning systems

Dr. MadhavDurbha

Supply chain planning systemIt was in 1965 that Dr. Gordon Moore made a prediction that changed the pace of tech. His prediction, popularly known as Moore’s law, was with regards to doubling of the number of transistors per square inch on an integrated circuit every 18 months or so. As a result of the innovations attributable to the endurance of Moore’s law over the last 50+ years, we have seen significant accelerations in processing power, storage, and connectivity. These advances continue to have major implications on how companies plan their supply chains. In my nearly two decades as a supply chain professional, I have seen quite a few changes.

Let’s look at some of the big shifts that have taken place in the supply chain planning space.

1. Planning community gets bolder in tackling scale:

Early on in my career, I remember working with a large global company who had to take their interconnected global supply chain model and slice it up into distinct independent supply chain models. This was because the processing power at the time was simply not enough to plan their supply chain in a single instance. This surgical separation of supply chains required a high degree of ingenuity and identifying the portions of supply network with the least amount of interconnections, and partition them. This was not the most optimal way to build a supply chain model, but they did what they could within the limitations of the technology then. With the advent of better processing power, they were able to consolidate these multiple instances into a single global instance leading to a better model of their business. This is just one of many such examples.

As the hardware side of the solution benefited from Moore’s law, in parallel, developers of the supply chain applications continued to make conscious efforts to better utilize the storage, processing, and network resources available to them. This multi-pronged approach resulted in squeezing further efficiencies and bringing better scalability. Now companies are getting more adventurous with their planning and are getting planning down to the point of consumption. While there is enough debate within the supply chain community as to whether the data at more atomic levels is clean, trustworthy, and dense enough, and whether the extra effort needed to model down to the granular levels is worth it, the fact that we are seeing technology scale to such levels of granularity is illustrative of the power of Moore’s law.

2. Planning moves to the Cloud:

In a traditional packaged planning software deployment, the vendor sells a perpetual license for the software, helps the customer with sizing the hardware, waits for the hardware to be setup and configured at the customer’s premises, then installs the software and the middleware components needed before the software configurations can begin. This whole process can take several weeks or in many cases, months. With Moore’s law holding its power over the decades, and resulting gains in processing, storage, and network speeds, newer delivery models prevailed. Supply Chain Planning capability is now being provided in a Software as a Service (SaaS) model. Immediately upon executing the necessary contracts, customers can start accessing the software, so the project can begin in earnest. This is shifting the focus from “Technology enablement” to “Business capability enablement”. I remember the days when prospects approached Cloud with skepticism, specifically around the security of cloud based systems. Now, while I still see a number of prospects asking questions around security as part of the RFP (Request for Proposal) process, it is fair to say that the security discussion in most instances is turning out to be a set of quick conversations with the customer’s IT teams. There is in general, a growing acknowledgement that a SaaS vendor catering to many customers is better equipped to handle security vulnerabilities than any one company’s IT organization.

One added advantage of the move to the cloud is accessibility. Until a few years ago, every RFP looking for global deployment of supply chain planning systems used to contain questions around accessibility on dial up lines and such in developing nations. Now it is not as often that I see questions around speed of networks and accessibility. With tech becoming accessible across the globe and with increasing availability of the bandwidth, I am seeing fewer companies query about accessibility from different geographies. Instead, the questions are more geared around access from various mobile devices, which is becoming a core requirement. The SaaS model renders itself very well to such support across varied devices and form factors. SaaS is illustrative of the symbiotic progress between hardware and software delivery models powered by Moore’s law.

3. Planning can happen at the speed of business:

While there is enough talk about the rise of the machines and autonomous supply chains, the newer forms of planning technology is in fact helping get the best of bringing together the humans and machines, rather than making humans redundant. The previous generations of planning technology was very much waterfall oriented with Demand Planning, followed by Supply Planning, followed by Capacity Planning, and so on. It severely undermined the role of human intelligence in supply chain planning. The well intentioned users of such systems spend more time in data gathering, preparation, and piece together information on outdated data using excel macros and such. Also, building an S&OP capability with such underlying technology is turning out to be an expensive band aid for several organizations.

Such batch, waterfall-oriented planning is giving way to near real-time concurrent planning supported by what-if scenarios and social collaboration. Supported by technologies such as in memory computing, concurrent planning can happen at a scale like we have not seen before. Such advances in planning at the speed of business can also better leverage advances in IoT, Machine Learning, and Data science. Batch oriented supply chain planning capabilities of the previous generation are not fit to consume the real time digital signals from smart, connected devices, and course correct as needed. Having a system that can supplement human intelligence so planners can make decisions at the speed of business can be very empowering.

Now it is becoming very realistic and affordable to represent the model of an end to end network of a large corporation with all its assumptions and parameters, and simulate the response strategies to the various stimuli the supply chain receives. Linear approximations of highly non-linear supply chains are giving way to more realistic modeling of supply networks.

The impact

All in all, Moore’s law did have a major impact on the supply chain planning capabilities. Significant gaps still exist between the “art of the possible” with a new way of concurrent planning, as compared to how many organizations run their supply chain planning processes in a batch oriented manner today. My advice to the companies embarking on supply chain transformation – the future is here! Challenge yourself on if the old ways of planning will meet the needs of the organizations of the present day. If Moore’s law helped get unprecedented computing power right in your pocket in the form of a smart phone, what can it do to your supply chain? The possibilities are limitless. You just need to be open to explore!

Dr. MadhavDurbha

As Vice President of Industry Strategy at Kinaxis, Madhav serves as a trusted advisor for our customers through sales and implementation, ensuring success. He also engages with our strategic customers and key industry leaders to drive thought leadership and innovation. Madhav joined Kinaxis in the summer of 2016, bringing many years of experience in Supply Chain Management across various industries. Madhav started his professional career at i2 (which was later acquired by JDA). During his 17+ year tenure at i2/JDA, Madhav played numerous roles in Customer Support, Consulting, Presales, and Product Management. During his illustrious career, he was instrumental in helping enable numerous large scale transformational supply chain opportunities. He is very passionate about Supply Chain Management and the role it plays in making the world a better place. He shares this passion with others through his engagements and writings. Madhav has a Ph.D. in Chemical Engineering from University of Florida and a B.Tech. in Chemical Engineering from Indian Institute of Technology (IIT), Madras.

More blog posts by Dr. Madhav Durbha

Discussions

  1. Quite an informative article!

    Having an experience of working with so many startups, few of them from logistics industry as well, and I have to say traditional does not work any more. With the help of technology , we are definitely seeing things that were unimaginable once.

    Logistics specifically has always been associated with being complicated and unorganized. But no more, there are so many logistics startups that are disrupting the traditional things that were followed for a very long time and making it easier for companies to plan their logistics.

    Indian market has so many logistics startups now, Instavans, Blackbuck, Rivigo, Delhivery, Opinio etc. Had a chance to work with one of them called Instavans (http://www.instavans.com/) and was surprised to see booking a cab or booking a truck is equally simple thanks to on demand platforms and technology. One can Real time book and track their logistics activities.
    I agree on the point that this is the time to go for it !

  2. Thanks Anjana! I agree we are seeing some very exciting developments in logistics arena supported by big data, real time asset tracking through sensors and so on. Uber like shared economy models are becoming feasible now. All possible due to the endurance of Moore’s law and advances in technology. However, there is also enough hype right now around these technologies and number of players jumping in that, a strong business use case led approach needs to be used as opposed to using technology for the sake of technology. Thanks for your comments.

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