Eliminating silos from any company’s supply chain planning processes comes with challenges. And those challenges are only amplified the bigger your supply chain is. When you’re a large global pharmaceutical company operating in more than 100 markets across four geographical regions, overcoming operational silos in the end-to-end supply chain may seem like an insurmountable feat. That’s how MSD ’s supply chain planning story began.
Supply chain planning challenges
Known as Merck & Co., Inc. in the US and Canada, MSD was desperately seeking a way to connect its end-to-end supply chain, which spans four planning hubs, over 80 distribution centers and more than 20 internal and external sites. Setting out on a journey to standardize its enterprise resource planning (ERP) platform meant finding a way to sync its supply chain data and enable access across all those divisions and locations to support better business decisions.
Henrik Frojdh, Supply Chain Planning Lead at MSD, quickly realized the only way to elevate supply chain planning capabilities to support that level of synchronization and at the same time optimize inventory levels, was the adoption of an integrated solution – one that enabled end-to-end supply chain planning, visibility and decision-making.
Over the years, working for and with numerous manufacturing companies, I’ve seen many supply chain practices that cost companies money. Over the next several weeks, I’ll outline these issues and discuss some ideas around how to avoid these practices. You can find the previous posts here:
Reason #8 Keeping supply chain information in silos (and preventing your users from making the best decisions)
Don’t ask… you don’t want to know. I can’t tell you how many times I’ve heard that phrase from different people in different contexts. Sometimes it’s true. I probably don’t want to know. Sometimes (like when I hear it from my son) I probably not only want to know, I NEED to know. Not because I want to pry (well… maybe a little) but mostly because I care and if I know I might be able to help.
When companies deploy supply chain solutions, they often make the decision for users… “you don’t want to know”. They do this by preventing them from getting (or making it very difficult to get) any more information than they absolutely need to do their specific job. Sometimes this information limitation actually prevents them from doing their job adequately.
Sometimes this is intentional and necessary;
- Some companies (especially publicly traded companies) restrict access to revenue / margin information to prevent unauthorized financial data from getting out.
- Some companies prevent access to data to prevent trade secrets (or in the case of US military manufacturers ITAR regulations prevent foreign nationals from accessing manufacturing data)
Sometimes this is intentional and questionable;
- One company I’ve talked to told me that they limit information to their planners because they wouldn’t know what to do with it… that it would just confuse them. But in my opinion, there are few things more complex than supply chain management. Planners are smart people and if educated (APICS training should be a prerequisite in my opinion), they likely will have no problem absorbing and using additional information.
- In other cases, information is limited because of interdepartmental rivalries, for example, “I don’t want demand planning to see my supply planning information. I’ll tell them what they are getting.”This is just plain wrong on multiple levels. If you hear this rational, then I’d look at your management levels and how people are being rewarded. In today’s competitive manufacturing environment, the only metrics that count are how a change impacts the company’s goals. Departmental goals should be secondary.
From catching up with the very first Kinaxis customer to exploring the future of supply chain, day one of Kinexions, our annual user and training supply chain conference, proved to be an out-of-this-world learning experience, aptly set to a soundtrack of songs by ‘80s rock group Journey.
And what a journey day one at Kinexions has been. Here are just a few of the great insights coming from the conference:
“Artificial intelligence and machine learning aren’t magical pixie dust.”
John Sicard, CEO, Kinaxis
As Kinaxis CEO John Sicard put it, artificial intelligence (AI) and machine learning (ML) aren’t magic, but they can help you create a little in your supply chain. Sicard talked about the notion of a self healing supply chain, one based on machine learning algorithms, which can help you:
- Detect deviations
- Analyze and make intelligent predictions on what your values should be
- Heal itself automatically
- Monitor performance improvement and value over time
There’s no getting around it. Artificial intelligence (AI) is here. From self-driving cars to intelligent digital assistants (one of whom I share a name with) to advanced robots working on the shop floor. But conspicuously absent in all this fervor around what’s new and next in AI are details and examples of how to implement these emerging technologies in supply chain planning. Everyone it seems is focusing on supply chain execution.
