A Roadmap for Designing an Enterprise that Thrives During Supply Chain Disruptions

We’ve arrived at mile markers 7, 8 and 9 on the road to building lasting resilience and agility into your extended supply chain. Thanks for sharing the journey with me.   

You’ll recall that the catalyst for this 4-part series was a renewed sense of obligation and urgency among Logility’s many seasoned supply chain and analytics professionals to share what we’ve learned over the years. As they say at Farmers Insurance, “We know a thing or two because we’ve seen a thing or two.” (Full disclosure, we thought we had seen it all, but 2020 has no equal.) 

Earlier this year we created a task force charged with documenting a program management methodology that would take CEO-driven enterprise-wide objectives and produce a “resiliency roadmap” that all can follow. The idea was to package our learning with a structure that you can leverage and adapt. It’s 12 steps, and in the first two posts I covered steps 1 through 6:  

  1. Assessment 
  2. Justification 
  3. Vision 
  4. Explore 
  5. Collaborate 
  6. Elevate

Now let’s cover steps 7 through 9. 

  1. Business Continuity. A long time ago in a business climate far, far away, business continuity was an IT responsibility, often paired with terms like disaster recovery, fail-over, recovery time objective, and recovery point objective. These were the glory days of the pessimistic approach to confronting supply chain disruptions. Success was defined as not dying. 

    At Logility, we applaud companies that have in recent years taken a broader, more optimistic view of business continuity. Traditional risk assessment remains essential, but companies should seek competitive advantage during challenging times. One way to do this is by strengthening and augmenting the supply chain.  

    Before introducing steps 8 and 9, Visibility and Change Management, let’s step back for a moment and critique the 12-step framework. It’s tempting to view each step as discrete and strictly chronological. But the world is messier than that. In reality, Visibility and Change Management permeate or at least influence most of the other steps on our journey.  
  1. Visibility. An enterprise seeking to fortify its supply chain must constantly strive for better data visibility across the entire network. We’ve observed that a certain “lunch bucket” mentality is useful. This step shouldn’t be left to theorists and data scientists. Improved visibility — and therefore improved decision-making — comes from practitioners tirelessly seeking novel insights from reliable data. 
  1. Change Management. This is where all consulting companies begin and end their presentations. There’s a reason for that. Perfect process and perfect technology won’t matter if employees are confused and unwilling to embrace new roles. In other words, culture eats strategy for breakfast. There will be strategy and ownership changes. Be honest. Communicate early and often. The good news is everyone can be empowered to make changes based on objective rather than subjective analyses.  

Dry Ice Dry Ice Baby 

For homework, think about how you would approach the massive disruption hitting the world’s “cold chain” as COVID-19 vaccines move through final approvals. At the time of writing, here are just a few of the logistical challenges that lie in wait: 

  • Vaccines like to be kept cool, but cooling requirements aren’t uniform. The Pfizer candidate for COVID-19 has to be kept at -70 degrees Celsius, 50 degrees colder than any current vaccine. That will be an issue for developing countries and for rural areas in the developed world. 
  • Dry ice is frozen carbon dioxide. What’s going to happen to the carbon dioxide supply? 
  • Dry ice can be dangerous to handle. 
  • Transportation is one thing, but what about storage? Consider what storage in California while wildfires are raging will be like. 
  • Coordination of construction and maintenance of databases that track who’s received what vaccine, where and when.  
  • Most vaccines are likely to require two doses. The whole effort must be repeated within weeks. 

Next up is the final installment of this 4-part series, where we’ll cover steps 10 through 12. 

You’re committed to rolling out an analytics platform across your supply chain and you have tons of data. So how do you turn that data into actionable information?

There is a continuum in terms of the presentation of data that allows for continuous sophistication in understanding and interpreting data. There are many ways to view data, but those that are particularly useful in supply chain analytics are reporting, score carding, dashboarding and benchmarking. Once these are embedded, deeper, more granular data analysis can be performed with the power of advanced analytics.

Reporting and Score carding

The simplest form of looking at data is the all-too-familiar reporting. Back in the day, reporting consisted of numbers printed out on green bar paper, but today’s analytical reports are far more detailed and dynamic than in the past. For instance, a modern report for a manufacturer might display all the data about transportation providers as usable information, in a scorecard format. Factors such as on-time delivery, freight cost per unit shipped, and transit time are assigned metrics and weighted averages to help users determine how well carriers are performing overall.

Dashboarding

Operations managers and executives who want a quick, daily overview of what is happening in their supply chain use dashboards to provide information in near real time to help users understand what is happening within their network. This supports them to make proactive decisions to remedy problems as they occur. Where reporting is really like looking in the rear-view mirror, dashboards are used to see what’s going on now, and make it easier for users to identify trends and exceptions, and to intervene before something goes wrong.

