MEIO in the 21st Century by Ann Grackin of ChainLink Research
Recently I wrote a research paper on Multi-Echelon Inventory Optimization, MEIO (Thinking Anew – Transform Your Supply Chain Using Multi-Echelon Inventory Optimization). It took me on a journey that reminded me of the days when I had to deliver the results, not just tell readers how they might do it.
The 1990s were extraordinary times for supply chain and technology. While these times were quite interesting, they were also the non-integrated, un-optimized, no-web days. It was really challenging, and expensive, to get a handle on your supply chain. In fact, very few even called it a supply chain back then. Where I worked, we were somewhat lucky since our new CEO was an avid follower of Michael Porter. In Porter’s book, Competitive Advantage: Creating and Sustaining Superior Performance, he advocated that value chains and supply chains were the ultimate source of competitive advantage. We launched a corporate-wide supply chain program based on that premise. For me, it was a life changing, and career changing, event.
Money poured into the supply chain development budget. PhDs in operations, mathematics, and computer science descended into our tent and we developed many useful applications. Of course, the applications did not talk to each other and they took all weekend to run. Thus a very limited set of use cases. That said, we achieved amazing results and value from these exercises and showed there was still a lot of potential waiting to be discovered.
However, I stated at that time, “The problem with these applications is that people can roll them into the closet and use them only sporadically or for special events.” At one site they literally did keep the server in a closet and rolled it out when needed. Thankfully, technology has moved on. And the solutions are now thatsolutionsnot point applications to solve 4-walls problems; they now provide visibility across the echelons of a global supply chain network.
The technology is smarter, faster, and integrated; the end-users of the technology have a vision of where they can, and have, used MEIO to really transform their supply chains.
This is why I really enjoyed the recent project, taking a fresh look at how MEIO programs have progressed. Speaking with companies actively engaged in MEIO projects, including Logility customer Stanley Black & Decker, it became apparent that the army of scientists and PhDs, once a common attachment to the supply chain organization, is not required. Instead, what is required is a determination to understand your supply chain policies and how they shape business performance, as well as how business policies and decisions can impact supply chains.
In the research, I explored how understanding the strategic implications affects tactical operationsand vice versa. In particular, we looked at the starting point for MEIO projectstactical or strategic? I had a few takeaways from this research: