The Winding Road toward the “Autonomous” Supply Chain (Part 2)


Last week, I began this train of thought with The Winding Road toward the ‘Autonomous’ Supply Chain (Part 1)”.  Now, as this weekend approaches, I conclude my piece, but I hope to spur your ideas.

Detect, Diagnose, Decide with Speed, Precision & Advanced Analytics

Detection of incidental challenges (e.g. a shipment that is about to arrive late, a production shortfall, etc.) in your value network can be significantly automated to take place in almost real-time.   Detection of systemic challenges will be a bit more gradual and is based on the metrics that matter to your business, capturing customer service, days of supply, etc., but it is the speed (and therefore, the scope) that is now possible that drives more value today from detection.

Diagnosing the causes of incidental problems is only limited by the organization and detail of your transactional data.  Diagnosing systemic challenges requires a hierarchy of metrics with respect to cause and effect (such as, or similar to, the SCOR® model).  Certainly, diagnosis can now happen with new speed, but it is the combination of speed and precision that makes a new level of knowledge and value possible through diagnosis.

With a clean, complete, synchronized data set and a proactive view of what is happening and why, you need to decide the next best action in a timeframe where it is still relevant.  You must optimize your tradeoffs and perform scenario (“what-if”) and sensitivity analysis.

Ideally, your advanced analytics will be on the same platform as your wrangled supra data set.  The Opalytics Cloud Platform (OCP) not only gives you state of the art data wrangling, but also provides pre-built applications for value network design and flow, inventory optimization, transportation routing and scheduling, clustering, predictive analytics, and more.  OCP also delivers a virtually unlimited ability to create your own apps for decision modeling, leveraging the latest and best algorithms and solver engines.

Speed in detection, speed and precision in diagnosis, and the culmination of speed, precision and advanced analytics in decision-making give you the power to transpose the performance of your value network to levels not previously possible (see Figure above).  Much of the entire Detect, Diagnose, Decide cycle and the prerequisite data synchronization can be, and will be, automated by industry leaders.  Just how “autonomous” those decisions become remains to be seen.

As yet another week slips into our past, I leave you with a thought from Ralph Waldo Emerson, “There is properly no history, only biography.”

Have a wonderful weekend and thank you, again, for stopping by.


Whither Supply Chain Analytics?

IBM has just released a study “Digital operations transform the physical” (capitalization theirs).

Citing client examples the report states,

“Perpetual planning enables more accurate demand and supply knowledge, as well as more accurate production and assembly status that can lower processing and inventory costs . . .

Analytics + real-time signals = perpetual planning to optimize supply chain flows

They are describing the space to which manufacturers, retailers, distributors, and even service providers are rapidly moving with value network analytics.  This is a challenging opportunity for software providers, and the race is on to enable this in a scalable way.  The leading software providers must rapidly achieve the following:

1)      Critical mass by industry

2)      Custody of all the necessary data and flows necessary for informing decision-makers of dynamic, timely updates of relevant information in an immediately comprehensible context

3)      Fast, relevant, predictive and prescriptive insights that leverage up-to-the-minute information

Some solution provider (or perhaps a few, segmented by industry) is going to own the “extended ERP” (ERP+ or EERP to coin a phrase?) data.  Whoever does that will be able to provide constantly flowing intelligent metrics and decision-support (what IBM has called “perpetual planning”) that all companies of size desperately need.  This means having the ability to improve the management of, working capital, optimize value network flows, minimize value network risk, plan for strategic capacity and contingency, and, perhaps most importantly, decision-making that is “in the moment” that spans the entire value networkThat is the real prize here and a growing number of solution providers are starting to turn their vision toward that goal.  Many are starting to converge on this space from different directions – some from inside the enterprise and some from the extra-enterprise space.

The remaining limiting factor for software vendors and their customers aspiring to accomplish this end-to-end, up-to-the-moment insight and analysis remains the completeness and cleanliness of data.  In many cases, half of this information is just wrong, incomplete, spread across disparate systems, or all of the above.  That is both a threat and an opportunity.  It is a threat because speedily providing metrics, even in the most meaningful visual context is worse than useless if the data used to calculate the metrics are wrong.  An opportunity exists because organizations can now focus on completing, correcting and harmonizing the data that is most essential to the metrics and analysis that matter the most.

What are you doing to achieve this capability for competitive advantage? 

Thanks for stopping by.  I’ll leave you with this thought of my own:

“Ethical corporate behavior comes from hiring ethical people.  Short of that, no amount of rules or focus on the avoidance of penalties will succeed.”

Have a wonderful weekend!

The Supply Chain of the Future

Source: Consumer Goods Forum

At last week’s conference of the Council of Supply Chain Management Professionals, John Phillips, Senior Vice President, Customer Supply Chain and Logistics for PepsiCo, presented findings from Building Strategies for the New Decade – Future Value Chain 2020.  The report is definitely worth a look and to whet your appetite and stimulate your thinking, I have summarized the twelve root trends below (supporting stats are sourced in the Report):

Increased Urbanization – By 2050, roughly 70% of the world’s population will live in urban centers.

Aging Population – Consumers 50 and older may soon represent the majority of the voting public.

Increasing Spread of Wealth – The population in low- and middle-income countries with purchasing power parity (PPP) is expected to triple by 2030.

Increased Impact of Consumer Technology Adoption – By 2013, more than 2 billion mobile users globally will have made a purchase via their handsets.

Increase in Consumer Service Demands – Over the next decade, the online channel will grow to 25% to 30% of total retail sales, up from the current 4% to 15%.

Increased Importance of Health and Wellbeing – In the U.S., for example, the “Lifestyles of Health and Sustainability” market is estimated to comprise approximately 19% of the adult population, representing a market of 41 million consumers.

Growing Consumer Concern about Sustainability – According to the Natural Marketing Institute (NMI), the green marketplace in the U.S. is predicted to grow from $420 billion in 2010 to $845 billion by 2015.

Shifting of Economic Power – China will overtake the U.S. to become the world’s largest economy as early as 2017.  And by 2012, India will have overtaken Japan.

Scarcity of Natural Resources – By 2030, the world’s population will reach 8.3 billion, with the demand for food and energy increasing by 50% and for fresh water by 30%.

Increase in Regulatory Pressure – Over the next decade regulatory pressure is expected to increase.

Rapid Adoption of Supply Chain Technology Capabilities – In the coming decade, improved collaboration together with new supply chain/logistics technologies and information transparency will enable a more synchronized value network with greater visibility and traceability.

Impact of Next Generation Information Technologies – Information technology will no longer be just an indispensable support function, but an expansion of the organization’s intelligence, a universal connector, the way to become adaptive.

This list brings up two questions:

1)      Are you seeing any of these trends today?

2)      What are you doing within your value network to capitalize on these trends – that’s right – capitalize on them, not just mitigate their effects.

With all this talk of trends and change, I will leave you with my favorite quote on change.  It was Leo Tolstoy who said, “Everybody thinks of changing humanity, and nobody things of changing himself.

Have a wonderful weekend!

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