Dashboards can be implemented by companies to track all their real-time data and provide detailed reports of information such as claims as a percent of freight cost, space utilization, fuel efficiency, or vehicle time utilization. Essentially, the dashboard determines whether a transportation system is effective. Significant cost savings can occur when KPIs are monitored and the data is accessible in a format that allows users to make informed decisions. The biggest advantage of using dashboards to present data is the time-saving factor – dashboards give companies the advantage of allowing users to make decisions without having to wait for someone to pull and send reports.

Benchmarking

An analytics platform for the supply chain also allows for benchmarking. Comparing data on factors such as freight rates and on-time delivery percentages against peers allows companies to gain a more complete picture of their performance in the marketplace. Take freight rates, for example. Rates have fluctuated with the disrupted economy, so your job is really to assess whether a deal offered by a vendor is good or not. By benchmarking carriers against each other, you can easily see who is offering you the best deal. Consistently monitoring and making informed decisions based on data means you are fully leveraging your analytics platform.

Advanced Analytics

As you become more mature in your supply chain analytics adoption, you will be able to apply predictive and prescriptive analytics to find patterns in historical data that yield insights into future risks and opportunities in your supply chain and transportation networks. This predictive analysis capability uses real-time, data-driven insights to speed up decision-making and help create an optimized and responsive supply chain.

So as you think about rolling out an analytics platform, think in terms of the applications, not the data. Think about what reports are important and how scorecards could improve your visibility into data. Develop dashboards to give you a look ahead and use scorecards and benchmarking to make sure that you are getting the best deal from your vendors and suppliers. And work towards using advanced analytics to focus on improving your forecasting and finding trends and patterns in your data to determine, and plan for, what might happen in the future.

Take a moment to read this real-world example of how a Logility customer solved complex supply chain challenges with analytics and collaboration.

A Roadmap for Designing an Enterprise that Thrives During Supply Chain Disruptions

In part 1 of this series, we talked about the consensus among supply chain practitioners, pundits, and technology providers that minor supply and demand disruptions flare up constantly, the result of actions and reactions across complex, highly tuned, and interdependent global value chains. This has become cliché…the sneeze in Shenzhen that becomes a bad cough in Cupertino. Most companies can cope with these speed bumps, some better than others.

However, major sustained turmoil — like that caused by COVID-19 — quickly separates companies into bankruptcies, survivors, and thrivers.

As supply chain professionals, we at Logility have real-world knowledge gained from helping companies improve the consistency of supply, react to changing consumer behavior, and use analytics to deliver market-driven insights. We noticed that while thrivers are often surprised, and even harmed by major disruptions, they are resilient. They bounce back under adverse conditions. More to the point, inside their supply chains they have levers. They have easy access to accurate market data, they gather and analyze it quickly, they distill the key insights and, as a result, they enjoy options.

As Seth Godin says, “Flexibility in the face of change is where resilience comes from.”

We felt an obligation to share our observations, so in March 2020 we built a task force charged with creating an operational model and program management methodology that would take CEO-driven enterprise-wide objectives and bring them to life in a persistent, systematic roadmap. It’s 12 steps, and in part 1 we covered steps 1 through 3.

1. Assessment
2. Justification
3. Vision

Now it is time to look at steps 4 through 6, beginning with Explore.

4. Explore. When it comes to evaluating modern supply chain technologies, it’s important to be well-informed, curious, and realistic. The market is saturated with breathless assertions about the benefits of solutions based on Artificial Intelligence, Machine Learning and Predictive Analytics.

Some of those claims are true, some are more hat than cattle. Beware the hype-cycle. Remember, supply chain professionals are being asked to deliver tangible results. That’s your day job. Refer back to your Assessment — many companies have yet to create a comprehensive digital twin. That is eminently achievable with modern systems like Logility, so start there, and keep laser-focused on network visibility and the integration of planning and execution.

5. Collaborate. There are two facets to this step. The first is having an honest discussion about what it means to add a new project to everyone’s plate. Remember, this is not an IT project. It’s a business transformation project. Collaboration inside a silo is worthless, at times even harmful. We believe your innovation strategy must include a strategic partner.

It follows that, as a key partner, we need to continually refine our development and implementation disciplines to perfectly balance rapid value creation with reduced risk. This is much more than a product roadmap exercise or a debate about agile versus waterfall project management methods.

We must never let the platform interfere with your success. To borrow an analogy from manufacturing, picture a veteran machinist reviewing a CAD drawing for a new product. If you hear the machinist say, “Well, here’s another engineer that’s never set foot on the shopfloor,” then the organization failed the test for designed-for-manufacturability. Upstream failed downstream. The same principle applies to supply chain technology development and implementation.

