Posts Tagged ‘collaboration’

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I recently read our new white paper entitled “Why you Need to Re-evaluate Your Approach to Supply Chain Planning”. The paper describes how the old supply chain paradigm is not well suited to today’s dynamic, outsourced environment. It got me thinking about how communication has changed since the early 90’s when i2 and Manugistics were the pioneers – e-mail finally took that first step out of the domain of researchers; the web was under development by Tim Berners-Lee at CERN. As the paper points out companies in the 90’s were much more locally based and fully integrated (outsourcing and off-shoring were barely a glint in someone’s eye). So to collaboratively create or update plans or to collaboratively solve problems was accomplished by verbal communication among relevant participants – usually in the conference room or on the shop floor, depending on what needed to be done.

Fast forward to 2008 … virtually all of the manufacturers I talk to have significantly outsourced their manufacturing. In fact supply chains have been dramatically extended around the globe. Customers, contract manufacturers, suppliers are now located throughout the world. Even within individual companies the actors are spread around the world – demand managers in North America, supply planners in Asia, buyers in each of the regions. Communication, in a word – email! My new smart phone has voice, email, web browsing, and text messaging all in one (as well as music and a camera), but by far and away email is my most used communication tool. Given how participants in the supply chain are in virtually every corner of the world, email is a fantastic tool.

But is email a good tool to collaborate with? Is email not just a mechanism for transmitting words? I contend that in order for you to have a supply chain that fits the current and future dynamic, outsourced, off-shored environment we live in; flinging a spreadsheet over the virtual wall is not an effective form of collaboration. Well what about collaboration hubs or portals? Excellent tools for passing information, but can you really have effective collaboration?

My point here is that collaboration is about understanding the other party. Does your customer have a bias towards over or under forecasting? Are they planning a promotion? Opening new stores? Closing some stores? Are you the major purchaser of your supplier?

So in order to have a supply chain suitable for today and the future, understand the other person or company. Humans get a lot out of verbal communication – the inflections in the tone, the words chosen, the response speed, etc. Encourage verbal communication amongst the internal stakeholders. Pick up the phone and call your customers … get to know their business. Call your suppliers … find out how their business is doing.

Kinaxis has just released a new white paper entitled “Why you need to re-evaluate your approach to supply chain planning.”  I won’t restate the entire paper here, but below is an abstract:

The supply chain planning approach developed in the early 1990’s is failing under today’s market pressures. Today’s environment requires more collaboration than control; more coordination than optimization. Demand and supply chain planning, monitoring and response needs to be performed by many users, on an ad hoc basis, as events occur. A new supply chain planning paradigm is required.

IndustryWeek recently published an article entitled “Demand Planning: A Game of Chance or Strategy?“  A couple of things jump out when reading this article.

1. Need for better customer collaboration – They key to getting better forecast accuracy is to really understand your customer. For vendors, it’s the customer who holds the trump card … they are the ones who control what ultimately is going to happen (i.e. they are the ones that are selling your product). As a vendor you have to get into their heads and understand their business – who they sell to; how much they sell to their customers; how much you sell to them; what forecasting bias do they have; etc. It’s only by collaborating with your customer will you be able to understand them. Granted the unexpected will always happen, so having a good process in place to respond effectively and efficiently is important as well.
2. Need to break down the silos – far too often things are flung over the wall for someone else to “deal with”. For example, forecasts are flung over to the master schedulers to make happen, inventory policies are set by the inventory management group … seems tough to figure out how this type of execution can ever work. Groups need to get together and coordinate their activities.
3. Need to measure – it’s well and good to drive to the best forecast while respecting inventory policies; you have to take various measurements. For example, measuring forecast accuracy for each customer on a continuous basis allows you to adjust their forecast. In other words, it will give you a sense of their forecast bias.

Is our e-mail centric world the cause of not communicating with one another? Are we now simply content to say “I sent you an email”? Email is a great collaboration tool … the ability to communicate globally 24×7 has really extended a vendors reach. But in the end this is about collaboration – the ability to get together and solve issues … it’s not about sending something over the wall. Applications that integrate demand data, supply data and product data into a single instance and provide views that are specific for each of the groups will allow for far better collaboration – resulting in better customer satisfaction.