How Uber Parallels the 6 Design Principles of Digital Supply Chain

Dr. MadhavDurbha

Digital supply chainDigital supply chain is the “in” thing! Don’t take my word for it, though. Just google the term. You will come across many articles talking about how supply chains are being remade by industry 4.0, internet of things (IoT), 3D printing, big data analytics, cloud computing and so on. But what most of these articles focus on are the means rather than the ends for the digital supply chain. On a day-to-day basis I speak to a number of supply chain practitioners. Most of them tell me they are at some stage of evolution with their digitization strategy. However, much confusion exists in terms of what constitutes a digital supply chain. So, I decided to write this blog to share my point of view on the topic.

Supply chain digitization is not simply taking existing information and capturing it in a digital format. It is not about automating your existing SCM processes. It is not about layering in Sales & Operations Planning (S&OP) as a band aid to connect disjointed processes. It is about having the most current information to run your supply chain effectively, available on demand, so you can service your customers and grow profitably. In other words, think of a Google search for supply chain. You ask questions and you get answers!

Here, I will introduce 6 design principles that make up a digital supply chain. I will lean on the example of Uber, how it digitized the taxi experience, and draw parallels to digital supply chain. Let us take a look at these design principles:

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Three Supply Chain Risks that Will Get You Thinking Bimodal


Supply Chain RiskIn a world where everything is changing, staying in one place is the fastest way to find yourself falling further behind. The same is true when it comes to your supply chain. Remaining stationary in your processes, relying on inefficient technology, and refusing to keep pace is how successful companies find themselves lagging behind the competition.

It’s not just about who does it better anymore. It’s about doing things differently. That’s when breakthroughs happen. Unfortunately, many companies are still looking at their supply chains with a lens focused solely on efficiency and the bottom line. That strategy alone won’t yield long-term success. There has to be the opportunity for innovation, as well. It’s what drives new products and pushes companies into new markets.

Hence the industry’s latest buzzword – bimodal. Most often credited with coining the term ‘bimodal supply chain’, research firm Gartner describes it as a supply chain made up of two distinct modes. Mode one is about cost-saving measures and efficiency and appeals to a need for predictability, accuracy and reliability. It’s focused on maintaining the status quo and managing day-to-day operations.

Mode two is all about experimentation and driving revolutionary changes in how supply chains adapt to new risks and opportunities.

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Latest Polls Show We’ve Lost Faith in Polls: 3 Lessons Election Pollsters Can Learn from Supply Chain


Supply Chain Polls“What happened to the polls?” next to “What now?” was likely the most frequently asked question as soon as the first results started to roll in back on Election Day. The results shocked everyone as the polls, both national and state, had Hillary consistently pegged to take her seat in the Oval Office. So what went wrong? How could the polls be so far off? What’s the likelihood of getting Canadian citizenship before January? All valid questions but let’s focus on the first two.

What’s fascinating about this is that so many polls, or let’s call them what they are, forecasts, were off the mark. All the different polling methodologies used by all the different polling organizations missed calling what was the biggest electoral spectacle in all of U.S. history. There are a number of theories floating around but all would agree the future is tough to predict. This is something supply chain practitioners live every day and not just during the election process.

Like the pollsters, demand planners in particular, model the future. However, many planners are well versed in expecting the unexpected, considering multiple variables, modeling and comparing multiple scenario outcomes and quickly adjusting plans when needed. Unfortunately for the popular vote there’s nothing we can do about 2016 but here are three lessons for the pollsters come 2020.

The lessons are actually borrowed from a post written by my colleague, Trevor Miles, from 2013 called Truth, Lies and Statistical Modelling in Supply Chain. I would recommend everyone, especially the pollsters, check out this three-part blog series where Trevor concludes “we model all of our manufacturing and supply chain systems using deterministic models, when in fact everything around us is stochastic.” You’ll quickly understand what he means when we get into the lessons.

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Revolutionize Your Planning with SCP 4.0


Supply Chain PlanningLet’s face it. Current supply chain planning systems have plateaued. They’re not fast enough or agile enough to keep pace with today’s rapidly shifting digital landscape. Companies are struggling, unable to get ahead of increasing complexity and mounting risks.

But how did we get here? The truth is, we’ve been here for decades. We’re still using processes and capabilities developed in the 1960s, based on Materials Requirements Planning (MRP), MRP II and more recently advanced planning systems (APS). Excel hell is still common place – companies filling the gaps of their supply chain systems with workbook after workbook.

Yes, we’ve added optimization capabilities as technology advanced, enabling ever-more complex models. But those early processes remain in use. When it comes to supply chains, the times, they aren’t a changing.

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The Sensing + Intelligent + Social Supply Chain: How can you achieve it?