6. Elevate Integrated Business Planning. This will remind many of you of Sales & Operations Planning. But there are new expectations in this realm, and they are focused on creating speed, trust, and resiliency. Specifically, your organization must embrace the value of a granular view of the extended enterprise. Can you analyze trends at the SKU level and drill into constraints on the shop floor? If so, then pronouncements from the War Room will be “virtually vetted,” and not the result of panic or guesswork.

Challenge yourself to think beyond the traditional Available-to-Promise metric and ask if an action meets the criterion of profitable-to-promise. You need to examine revenue, cost and margin impacts of every scenario under consideration. Some of these decisions will be automated, others will require exception-based intervention.

There you have a sketch for steps 4 through 6 in Logility’s 12-step process for building a resilient enterprise. Watch this space for steps 7 through 12. In the meantime, send us questions and comments. And for homework, spend some time thinking about this statement: “Planning is dead. Don’t waste your time telling the market what you want; instead, watch it like a hawk every day and take what it gives you.” Do you agree? Disagree? Somewhere in the middle perhaps?

Register for the first webcast of our four part series that will cover this 12-step roadmap for building a resilient enterprise. We will work our way through each step as we explore how to create a business that can respond and pivot at the pace of disruption, as well as seize opportunities presented by shifting market forces. Register here.

What does this mean for your supply chain?

On January 13, 2021 the United States Customs and Border Protection expanded the blanket Withhold Release Order (WRO) initially issued on December 2, 2020 and will detain all shipments containing cotton and cotton products originating from the Xinjiang Uyghur Autonomous Region (XUAR) and now includes tomato products. This potentially affects cotton products from countries other than China that use Chinese cotton inputs such as cotton fabric. Earlier this week Britain also announced they will tighten laws on imports linked to XUAR human rights abuses.

These announcements from both sides of the Atlantic highlight the urgency with which companies must act to ensure their products are not stopped at the border. According to the US Customs and Border Protection, the importer of record is responsible to prove its products do not contain any material, in whole or part, sourced from XUAR. If suspected and unable to show verifiable proof, the importer has three options:

1) Take the products out of the US market and export them somewhere else.

2) Destroy the merchandise.

3) Abandon the merchandise.

All three are costly, both financially and in the minds of consumers. Today’s consumers want to support brands that are ethical towards the treatment of workers and sustainable, good for the environment. Many companies tout their Corporate Social Responsibility initiatives however few can measure the impact of their supply chain beyond the first or second tier in the network. How the cotton is picked, or the yarn is spun, where the tomatoes are sourced, or silica is mined is more a matter of faith. The vast majority of companies do not have the capability to show evidence that each tier of their supply chain meets the ethical and sustainable standards they espouse, and their customers expect.

The latest developments from the United Kingdom and United States show there is strong action being taken to change the way materials are sourced. Now, it is up to supply chain leaders to ensure they can prove through a digital thread they are in compliance across every link in their complex, global supply chain.

How ready are you?

Continue Learning:

Spinning up a Digital Thread to Help Brands Achieve Supply Chain Resiliency, Compliance and Sustainability

Let’s journey back to late 2019 and early 2020. Under the umbrella of Sustainability, key players in the global fashion industry were talking about implementing lot traceability technologies, but in general the timelines were somewhat “comfortable.” There was no compelling event on the horizon. That would change.

At that point, “Sustainable” was largely a marketing term, and many fashion brands were using it haphazardly and irresponsibly. It reached the apex of the hype-cycle and consumers were naturally growing skeptical and cynical of its promotion without verification. Worried about alienating customers, many brand owners took new interest in traceability to understand the environmental impact of facilities, partners, and materials used.

The onslaught of COVID put pressure on many supply chains, including fashion. It forced the adoption and acceleration of eCommerce and spurred new ways of looking at stores as multi-purpose assets. In addition, COVID revealed the need for increased downstream fortification as sources — from growers to spinners to mills — became less reliable. The industry recognized the need for a digital thread connecting all members of the value chain, and lot traceability would be an important component.

Then came the moment of stark clarity, interestingly enough in numerical form: 406-3. (No, that’s not the score of the Georgia Tech football team’s historic victory over Cumberland College. Coach John Heisman’s Engineers eked out a victory in that game by a score of 222-0.)

The other shoe dropped in September 2020 when, by a vote of 406-3, the United States House of Representatives passed H.R. 6210 — the Uyghur Forced Labor Prevention Act. As currently drafted, the bill will block the import of any goods into the U.S. that cannot prove the merchandise is free of material and labor inputs originating in China’s Xinjiang region (XUAR).