Don’t get caught in the spin cycle
While examples of AI and machine learning in supply chain planning are few and far between, that doesn’t mean folks aren’t making progress in this area. The trick it seems is not getting caught up in all the hype – and there’s certainly a lot of it. Nearly every company under the sun is touting their software as having advanced AI capabilities. Well it’s time for a little truth – most of those claims are just creative marketing spin (it’s ok, I work in marketing so I can say that!). There isn’t a supply chain management tool on the market today that can catapult your supply chain planning into a realm where humans are strictly hands-off.
That’s in part because AI in supply chain planning is still in its relevant infancy, but mostly because that isn’t the direction we’re heading. The robot apocalypse isn’t here. And there’s a good chance it’s never going to come. The likelihood of robots and smart machines putting everyone in the unemployment line is miniscule at best.
How concurrent planning can help you take back your time
Stop being a slave to your supply chain and take back your time! Don’t wait around for your supply chain to catch up to the speed of life. Why spend hours, days or even weeks waiting for data transfers, analyses or simulations when you can accomplish all of those things in a fraction of the time it takes you today. All you need is the right supply chain management software – one that enables concurrent planning.
Concurrent planning isn’t a collection of disconnected functional models. It’s a way to look at the supply chain as a whole, not just individual links in a broken chain. It allows you to bridge the gap between data, process and people, so you can better manage sales and operations planning (S&OP) and supply chain planning more effectively.
Here are just a few of the things you could find time for if you ran an effective supply chain with concurrent planning at its core:
It’s hard to believe that Kinexions ‘17 is only a few weeks away. Time flies – just like astronaut Chris Hadfield, who will be joining us as our keynote speaker on the Kinexions mainstage in Orlando this year.
For those of you who missed my last blog post, Kinexions is the premier annual event for our RapidResponse® user community, including customers and prospects. The supply chain conference offers two full days of networking, inspiring keynotes, informative general sessions and a variety of breakouts delivered by customers, product experts and partners.
Last post, I touched on the top five reasons to attend the conference:
- Supply chain stories that inspire
- Out-of-this-world keynote speakers
- Network. Network.
- Fun, exercise and a touch of Supertramp
- More opportunities for RapidResponse learning
Today, I’d like to dig a little deeper into reason #1: supply chain stories that inspire.
Rushing kids out the door, walking the dog, navigating traffic—life is complicated enough without having to deal with overly complex supply chain management processes. Unfortunately, increasing consumer demands, growing globalization and mounting pressure to stay profitable in an ever-changing world is the new reality, and for many it means working harder than ever.
Just because supply chains are getting more complex, doesn’t mean the job of managing them has to as well. Isn’t it time you simplified your day-to-day responsibilities, made room for a little more ‘me’ time and moved away from bracing for chaos every single day at work?
The first step in re-gaining your work-life balance and getting your sanity back is ditching the plethora of Excel files littering your desktop. To do it, you have to take a deep breath and say goodbye to running your supply chain from Excel. Instead, bring a little peace back into your life by harmonizing all that disparate data from multiple sources and legacy enterprise resource planning (ERP) systems and bringing it together in one solution.
Having access to all supply chain data in a single system means you’ll gain the ability to run what-if scenario simulations faster and more effectively. They’ll be no need to import and verify data from multiple sources, which will cut down on the potential for data errors or integrity issues, and speed up the decision-making process. No more fretting about whether your data’s up-to-date and accurate. Just think of all the time you’ll save not having to do multiple data pulls and merging Excel files. You might actually make it home on time for dinner!
There’s no such thing as 100% when it comes to forecast accuracy. Let me say it again. One hundred percent accuracy does not exist. I don’t care how good your demand sensing is or how sure your sales team is of their market projections. It’s just not possible. Anyone who says differently is either selling something, or a deity. So why are you spending so much time trying to make the impossible real?
Time and again I’ve heard how important forecast accuracy is when it comes to improving supply chain operations. It always seems to be a priority no matter where on the maturity scale a company falls. But this practice of chasing perfection is killing your supply chain. Not slowly, over time, but rapidly, like a tsunami sweeping your profits out to sea as that one giant wave recedes. Because that’s all it takes to destroy you. One catastrophic unexpected event.
Why forecast accuracy fails
It could be a natural disaster, a drastic shift in the political landscape or even the collapse of your only tier one supplier. The unknown is your biggest supply chain weakness, and the one you’ll never see coming, no matter how great you are at forecasting. Pretending otherwise, that forecast accuracy can save you when the unexpected strikes, is foolhardy at best, a death sentence at worst.