Supply chain convergence certainly sounds like a good thing. After all, in mathematics we talk about converging on a solution, don’t we? In the supply chain world, when the disciplines of planning and optimization converge, it’s like a rising tide of synergy that lifts all boats.
In this case we are talking about convergence in the roles of inventory optimization, demand planning, transportation management, and supply planning that goes beyond data integration. It’s a cross-functional interaction that creates business value by injecting information and analytics from one application into the others. My colleagues Chris Russell and Jeff Pitman recently tackled this topic on the video podcast, Supply Chain Convergence: A Converging Tide Lifts all Supply Chain Boats.
For example, better demand planning can create a more accurate demand signal that drives smarter inventory optimization decisions. Planners in many SCM-savvy companies find that they can add value directly to the task of setting better inventory targets.
Another example: informing inventory optimization efforts with transportation lane and mode information also yields better targets.
And a third: the twin mysteries of demand uncertainty and supply variability can be handled more cost-effectively when multiple groups and disciplines like manufacturing, transportation, and forecasting cross-pollinate.
Bottom line: Extra benefits accrue when supply chain planning and optimization tools converge to infuse each other with information, understanding, and recommendations. Operations teams at leading companies are actively seeking these convergence dividends by widening their SCM cooperation. Are you?
Click to view the podcast: Supply Chain Convergence: A Converging Tide Lifts all Supply Chain Boats
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