Supply Chain Innovation: The Road to Real Time Supply Chain is Now Wide Open
A new Bloomberg BusinessWeek Research Services survey and report makes it clear that innovative supply chain tools are widely acknowledged to be crucial to meeting corporate goals now and in the future as supply chains grow more complex, customers become more demanding and globalization accelerates. In this context, supply chain innovation is becoming more important as companies that have invested in traditional tools are now determined to operate real-time supply chains.
Although more than three-quarters of survey respondents noted that demand and supply forecasting and planning tools are already very important, and a majority already has these tools in place, adopting newer supply chain tools that support the creation of real-time supply chains is recognized as highly important.
A real-time supply chain can sense and detect new challenges as they happen. That enables supply chain planners and practitioners to make real-time decisions based on the most up-to-date information. Companies taking this approach view the supply chain as a strategic initiative. They use their understanding of the market and fluctuating demand patterns to adjust their supply plans in real time.
In fact, the Bloomberg Businessweek Research Services survey found that the tools required for real-time supply chain management are on a fast track to adoption within the next two years. Among the real time supply chain focus areas highlighted are multi-level inventory optimization, demand signal repository, sales and operations planning, and leveraging point of sales (POS) data across the supply network.
5 Steps to a Real-Time Supply Chain
Perhaps the most critical step is enabling insightful supply chain management. Supply chain business decisions need to be made in a business context, not in a silo. Companies leveraging the wealth of performance data about their supply chains can enable that real-time analysis, gain insight into fragmented business processes and achieve deeper visibility through alerts based on key performance indicators (KPIs). The result is a transition from management by exception to management by information – a “supply chain GPS,” if you will.
The second step is transitioning from traditional S&OP to sales and operations business planning. Companies cannot afford to disconnect their sales and operations business planning from tactical planning. Business priorities and operational decisions must be balanced against a clear understanding of their financial impact. Using solutions that combine operations and financial data, the business can collaboratively create scenarios and simulate the effects of decisions in real time to increase supply chain profitability.
Another key driver is embracing the concept of a demand-driven supply chain. The most prevalent supply chain challenge is lack of clarity into what customers want and when they want it. In a demand-driven model, companies use POS, social media and market research data to sense customer demand signals immediately and to respond in real time to build that demand into the planning processes. This accelerates supply chain processes and reduces planning cycle times, working capital (inventory) and lead times. It also provides the opportunity to increase revenue by avoiding stock outs, increasing promotion effectiveness and optimizing new product launches.
With complex global networks, ensuring efficient execution in the areas of logistics and order fulfillment is more critical than ever. With increased supply chain complexity, it becomes more difficult to deliver the perfect order. At the same time, transportation costs are rising across more complicated supply chains. Optimizing execution requires real-time visibility into shipping processes and track-and-trace capabilities, along with automated warehouse and distribution processes and advanced transportation planning.
To close the real-time loop, companies must focus on streamlining the service supply chain. Successfully running an integrated supply chain for service parts businesses requires real-time visibility into customers, suppliers and operations. This enables companies to respond swiftly to customer requirements, procure parts earlier, plan parts inventory more effectively and unlock service parts profit potential.
To transition to a real-time supply chain, these five areas need to be tightly integrated and coordinated. Besides advanced solutions, companies need advanced analytics that can support real-time decision making. Recent advancements in the area of in-memory computing are already allowing companies to respond quickly to market dynamics with real-time visibility into customer demand. Mobile solutions, with their user-friendly interfaces, can deliver real-time optimization to all stages of the supply chain.
The road to a real-time supply chain is getting shorter, and those who have arrived say it is well worth the journey. Those not there yet need to engage partners who will enable them to adopt and integrate these technologies in a non-disruptive way, through side-by-side deployment options and turn-key deployment projects.
(This blog appeared first as a Guest Commentary column in Logistics Viewpoints www.logisticsviewpoints.com in March 5th 2013)