August 3, 2015 Leave a comment
If you can’t answer these 3 questions in less than 10 minutes (and I suspect that you can’t), then your supply chain is not the lever it could be to drive more revenue with better margin and less working capital:
1) What are inventory turns by product category (e.g. finished goods, WIP, raw materials, ABC category, etc.)? How are they trending? Why?2) What is the inventory coverage? What will projected inventory be at by the start of a promotion or season. Within sourcing, manufacturing or distribution constraints, what options do I have if my demand spikes or tanks?
3) What proportion (and how many) of your customer orders (or margin or revenue) shipped at 99% on-time and in-full? How many at 98%? And so on . . . Do you understand the drivers?
The slack time that global competition is allowing you to have between planning and execution is collapsing at an accelerating rate.
You need to know the “What?” and the “Why?“ so you can determine what to do before it’s too late.
You need to answer the questions that your ERP and APS can’t so your supply chain makes your business more valuable.
Since supply chain decisions are all about managing interrelated goals and trade-offs, data may need to come from various ERP systems, OMS, APS, WMS, MES, and more, so unless you have a platform that consolidates and blends data from end-to-end at every level of granularity and along all dimensions, you will always be reinventing the wheel when it comes to finding and collecting the data for decision support. It will always take too long. It will always be too late.
You need the kind of platform that will deliver diagnostic insights so that you can know not just what, but why. And, once you know what is happening and why, you need to know what to do — your next best action, or at least viable options and their risks . . . and you need that information in context and “in the moment”.
In short, you need to detect opportunities and challenges in your execution and decision-making, diagnose the causes, and direct the next best action in a way that brings execution and decision-making together.
If you don’t have all three now – Detect, Diagnose and Direct – in a way that covers your end-to-end value network, you need to explore how you can get there.