Chinese cotton is extremely important to the fashion industry. As much as 85% of the cotton used in the industry is from the XUAR. In the US, 24% of all imports of cotton textile and apparel come from China. While the bill and related Withhold Release Orders did not go as far as banning all cotton and yarn products from China into the United States, it puts the industry on notice that cotton and other products from this region are becoming controversial due to human rights concerns. In other words, more action could come.

As the bill wound its way through House committees in the spring and summer, some apparel brands decided to hedge their bets and began to cut ties with companies that source materials from the region. In July, Patagonia said it would end sourcing from Xinjiang, and two months later, H&M Group confirmed plans to sever ties over the next year with a mill associated with a textile producer linked to Uyghur abuses.

But it was the September 22nd vote that grabbed everyone’s attention, in part because the bill imposes a guilty until proven innocent burden for importers. Complying will force the fashion industry to adopt sophisticated lot trace technologies.

Unlocking this level of verification will require a greater level of traceability than fashion is accustomed to. This is an early morning wake-up call. Most companies only deal with their Tier 1 vendors, because that’s where they have the relationship. The finished garment company sells to one of the retailers in the U.S., and that retailer has really no relationship with the fabric mill. They might have nominated that fabric, but they really have no idea where the yarns are coming from, much less even where the cotton is coming from.”

Thus, thanks to COVID and geopolitics, the industry now recognizes the growing importance of a resilient supply chain. Mapping and strengthening the supply network is one thing; but businesses now must take a more important step—completely eliminating and replacing XUAR-based fabric sources.

In the wake of these growing concerns, we launched in December 2020 a digital supply-chain traceability solution giving brand owners and retailers the tools to document the chain of custody from component origin to importer of record. With this solution, users can trace the chain of custody through all tiers in the supply chain in one digital thread while storing and managing all supporting documents related to every transaction between supply-chain trading partners.

The digital thread compiles and organizes a chronological record of importer of record back through the finished goods factory, fabric mill, yarn supplier, and cotton source. Transactions are validated at every tier using PO’s, invoices and packing lists. All these documents are rolled up to a certificate of compliance with complete chain of custody. This comprehensive genealogy is sent electronically for all shipments arriving in the US. This is what United States Customs and Border Protection will examine to determine compliance with relevant rules and regulations.

Outside of the potential legal issues arising for apparel companies, traceability will be key in meeting consumer demands. While supply chain professionals in the fashion industry knew that a sophisticated lot traceability solution would be critical for backing up sustainability claims, no one predicted that the path would include a pandemic and aggressive state-versus-state government action. Coming full circle, brands now have compliance tools that also help them prove to jaded customers that environmental and social responsibility programs are in place and supported by tangible evidence.

How can manufacturers manage disruption and improve productivity? By using advanced analytics for manufacturing, to understand the valuable information concealed within the data they already have!

Most manufacturers have already made the easiest and most obvious changes to improve their operations, leveraging traditional methods to boost their own productivity and simultaneously create a more dependable supply chain.

But the pressure to do even more with less is relentless, especially in a volatile business climate such as the one the global community is currently experiencing with the pandemic. Therefore, manufacturers must continually look for new ways to improve the productivity and profitability of their operations. Advanced analytics for manufacturing is a good place to start.

Optimizing Your Existing Assets

We’ve used this space to say this before. Here it is again: there’s an asset that many manufacturers have not yet optimized – their own data.

Some of you may want to argue that point but note that we’re calling for the optimization of deriving sound business decisions from data. It’s a high bar. You may have called a few meetings, written a few emails, maybe even scribbled on a whiteboard and snapped a photo. That’s not good enough.

Thanks to the power of the cloud and advanced analytics, manufacturers can put data to work, gathering information from multiple data sources and taking advantage of machine learning models and visualization platforms to uncover new ways to streamline processes from sourcing to sales.

Advanced analytics for manufacturing and production not only help manufacturers solve stubborn problems, they may reveal some they never knew about such as weaknesses in the extended supply chain or unprofitable production lines. Specifically, practitioners can use intuitive displays to drill into safety metrics, product quality, on-time delivery, cost efficiency, and much more. Here are some common advanced analytics use cases for manufacturers.

Quality Control

Quality control is key to the customer experience and to your bottom line. Over time, ineffective quality control processes will affect customer satisfaction, buying behaviors, and ultimately lead to lost market share. And the costs don’t stop there.

Poor quality control leads to more customer support costs, warranty issues and repairs, and less efficient manufacturing. Good predictive analytics, however, can provide insight into potential quality issues and trends before they become truly critical issues. You can use advanced analytics for manufacturing to understand defects by item, work center, work order, shift and reason code. Separate trends from one-off outliers.

