Part two of a six-part blog series based on my 30+ years’ experience collaborating on innovation with complex, discrete machinery manufacturers. For the CSCO.
In my last blog, I discussed how ― in truly intelligent enterprises ― the chief financial officers take an active role in spotting new savings and revenue-generating potential throughout the organization. Now I want to discuss how supply chain executives can stay in touch with the shop floor too.
My interest in this began when I found an article in the Harvard Business Review entitled, “Why (and How) to Take a Plant Tour,” written by David M. Upton, professor of Operations Management at the University of Oxford’s Saïd Business School. The intriguing thing about the article is that it was written in May of 1997, and it’s fascinating to see how things have changed in the last 22 years.
Of course, the supply chain is technically older than the industrial revolution because producers always needed to get their goods to market, but even in 1997 supply chain as we know it was still relatively primitive. ERP was still a pretty novel idea back then too, and clouds were still puffy clusters of water vapor that could ruin a picnic. Manufacturers had to stitch together completely siloed supply chain functions, with revision after revision of Excel spreadsheets, innumerable phone calls and emails, and countless hours of importing and exporting data to and from a patchwork of systems. Those of us who survived that era look back on it with the pride of a war veteran.
Some are still fighting the battle.
Part of the battle plan back then necessitated a plant tour to evaluate operations. The spreadsheet numbers could tell us if things were running smoothly, but they were less useful at telling us why things weren’t running smoothly. This is from Professor Upton’s article:
Only with sufficient direct observation is it possible to develop the right prescription for improving the operation—whether it be capital for reconfiguring a plant, new management, or different improvement techniques.
In 1997, it was reasonable for the manufacturing process to be thought of as a chain ― or perhaps a number of parallel chains (product, information, money, etc.). The intuitive goal at the time was to seek out the weak links and repair them. Unfortunately, that was a very reactive way of thinking and it didn’t acknowledge the true complexities of the larger value web. The problem is that repairing weak links is an engineered solution and today’s manufacturing industry requires a more proactive, designed solution.
The distinction between engineering and design is that engineers look to eliminate problems as efficiently as possible, but designers embrace the challenge of finding new problems to solve. After engineers find a solution, they don’t revisit the issue unless something else breaks, or another problem arises. If it ain’t broke, they won’t fix it.
Designers, on the other hand, look for problems, and that in turn inspires them to find the most elegant and creative solutions possible. And even when they find solutions, they’ll continue to look for better results. They will consider the repercussions across the entire value web, and instead of being reactive, they proactively look for new opportunities. The perfect supply chain is not one that’s free of weak links, but one that can anticipate and adapt to inevitable ever-shifting variables.
In 1997, designing solutions would have been impossible because there was no way to intelligently consume all of the data from those disparate spreadsheets, and it would have required a constant presence in the field to truly appreciate how well the supply chain was functioning. Further, the implementation of newly designed processes would have taken so long to achieve that circumstances would have changed before they could be employed.
Today, supply chain executives have the ability to conceptualize optimal scenarios with software that captures and evaluates a myriad of variables instantaneously. Instead of executives visiting the plant, the entire supply chain is virtually brought to the executive via a supply chain control tower. This allows for end-to-end visibility through Big Data analytics and smart alerts, which in turn allows exceptions to be uncovered earlier and faster at a level of granularity that would have been unthinkable 22 years ago.
An effective supply chain control tower will allow the use of intelligent alerting to increase on-time delivery performance, drive collaborative actions within a team, and proactively resolve issues through increased visibility and orchestration. It will also integrate performance data from various systems, clarify decisions by simulating and comparing options, and use a collaborative framework for all players to monitor performance and drive continuous improvement. Further, it will increase overall network visibility by combining planning, execution, and network data, work with external partners for easier and faster planning, and lower inventory costs thanks to multitier visibility into inventory, demand, and supply.
To get a better understanding of how this works, there is an excellent video overview of integrated business planning solutions online.
In short, the first step in achieving a truly mature supply chain is to implement a supply chain planning (SCP) system of record (SOR). SCP SOR is a planning platform that enables collaboration across the entire supply chain — from demand plan creation through the supply-side response, and from detailed operational planning through tactical-level planning.
I love helping businesses make that transition possible, and I’m proud to say SAP’s supply chain management portfolio and our customer base have been recognized by several recent analyst firms around warehouse management and transportation management. SAP was also recently included in “The Gartner Supply Chain Top 25 for 2018,” and the SAP Integrated Business Planning solution has been recognized by Gartner, Inc., in the Leaders quadrant of the “Magic Quadrant for Supply Chain Planning System of Record.”
The supply chain isn’t the only thing that’s changed dramatically for manufacturers in the last 22 years. In the next blog, I’ll take a look at what Professor Upton said about manufacturing processes back in 1997, and compare it to how intelligent manufacturing plants are run today.
Having a thorough understanding of your customer needs is the key for any business. Join our webinar on June 18th and learn how to leverage intelligent technologies with Lead-to-Cash processes in order to provide exceptional customer experience!