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?
Check out part 3 of our 4-part blog series here.