Life Cycle Maintenance

For manufacturers with major investments in infrastructure and equipment, the ability to manage that capital outlay is critical. By analyzing metrics and data related to the life cycle maintenance of equipment, companies can predict both timelines for probable maintenance events and upcoming capital expenditure requirements, allowing them to streamline their maintenance costs and avoid critical downtime.

In short, knowing when a part is going to break reduces downtime and waste. By analyzing factors that drive the wear and tear of your devices and machinery, you gain transparency on the real lifetime of your products. According to McKinsey & Company’s 2017 report ‘Manufacturing: Analytics Unleashes Productivity and Profitability’, what is often termed predictive maintenance typically reduces machine downtime by 30% to 50% and increases machine life by 20% to 40%.

Supply Chain Optimization

We’ve saved supply chain optimization for last. This use case is especially relevant as we watch global supply chains cope with the damage caused by the COVID-19 pandemic. Start by simply mapping your supply chain to at least the second level and preferably the third. Your overall goal is to identify weaknesses and build resilience. As a practical matter, you will learn to anticipate the right time to produce orders or plan shipments to maximize on-time delivery and resolve storage issues. Analyzing the duration of individual processes and the interdependencies among them provides information about the impact of disruptions and potential options for avoiding those disruptions.

Bear in mind that supply chain excellence requires strong supplier relationships and a constant exchange of information with your suppliers to ensure materials and parts are where they need to be when you need them. Logility fosters collaboration – even outside your company – on a common platform to increase pipeline efficiency.

Managing Your Data

Let’s wrap up with a reminder that data-driven insights require holistic data management. In other words, you need to bring it all together to tease out the deep meaning and enjoy the benefits. The term of art is data warehousing. Because Logility provides data integration across departments and systems, essentially everything your business collects — big data, small data, on premise, off premise — you have the ability to develop business insights that follow your entire business process, not just pieces of it.

Data warehousing builds a common repository that allows you to work with your information with a myriad of information access and visualization tools. No matter how your team chooses to work with your enterprise data, data warehousing ensures everyone has the same set of metrics, rules and assumptions to help them meet common goals.

If you haven’t already, make advanced analytics for manufacturing a priority at your company. Start, or finish what you started. What better way to use the downtime none of us expected to have in 2020?

Want to learn more about tackling common supply chain challenges in the manufacturing industry. Check out our ebook ‘Top Supply Chain Challenges for Manufacturing Companies’.

A Roadmap for Designing an Enterprise that Thrives During Supply Chain Disruptions. Part 1 of a 4-Part Series

The human race has long appreciated that disruptions are part of life, they come in waves, and the best laid plans don’t always result in the outcomes we work to achieve. The idiom that describes falling out of the frying pan into the fire goes back at least as far as the 1500’s. And 2,000 years ago, a Greek fable warned of being like the hare that, while being chased by a dog, decided to escape by jumping into the sea. Where it was then eaten by a dogfish.

 

Are these figures of speech and stories examples of gallows humor spun up by early supply chain professionals? We’ll never know, but it’s plausible!

The source of these musings shouldn’t be a mystery. We can all agree that 2020 has been challenging for everyone, to say the least. Remember when “all” we worried about were trade wars, tariffs and headless robot kittens on display at CES? Apparently, that was the fire. Then came COVID-19, the frying pan. If there were a Richter scale for global supply chain upheavals, COVID-19 would have to be a magnitude 8+.

Companies around the world felt turmoil on both the supply and demand sides of the business.


Throughout 2020 — as we listened to our customers and worked with them to use technology to optimize supply chain performance in the face of serious headwinds — a few themes began to coalesce and indeed demand our attention:

Given that one disruption gives way to another, what is the correct business goal? Can we help customers thrive versus simply survive? Can we at minimum present a series of options inside a planning horizon that gives planners time to evaluate trade-offs and act should they choose to? Is it better to have the opportunity to be wrong than to be completely paralyzed?

Part of Logility’s mission is helping customers during a crisis. Our customers’ supply chains are being stress-tested right now. How is our technology helping them?

What do CEOs think they are getting when they partner with us for technology and services? We think they want, and are right to want, a resilient enterprise.

Winston Churchill once said “Never waste a good crisis.” In the context of business performance, what does that mean? Strength through trials? Sounds like resiliency.

Finally, like you, we’ve seen and admired how some companies have “used” the pandemic to build new revenue streams and change operating models to reflect shifting market forces. Here are two examples:

The pandemic accelerated “ghost kitchen” plans at Famous Dave’s. Famous Dave’s, which currently has 125 locations, is also planning to add drive-thrus at both its existing locations and its planned locations. Diversifying its footprint will help the chain better recover from the COVID-19 pandemic, which led to same-store sales declines of nearly 23% at company-owned locations during Q2 2020.

