Two years ago we wondered whether supply chain planners might one day be called network planners:
“Much like artificial intelligence (AI) and machine learning (ML), there is still a lot of hype about the network planner. Will it be something that we evolve to as part of supply chain transformations, or will it be out of necessity and a need to manage the new supply chain planning landscape?”
If you had anything to do with supply chain planning in the early days of enterprise resource planning (ERP), you may consider those years the “good ol’ days”. Spreadsheets were the latest and greatest thing, your biggest headache was a supplier failure, and collaboration meant walking down the hall to visit with your buyer or dropping by the shop floor to check on a machine breakdown.
Times have changed. Supply chain planners (I’m lumping in all the silos, including demand, supply, inventory and capacity planning) today are dealing with challenges that were unimaginable when Lotus notes were the next big thing. Arguably, changes to the good ol’ days started with product proliferation, increasingly shorter product life cycles, globalization and a more educated, demanding customer.
Aligning the supply plans to these new volatile demand profiles was no easy achievement. However, none of this physically destroyed your supply chain. The increase in extreme weather events is becoming commonplace for the supply chain community and the challenge of managing around these supply chain disruptions is the new norm.
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.
There are lots of organizations that claim to have reinvented supply chain planning. They say they simplify planning by aligning different supply chain processes or functions. There’s just one problem: None have truly reached their goal. None really do concurrent planning.
While many companies claim to solve the sequential planning issues of the past, few have. They have brought parts of the planning process into the cloud, added algorithms and machine learning capabilities, or simplified reporting procedures.
But most still rely on parts of the same vicious, siloed cycle that’s been in use forever: wait for someone ahead of you to generate a plan, create your plan using their results, try to reconcile these plans with one another and eventually recognize that everyone’s plans have become meaningless in the time it’s taken to reach a consensus…
It’s appropriate that I’m reading Nucleus Research’s piece “Beyond Excel in Supply Chain Planning” on a Thursday.
I’m having a throwback Thursday moment as it was back in 2013 I made the case for Excel in a blog post titled, “Hey software bullies, stop picking on Excel.”
In my blog I observed that Excel was picking up the analytical gaps found in ERP systems. And as Seth Lippincott points out in the Nucleus Research piece, the flexibility and familiarity continue to drive the use of Excel.
Full disclosure: I work for a best-of-breed supply chain planning vendor so I will do my best to take an unbiased approach as I provide my opinions on how to solve the challenges of planning today’s supply chains with all its complexity and volatility.
I’ll be honest, it would be great to get everything from one supply chain software vendor. One negotiation, one price list, one number to call if by some chance something went wrong. At first glance is seems like a practical, straightforward approach. I can understand why IT organizations would want to limit the number of vendors they need to deal with. But do the economics work out?
Stop making decisions in the dark.
Some things are better in the dark. Fireworks. Watching a movie. Robbing a bank. Supply chain planning isn’t one of them. So why do so many companies still plan that way?
Managing a supply chain is tough enough without having to make decisions blind. Increasing cost pressures, growing customer expectations, expanding ecosystems—all add to the complexity you’re facing every day.
But today’s planning reality leaves way too much in the dark. Siloed data and processes don’t deliver the visibility you need. Cumbersome, disconnected systems don’t provide the flexibility and agility you want. The resulting lag time leaves you feeling like you’re jumping through hoops only to get to the wrong answer. Planning in the dark like that only leads to unexpected and unwanted results.