How to make winning/smart supply chain decisions in the new normal
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This article is derived from a webinar about the eBook Smart Supply Chain Decisions in the New Normal that I have co-authored together with Sanjay Sharma, Co-Founder and CEO of Roambee Corporation, a California-based asset tracking and shipment monitoring company, I am a board member of.
We all wish to win and the call for smart supply chain decisions is nothing new. Aiming at smart choices is what supply chain practitioner do every day. They seek ways to overcome their daily challenges. In the new normal, problem-solving skills have become more important than ever. Enhancing them with digital capabilities is the way to navigate today’s volatile and uncertain times.
The advent of the “new normal”
What is the new normal? The new normal is virus, volatility, and uncertainty. SARS-CoV-2 seems to stay with us, and no one knows for how long. I have been in Asia and confronted with the new coronavirus for almost half a year now. Our initial hopes that the new virus would disappear with the arrival of spring and summer and the rising temperatures have vanished. Covid-19 has become our daily reality and the virus our companion. Countries and cities, citizens and companies need to prepare for operating despite the adverse conditions the coronavirus pandemic has brought.
Resilience as part of a big puzzle
A lot of people put a strong emphasis on resilience. But resilience is only a part of the puzzle. As many other characteristics, resilience contributes to performance. Performance is what supply chain management is all about. It is about delivering on a company’s promise, efficiently, on time and in full (OTIF). We can make supply chains resilient – at the detriment of performance. We can build in redundancies, e.g. a spare plane, or a buffer stock. Or we can hold idle capacity to be prepared for the next peak or pandemic. But why haven’t we done this so far? Because this comes at a high cost. Supply chain management is about performance under all circumstances. Like with many other things, like with safety or sustainability, we need to find smart ways to perform and protect profits, people, and planet.
Smart decisions for winners
We need to make smart decisions. Smart does not mean that we do the obvious. Winning requires to be different, to be better than others. It requires better decisions. Usually made by people that are better skilled, trained and better equipped. We are now in the Fourth Industrial Revolution. With accelerating and converging technological developments. This era brings out new bundles of solutions. Covid-19 has given this development an even harder push. Increasing adoption should bring costs even further down. We are at the beginning of exponential digitization. What I expected at the beginning of 2020 to evolve in the coming 5 years has now occurred in the last 5 months. This, because a crisis is often a catalyst for change, and you can expect a lot of change coming towards us going forward. Winning in this era means to be aware of what is out there. It means to be ready to test and experiment. It means to know what is happening in the supply chain networks and their ecosystems. In an environment of increasing connectivity and complexity implementing and using advanced technology is the only way forward.
Three pillars to look at
Three pillars appear to be vital for winning. These three pillars are new supply chain paradigms. They represent parts of the new normal.
The first is remote operating: Covid-19 has made “remote” the word of these times. Many of us were asked to go home and stay. This forced us to work from there. Surprisingly, it worked. What had we done without computers, connectivity, and the internet? With these, we were protected and able to produce. Moreover, productivity went up. Distributing our workforces may be one of the smart moves to make.
The second take on Covid-19 is the need for shorter planning cycles. We needed to innovate planning. First, because we cannot continue with 13 weeks cycles in such volatile times. Nor can we rely on our experience. This is a new situation. Data is the only compass. The more data we have the smarter are the decisions we make. Many companies reach out to their suppliers and customers, the information gathered needs to be fed into supply chain mapping tools and serve as inputs to scenario planning. It also complements the operational data at hand.
The third pillar is instant decision-making. In the supply chain business, yesterday’s information is of little value. It is in today, where the battles against disruption are to be fought. This requires real-time data, analytics, and recommendations; and we need this everywhere. This requires that we are able to connect, control, and collaborate from home, hotels, the hovercraft, and the headquarters.
1- Remote working
Operating the “mobile” enterprise
Today, a lot of tasks can be replaced with automated live data capture systems. These spare companies the cost for error-prone human labor used to count screws and switches in stations and stores. Now, it is sensors and platforms that can do the job and provide, in addition, valuable information about our working capital, our capacity utilization, customer behavior and the sales situation. During Covid-19, protecting people is a major driver for implementing remote management. But remote operating has been a consideration for some time for safety reasons, for example during loading and unloading of ships or dangerous situations. Remote operating is core and center to the internet of things concept, which is rooted in the idea of machine to machine communication. Another reason for remote operating is efficiency. An onshore captain can navigate five ships instead of one.
We rarely leave our smartphones behind when we are leaving home. Wherever we are, we wish to be informed. About the traffic situation, the stock exchange, Covid-19 etc. Supply Chain professionals wish to know what is happening in their supply chain networks and the related ecosystems. They need to know whether everything is fine, or something needs attention. The good news is that in the digital age, you can have your personal control tower always with you and in your pocket. Connectivity, intelligence, and mobile devices made this a reality.