Chipotle recently announced its first-ever digital-only restaurant called the Chipotle Digital Kitchen, designed for pick-up and delivery only. The new prototype will allow Chipotle to enter more urban areas that wouldn’t support a full-size restaurant and allows for flexibility with future locations.

To us, part of what’s impressive about these moves is both firms’ ability to see and seize opportunity. Of course this speaks to strong leadership, but it takes a strong supply chain analytics infrastructure to pivot like this, and it takes trust.

In contrast, and unfortunately, some of the stories we hear don’t end well. A pre-COVID study of manufacturers, conducted by Supply Chain Insights, found that after seven years only 38% were satisfied with the progress they had made implementing advanced S&OP. You can assume that once COVID-19 hit that percentage dropped.

As supply chain professionals, we have real-world knowledge of how to help companies improve the consistency of supply, react to changing consumer behavior and expectations, and of course put our customers on a path to lasting success.

We felt an obligation to share, so in March 2020 we created a task force charged with codifying an operational model and program management methodology that would take CEO-driven enterprise-wide objectives and create a persistent, systematic roadmap. We have received overwhelmingly positive feedback from this process and now want to share it with you. It’s 12 steps, and here we touch on the first three:

Assessment. Be brutally honest and ask Does the business have a problem? If so, is it a priority to fix? How does it compare to other strategic priorities? If you tackle this problem, what’s the opportunity cost? You can frame this question in many ways, including Did we miss opportunity? Did we take on too much risk?

Justification. Assume the assessment yields a definitive Yes, we have a problem, and will continue to. In order to make your case, you’ll need to quantify what it’s worth to fix the problem. You could frame this exercise as: if, in 18-24 months, we were better able to do X and Y, what would be the return on investment?

This step might be at times awkward, frustrating, and exhilarating. But know this: if the C-Suite is ever going to understand supply chain — or at least try to — it’s now.

Vision. How will the organization accomplish the journey? Can you leverage the existing technology stack, or will you need something new, modern, something that pulls in suppliers? This is not a 5-year Pollyanna statement. Focus on ruthless pursuit of measurable improvements with unambiguous results in 2 years.

There you have the first three steps in Logility’s 12-step process for building a resilient enterprise. Watch this space for steps 4 through 12. In the meantime, send us questions and comments. And for homework, jot down three ways your company could benefit from a platform that moves you from data rich to insight rich. In other words, what if the hare had had other options?

 

 

 

I grew up in a time before people knew much about being eco-friendly or “Green,” so the concept of sustainability isn’t usually at the top of my mind. Just to level set, the Brundtland Commission defined sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” I care about the environment and doing what I can to minimize my impact. In fact, I often find myself surrounded by and admiring nature.

Younger generations who have grown up with the threat of global warming, holes in the ozone layer, greenhouse gasses, etc. have a much different focus on what it means to be eco-friendly. The topic of sustainability and being eco-friendly is discussed in K-12 education on a regular basis. In fact, it is not unusual for kids to come home and ask their parents what they are doing that benefits the environment. I would venture to say that, like myself, most parents find it difficult to respond with a good answer to that question. So, I started thinking about how supply chain management can impact the environment and concluded that supply chain managers are Green Superheroes.

Almost every supply chain improvement made to reduce costs has a beneficial side effect that contributes to the Greening the supply chain. Most improvements are made through more effective planning or more efficient operations. For example:

  • Optimizing a distribution network not only reduces logistics costs but, in most cases, reduces carbon emissions through fewer transportation miles and/or less inventory holding costs.
  • Higher forecast accuracy supporting a mature S&OP process allows a company to hold less inventory, run more efficient plants, and improve transportation efficiency. Better supply chain planning saves money but also reduces greenhouse gases and decreases your company’s carbon footprint.
  • Scenario planning enables a company to find the most efficient and effective solution to unexpected events, ensuring a high-level of customer service while minimizing costs. Often the lowest cost scenario is also the best one from a Green standpoint.

Following and supporting “Green Supply Chain” practices is important to a growing portion of the population and can positively affect brand awareness and market share. There is increasing evidence that in addition to a positive reputation, brands that follow and claim eco-friendly policies can charge more for their products. The results from another study reported that over 60% of Gen Z and Millennial shoppers prefer to buy from sustainable brands. Further, 50%+ of these younger shoppers are willing to spend up to 10% more on sustainable products.