The Result is Faster and More Effective End-to-End Supply Chain Management

End-to-end supply chain managementIn my first two blogs on this topic, I explained how supply chain management is a collective activity. It requires collaboration, consensus, and compromise across functions for optimal decision making. With growing globalization and complexity, it is becoming more important than ever that your supply chain has all of these aspects. The Sensing + Intelligent + Social Supply Chain provides a way to harmoniously connect data, process and people to make better decisions faster and achieve an effective end-to-end supply chain management.

I outlined how decisions made by one functional group often have a ripple effect on other departments. Today’s velocity of change is only magnifying this cause-and-effect relationship. It can’t just be about individual issues. There has to be an eye on the bigger picture. But today’s environment of modular, functional supply chain planning is failing to provide that view. Companies can’t see, understand and orchestra end-to-end.

As highlighted in my previous blog on why you need a Sensing + Intelligent + Social Supply Chain, this new way forward can provide big benefits. But how can you implement one? That will be the focus of this final blog in the series.

Visibility into the End-to-End Supply Chain

When it comes to implementing a Sensing + Intelligent + Social Supply Chain, it starts with believing in the change.

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The problem with renewable energy resources isn’t the technology, but the quantity of supply


renewable energyWhen talking about supply chain, either professionally or more casually, people typically default to the assumption that supply chain is about the movement of goods and people from one destination to another. Other “non” physical goods, such as electrical energy and renewable energy resources, are almost never discussed in a conversation about supply management, and why would it be? It’s always there, ready at a moment’s notice. Plug an electrical cord into an outlet and the device is instantly on. Electricity, as we use it in our day-to-day lives, is always available. (I am, of course, making the assumption you’re not reading this on your phone in the middle of a power outage.) Electrical transmission doesn’t need to worry about typical supply chain issues such as expiry dates, lead times/critical paths, methods of shipment, or delays. Instead, electrical companies only need to worry about demand and insuring that the supply is adequate to meet humanity’s ever growing hunger of energy. And it is this renewable energy supply chain that brings its own unique challenges. As Earth’s population continues to grow, developing nations are starting to become energy dependent and developed countries continue to increase their consumption. To meet this demand, new power plants are continuing to be built to keep up with this demand, which is where the problem lies. Countries are embracing “green” technologies such as wind, solar and tidal that are environmentally friendly, (unlike traditional “old” plants which used coal and oil), but these environmentally friendly options have one major drawback, something that most people don’t think about: quantity of supply.

To properly understand the problem of green energy supply, look at how much energy developed nations actually consume. Population wise, Canada can be considered a “small” nation with roughly 35 million people. In 2010, Canada had an electrical demand of 500 TWh (Terra-watt hours).1 For your reference, a Watthour (Wh) is a unit that measures the energy required to power a one-watt device operating for one hour. This 510TWh is in itself a large number, but ponder for a moment the energy consumption of the United States with a population of nearly ten times that of Canada!

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6 Supply Chain Lessons from Henry Ford


Ford Supply ChainHenry Ford has become synonymous with revolutionary advances in manufacturing. His utilization of the assembly line for his Model T changed not only the way businesses operated, but consumer demand as well. As an early technology adopter and strong proponent of innovation, Ford was more than a manufacturing master. He was a supply chain pioneer. His company delivered on affordability and availability, designing with the customer need in mind. It’s something every business today tries to emulate.

David Thomas, Director, Global Capacity Planning, Ford Motor Company recently resurrected some of the company founder’s most inspiring quotes during his presentation at Kinexions, the Kinaxis annual user and training conference. While he used them to illustrate Ford’s regional and global changes in recent years, I thought I’d put an even bigger supply chain spin on them. Here are the top six things Henry Ford can teach you about your supply chain.

  1. “Businesses that grow by development and improvement do not die.” Stagnant companies (and their associated supply chains) will forever stay stuck in the past. As seen time and time again in the consumer electronics space, companies that innovate and push new ideas and concepts forward are often more successful than their counterparts focused solely on efficiency and maintaining the status quo. Developing a bimodal supply chain, one that allows for efficiency and innovation simultaneously, is the way forward.

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Is S&OP an expensive band aid?

Dr. MadhavDurbha

S&OPI love talking to customers and prospects! Each of these interactions provide me with an opportunity to meet someone new, learn about their business, their challenges, dreams, and aspirations. The topic that often comes up in these conversations is Sales & Operations Planning (S&OP). While S&OP as a discipline has been around for over two decades, it has been generating great interest recently. As much interest as it has generated, based on my conversations, the results from S&OP efforts have been mixed at best. From time to time, I hear comments such as:

  • “My monthly S&OP process takes 6 weeks to execute”
  • “We have this massive excel sheet into which we load all our S&OP data to generate the reports for review. The process to gather the data is time consuming and by the time we present our S&OP to our leadership, the world has moved on and our plans are no longer valid”
  • “We started S&OP as our COO insisted we do it. It is turning out to be a report to him, rather than a tool to run our business”

In fact, this has been such a recurring theme that I decided to share my point of view in this blog. Let me elaborate on what I believe are the reasons behind this disillusionment.

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