Think back to the last birthday party you planned. How did it go? As the organizer, you were responsible for everything from getting invitations in the mail through to making sure you had enough drinks and cake for everybody. Then there’s ensuring that everybody got themselves home safely after the festivities (whether it was kids being picked up by parents or adults who may have needed a cab). But what happens next time when 10 of your invitees take it upon themselves to invite 10 additional people, not on the list? Demand for drinks and cake just shot up and you’re not ready for that. Or are you? This is an extremely simplified, yet apt, analogy for the role a production planner plays in keeping the business running smoothly and ensuring that when demand does spike there won’t be any disruptions.
IT managers and logistics managers have more in common than you might think. Both require transparency and the real-time data it enables in order to be effective in their roles. Both also thrive in the decision-making process and all the back-and-forth with stakeholders that it entails. At the same time, there are of course glaring differences. IT teams work with end-user computer hardware, software, and networking technologies every day, while logistics planners interact with their own hardware with the sole intent of making goods move smoothly on their journey to the customer. Both are customer service oriented, it’s just that the IT manager’s customers are within the same company while the logistics manager’s customers are outside client companies. It’s that root level focus on customer satisfaction that drives both roles.
Supply chain forecasting lies at the heart of the balancing act between current supply and future demand. At a fundamental level, it’s the process of combining historical purchasing data with customer buying trends to develop a prediction of what sales flows will look like at a given time in the future. The ability to generate an accurate demand forecast is challenging enough in and of itself, but when you mix in the inherent risks and outside challenges of your end-to-end supply chain—you start to see how easy it can be to get things wrong. Think of it like this, if you’re having a party and invite 12 people, what do you do when each of them unexpectedly brings a friend? Did you get enough cups? How about food? Do you have a contingency plan for the quick delivery of extra supplies? That’s a simplified example, we know, but the fundamentals remain the same—you must have all the data at hand to overcome whatever challenges present themselves and create the most accurate forecast possible.
Where does risk come from? Is it an external force? Something from within? Or is it what happens when you’re not prepared for an unexpected event? In our experience, it’s the combination of all three of these forces, acting on your weekend plans, your work project, or your supply chain. How do you address these risks? Reactively, by waiting for the disruption to occur and then working feverishly to repair the damage and return everything to normal operation? Or proactively, by defining plans and processes so that when a disruption happens, you and your team can follow the established steps to return to normalcy? Again, we would posit that it’s in finding the right balance between these options, allowing you to proactively plan for any contingency you may have to react to, that you’ll find risk management success.
Ever had one of those days where you set out to run three easy errands but end up driving in multiple circles, making 7 unplanned stops and not getting home until well after dinner? Us too, and this is an apt analogy for how some supply chain transportation logistics networks are running these days—with trucks making multiple partial runs, unplanned stops being added to the itinerary at the last minute, and containers sitting on the dock for days. Transportation logistics is chock full of low hanging fruit when it comes to optimizing your network and reducing waste. With the unnecessary movement of goods, half-empty trucks, and trucks sitting around while warehouse staff scramble to find the entire order—this is an area ripe for optimization. We’re going to look at a handful of examples of how you can start working toward the goal of cutting transportation logistics waste from your supply chain.
Remember when you were in school? No matter the class, every term you got a syllabus for each class that laid out when exams, quizzes, and term papers were all due? Then you set about working each syllabus into your own personal calendar, with short-term items like quizzes, mid-range ones like exams, and the long-game term papers for each class. There’s a similar way to look at your production planning schedule, with short-, mid-, and long-range goals and KPIs. Long-range is handled by your annual strategic plan, mid-range duties fall to S&OP, and today we’re going to dig into the short-range process of S&OE. Specifically, we’re looking at how to know if your sales & operations execution process is successful or not.
You’ve all heard the saying, “the left hand doesn’t know what the right hand is doing.” This encapsulates many organizations' approach to sales and operations planning, or S&OP. Too often, companies fail to include all the relevant stakeholders and departments in their S&OP process, leading to major sections of the supply chain being left out. For a process that impacts every aspect of a manufacturing concern, this seems not only short-sighted but also like a potentially catastrophic oversight. On the other hand (no pun intended), when a company’s S&OP process is run by an integrated team that includes representatives from the C-suite, sales & marketing, production, inventory, all the way to logistics—the outcomes can improve drastically.
Remember your last car trip? You spent all that time planning your route to maximize the sights you would see. Then you organized your equipment and snacks and packed the car just right so everything was easily accessible. Can you imagine what would have happened if you went to leave and the car didn’t start? Now your whole itinerary is thrown off, you have to call roadside assistance, change the hotel reservations, not the way to start a great vacation. The analogy to the transportation leg of your supply chain is clear—if you neglect one segment the whole system can come crashing down. In order to optimize your end-to-end supply chain, you need to pay close attention to the transportation network. This is often the place where systems break down and costs can spiral out of control. On the other hand, just as doing preventative maintenance on your car eliminates the possibility of the failure of your vacation, optimizing your transportation network can eliminate cost overruns and other disruptions to your smoothly functioning supply chain. Follow these best practices and you’ll be off to a great start.
Sustainability is more than a buzzword. In a recent study reported in Forbes, a whopping 88% of those polled say they are more likely to support brands that they view as helping them lead more ethical and sustainable lives. What impact does this have on your supply chain? Well, the public is who ultimately buys your product, and they’ve spoken. They want companies to care as much as they do about leaving a better planet for the generations to come. As members of the global community, we need to step up and do what we can to support the goals laid out by nations the world over, to clean up sourcing, pollution, workforce conditions, and more. Just how to go about cleaning up an end-to-end supply chain is a complicated question, so here are some guidelines we hope will help set you on the right path.
Industry 4.0 technology is making its impact felt all along the supply chain as we enter the third decade of the 21st-century. Alongside IoT sensors, GPS trackers, smart pallets, and robotic picking technology, the progress made in supply chain management software has been unstoppable. Whereas once Excel sufficed to layout a strategic plan and track forecasting, today this method is becoming increasingly outdated and outpaced by more collaborative options. These new systems allow for real-time updates and enable real-time collaboration on planning documents by multiple stakeholders at the same time.