Source: Nielsen Product Insider, 10/20/2018

As a supply chain manager, how do you start your journey to becoming a Green Superhero?
Unfortunately, an industry-accepted definition of a “Green Supply Chain” does not exist. So how does one build one? Is it enough to be eco-friendly in some processes, like transportation or manufacturing, to qualify your company as being Green? What about warehousing, inventory management and the efficient maintenance of your capital equipment? Must every supply chain function be eco-friendly, or can you focus on some areas of the supply chain and still be considered Green? There is no easy answer, however most experts agree that building a Green Supply Chain is like implementing other Supply Chain Improvement Projects: It’s a journey, Not a destination.

According to an article published in the MIT Sloan Management Review, for most companies, becoming sustainable involves a conscious and continuing effort to build long-term value for shareholders. The article listed characteristics of sustainability leaders:
1. They take a long-term view when making decisions.
2. They are willing to take measured risks in pursuit of sustainability.
3. They learn from the outside and are far more likely to encourage their employees to assimilate knowledge from sources external to their company.
4. They encourage their supply chains to adopt sustainable strategies.
5. They incorporate sustainability metrics into the capital budgeting process, develop solid valuation processes that take externalities into account, set clear targets for sustainability objectives, and establish targeted programs linking the objectives to business results.

A good place to start the journey of Greening your supply chain is to focus on initiatives that will improve operational efficiencies. Unfortunately, many efficiency improvement projects have a functional focus and just lead to inefficiencies in other areas of the supply chain. For example, maximizing plant efficiencies often leads to larger inventory holdings and less efficient distribution. Your ability to improve integrated supply chain efficiencies is greatly enhanced if you utilize a Supply Chain Digital Planning Platform like Logility. An advanced planning platform provides one place to visualize and analyze product, service, costs and sustainability information to enable intelligent tradeoffs.

Supply chain practitioners should measure and publicize not only the economic but also the ecological impact of supply chain improvements. Next time someone asks you what you have done to improve the environment, put on your Green Cape and tell them about your Green supply chain improvement projects.

An Imperative in Today’s Rapidly Changing World

In almost every supply chain publication, you will find an article discussing digital transformation. Industry analysts, consultants, solution providers, executives and practitioners are all focused on how to transition from a traditional, analog supply chain to a more digital supply chain. This has never been truer than it is today. Digital supply chain capabilities enable more agility and resilience; two supply chain characteristics that are especially important in dealing with unforeseen disruptions. As a supply chain practitioner, it is critical to understand what a digital supply chain looks like and how to ensure your supply chain is on the right transformational path.

 

What is Digital Transformation?

Digital Transformation involves a focused effort of activity across multiple processes that accelerate performance and deliver new value-added capabilities. Digital Transformation in supply chain operations usually involves the development of new tools, skills, and/or processes that target a step change in speed and/or agility.

Why is Digital Transformation Important?

Digital Transformation is one of the top concerns and areas of focus for C-Level executives. There is a growing awareness within senior executives that transforming supply chain capabilities to take advantage of the emerging areas of “Big Data,” “Artificial Intelligence,” “Advanced Analytics” and “Cloud Computing” provides a competitive advantage and reduces risk due to disruptions.

Supply chain leaders know there is a “War for Talent” to find and retain qualified personnel. It has been reported that there is only one qualified supply chain candidate for every seven openings, and this ratio is projected to increase before it gets better. The best candidates want to work with advanced technology platforms that allow them to spend more time analyzing problems and developing value-added recommendations. Digital Transformation of supply chain capabilities is critical to hire and retain the best talent.

Supply chain practitioners are asked to accomplish more with less, to be involved in more business processes and deliver more value-added capabilities while lowering costs and ensuring high customer service. Materials and components are sourced from even more remote locations and finished products are being sold into expanding regions and channels. The amount of external data continues to grow at exponential rates. Planning cycles continue to shrink, and customers expect shorter and shorter delivery times. All these pressures demand a step change in performance creating the need for Digital Transformation.

As a Supply Chain Practitioner, How Can I Facilitate a Digital Transformation?

The first step is to obtain C-Level sponsorship. Unlike most supply chain improvement efforts focused on managing and maintaining the current state and making incremental improvements, transformation involves multi-year, multi-functional efforts that can only be accomplished when embraced by top company executives. To gain executive buy-in develop a business case showing substantial hard and soft benefits.

Start with documenting the “As-Is” process capabilities and corresponding key performance metrics. This will lay the foundation for any future performance comparison and provide the starting point to develop benefits for transformation. Envision the “To-Be” process capabilities and desired performance metrics through benchmarking, group brain storming sessions, and alignment to business strategy and direction. Include envisioned capability cases to provide a vision of what the “To-Be” environment might look like. Develop a roadmap with critical milestones required to transition from the “As-Is” state to the “To-Be” vision. The trick is to have enough detail in this transition plan to execute against while still maintaining flexibility to adjust to new priorities and emerging technologies.