24/7 real-time visibility
Inventories in motion
Visibility sits at the core of 21st century supply chain management practices. Supply chains are materials in motion. Which is another way of saying cash in motion. Cash of the company is what the supply chain professionals are dealing with. Sometimes with billions of dollars. You wish to have an eye on this treasure and the space around it – and this 24/7.
Ecosystem & operating environment
Keeping an eye on your assets and goods is good. Understanding what is going on in the environment you are operating in is even better. Where are the hot spots? The bottlenecks? Where are the areas where regularly incidents and deviations occur? Theft, congestion, traffic jams. This helps supply chain professionals to make fact-based decisions to improve their operations. Wherever they and their teams may be at that critical moment of deviation or disruption they need to be able to join the discussion. Remotely controllable systems make members spread across the planet part of the problem-solving team.
Remote operating has many advantages, it protects people, increases productivity, and improves supply chain visibility. But remote working comes also at a cost. It is easier to fence and protect a system based in one place than an architecture where a significant part of the connected devices is distributed. Where users log in from home, taxis, and lounges. Remote working brings bigger challenge for the cybersecurity teams. This is an area to watch.
2- Accelerated planning
Planning in real-time
Visibility implies real-time availability of data. Looking at yesterday’s traffic jam does not add a lot of value. Visibility needs to be real-time. The expectation is also that visibility spans from end-to-end and covers all activities and areas of global supply and demand networks. End-to-end visibility requires the data to be delivered on-time and in-full. Continues data logging through live data capture systems are the enablers to realize this vison.
At the same time, data comes in enormous quantities. We have seen that the visibility dream can turn quickly into a data nightmare. Making visibility digestible requires continuous analysis, ideally in real-time. In advanced systems and behind the scenes algorithms are constantly cleansing, categorizing, and computing data. The results are early warning signals and recommendations for timely and fact-based decision-making and problem-solving.
Compliance with SLAs
Connectivity, data, and analysis also enable continuous partner benchmarking to spot deviations from the agreed service level agreements (SLAs) but also to identify the best performers including the understanding of the reasons behind it. Benchmarking is important to assess performance and drive quality to and above the required levels.
Continuous partner benchmarking enables fact-based discussions with partners as the starting point for improvement and progress. Constant benchmarking is the finger on the pulse of performance. Visibility is the foundation for resilience, agility, and efficiency. You have a lot of areas that can be measured. Your transporters partners’ performance against its own past performance based on on-time, in-full deliveries. Individual cold chain compliance against the best performance. Or the performance of the partners against an industry standard.
Improving supply chain performance, in volatile times and beyond requires to constantly evaluate new and alternative lanes. Today’s systems work across multi-modal routes and provide intelligence about expected lane performance based on historical data and real-time inputs.
3- Instant decision making
Building an intelligent network
Early warning signals
I emphasised the importance of visibility established through data. I also pointed out the overwhelming volume of data that comes with visibility tools. This means that we cannot constantly have an eye on the complete chain. Ideally, we should be able to trust almost blindly the system to pick those datasets that are relevant to us and which require our closer look.
Collective access (relevant stakeholders)
Most of the time, the best decisions and solutions result from teamwork. Therefore, asset tracking and shipment monitoring platforms push the information about deviations from plan, e.g. that a truck is late, or a flight cancelled not only to one person but everyone that can contribute to solving the problem.
Prevent damaging (condition) excursions
Pharma cold chain
Accurate data about location and the goods’ conditions is of utmost importance in some pharma and healthcare supply chains that can carrying extremely sensitive goods, like vaccines or human organs. These goods require to stay below a certain temperature level. The key to temperature-controlled logistics excellence is the use of a monitoring system that provides tracking and tracing, but also cold chain data from the first mile until the last mile in real time.
Deviations from plan
Early warning features provide filtered real-time visibility into the state of your supply chain: this is a predictive and easy to action way of monitoring which allows you to deal with anomalies proactively rather than once the damage has already occurred. Sensors and Bluetooth-enabled beacons help to monitor the movements and the temperature not only at a shipment level but also at the package-level.
Real-time analysis helps to automate today’s control towers. Recommendation engines take in early warning signals and suggest options based on the available supply chain data. Once the system is well calibrated the decision-making itself can be automated. This is the moment when recommendation engines become decision-makers.
Despite my passion for technology, I am convinced that the best of all worlds is a close collaboration between man and machines. A world in which the machines are supporting you, the experienced supply chain professionals to perform your role more efficiently. It is once again Covid-19 that has shown us that at a certain moment people with robust experience and relations need to take over, like the pilot that starts aviating in the eye of the storm. Staying with the aviation analogy, I can also say that it is obvious that without instruments it is awfully hard and sometimes impossible to travel safely through turbulent weather. Grounding may then be the safest option. A choice which supply chain practitioners usually avoid making.
Photo: Wolfgang Lehmacher