The skills people need to operate in the envisioned “To-Be” environment will be different requiring training and education. A focus on change management and employee development is necessary for successful transformation.

Conclusion:

The move to digital business capabilities is affecting all areas of a company including the supply chain. Today, technologies such as RFID, GPS and sensors have enabled organizations to transform their existing supply chain execution capabilities to be more flexible, open, agile and collaborative. Digital Transformation of supply chain operations is well underway in most industries today.

To be truly competitive in an increasingly volatile world, forward-thinking companies will need to transform their supply chain operations by investing in digital supply chain capabilities. The ability to improve customer service, reduce costs, minimize risk and enable company strategies through digital supply chain capabilities has caught the attention of executive management and supply chain practitioners must step up to meet this challenge.

Digital Transformation is an exciting opportunity for supply chain teams and requires the right combination of people, process, technology and data. At Logility, we have helped companies around the world transform and build resilient supply chains. Is your company embarking on a transformation journey? Have questions about how best to get started? Reach out to me on LinkedIn and let’s help you set the right path for your company.

 

 

 

Detective Joe Friday had a way with words. Even if you’ve never seen a Dragnet re-run in your life, or you’ve never heard of Joe Friday, his catchphrase, “Just the facts, ma’am,” is a good motto for running your business. The foundation of supply chain analytics is the desire to let objective, relevant information drive action – in other words, to empower and enlighten employees about data and to make decisions after they’ve looked carefully at “just the facts,” with the help of well-designed supply chain dashboards.

As humans we have an innate ability to use our neocortex (the part of the brain where abstract reasoning, imagination and mathematics are processed) to validate what our limbic brain (where emotions are processed) is “feeling.” Think about it – when we have a “gut feeling” about how business is going, the first thing we do is try to validate that feeling with data. The problem is we can’t take in and effectively analyze the terabytes of raw information now readily available; we’re just not built that way.

We need systems to filter out the extraneous bits, and, just as importantly, we need systems to present the most relevant information in ways we can easily assimilate. To do that well, a digital supply chain platform must place a premium on dashboard design.

It’s true that aesthetics and user experience seem like soft targets at first, especially if you consider yourself a numbers person. But in the case of a solid digital supply chain platform which offers a very broad spectrum of analytics capabilities, like Logility, the focus on the effective design of supply chain dashboards is all about letting form follow function. Here are four reasons why good design is essential for supply chain dashboards.

1. Well-designed supply chain dashboards make information consumption effortless

When a user glances at a well-designed supply chain dashboard, that user should get an immediate overview of how the company is doing relative to their responsibilities. Everything he or she needs to make the decisions you depend upon him or her to make should be right there, ideally on one easy-to-view screen. Not only should the dashboard be carefully designed for maximum comprehension, but so should each element on the dashboard. KPIs should leap out visually, as should any serious anomalies. That just won’t happen if you’re relying on poor design.

2. Well-designed supply chain dashboards lead viewers through consistent processes

As it turns out, we tend to take in visual representations of information in predictable ways. Most of us, for example, look first at the upper-right hand portion of a screen before glancing at other sections. Quality design can exploit these tendencies and, through thoughtful layout, lead an analytics dashboard user through a consistent process for consuming and acting upon a given set of data. The flip side, of course, is that poor design can prevent this kind of consistency from taking root.

3. Well-designed supply chain dashboards turns data into actionable information

We can all agree that data is dumb. In the raw, a large collection of data can lead knowledge workers astray, or in many cases, virtually paralyze them. That’s a terrible waste of your company’s greatest asset – human intelligence. A well-designed solution can take at least the preliminary layer of analysis off a worker’s plate. Think of something as simple as the judicious use of icons. Putting them in line with raw numbers to show the direction of trends can make scanning a set of metrics and choosing a course of action much simpler.

4. Well-designed supply chain dashboards make ROI possible

A poorly designed tool isn’t an asset, it’s a cost sink. It doesn’t matter if the tool is a $3.00 utility knife from the big-box DIY store or an enterprise-level software solution. If no one trusts the results, or if it’s hard to use, no one is going to turn to it when it’s time to get things done. We’re back to trusting our “gut feel” which seems to ignore the last 40,000 years of neocortex evolution. It’s impossible to reach ROI without validating the gut feeling. Quality design is only one step in the process of optimizing your data assets; it is the beginning of a long road to ensure that employees trust and use your company’s analytics.

So, there you have it – four ways that good design impacts information presentation and a little insight into what that means for the knowledge workers in your organization.