Wouldn’t it be nice if supply chains could run themselves? Well, between automated scheduling, production machinery, and even logistics planning, you can achieve a fair approximation using the right tools. Even so, there are plenty of places along the value chain where things can go sideways. The headaches may be less frequent, but they are no less real. No matter how seemingly care-free your supply chain, there are aspects you’ll want to closely monitor to ensure that smooth running continues. Crucial to each of these is the visibility into your processes that comes with Industry 4.0 technology and a solid supply chain management solution.
They say that those who don’t learn from history are doomed to repeat it—but in point of fact, relying too heavily on historical knowledge can often be just as bad. History tells us a particular new innovation will never work, or a new strategy will never succeed, and as a result we’re often blindsided when something truly innovative or unusual comes around. This is particularly true in the logistics industry, where changes in the global economy and the nature of supply chain technology are causing an exponential increase in the number of paths that any given cargo might take from producer to consumer.
Have you ever headed out for a family picnic, only to arrive and find your favorite meadow has been dug up to make way for a new housing development? Or left the house for a walk, and had it start pouring rain once you were ½ mile away? Did you have a contingency plan for that picnic, a backup location already selected? Were you carrying a raincoat in your backpack on that walk? These are examples of real-time planning in the regular world, but the concept transfers directly into the manufacturing realm in the form of being able to adjust and pivot as necessary. This real-time planning ability relies on more accurate demand forecasts, better visibility into the production line, and greater reporting functionality. In order for your company’s APS (advanced planning and scheduling) to be effective, let alone real-time, there are some contingencies that you’ll need to take into account.
Is your ERP working for you? Or against you? Sometimes businesses can get so entrenched in “how we’ve always done things” that they don’t see how the old ways are actually hindering their forward progress. And when it comes to a smoothly functioning sales & operations planning (S&OP) process, this hinderance can become fatal. S&OP is a constantly evolving, cross-departmental, high-level set of processes that are deeply entwined in and around multiple business units. It focuses on developing a future outlook, using historical data as its source material. Being locked into an archaic ERP system can throw up a brick wall in front of that future vision. To be sure we’re all on the same page as we get started, here are brief summaries of the major terms we’re working with today, ERP and S&OP.
As of a 2017 survey, just 6% of companies felt they had reached supply chain visibility. Elsewhere, nearly a fifth of companies listed visibility as their number one operational challenge (it ranks the third highest priority overall), but more than 60% admitted that they didn’t use any technology for monitoring their supply chains. By the same token, more than 90% of businesses have listed digital transformation as a huge driving force in the evolution of the modern supply chain, but fewer than half of those businesses have an actual plan in place for managing that evolution.
Is your boss starting to ask uncomfortable questions? Like what your average order cycle time is? Or what the latest shrinkage numbers are? Sounds like it’s time to line up your metrics and develop a solid plan for tracking and reporting to management.
Depending on your background, when you were a child your parents might have told you that your Christmas presents came from Santa Claus. From a supply chain planning perspective, this would have made things difficult for you, since your only source of information was fairly opaque, and you had little insight into the distribution mechanisms for toys and gifts. As a result, you were stuck jumping through whatever holiday hoops were presented to you, whether that was mailing a letter to St. Nick or putting out milk and cookies the night before. Once you realized the truth, however, all bets were off. At that point, you knew that the things that wound up under the tree just came from the toy store, and if you were feeling enterprising you could change your supplier relations to arrive at more favorable terms.
As the era of Industry 4.0 approaches in earnest, production managers will soon have access to more data and information than ever before. Internet of things (IoT) sensors and RFID chips throughout the production chain will offer real-time monitoring for your planned production programs, just as robust software integration will help you to better understand what’s happening at various other touchpoints on the supply chain. This is exciting, but it can also be a bit daunting. After all, what exactly are you supposed to do with all of that data?
Has your supply chain management situation changed recently? We’d wager it has. With the introduction of Industry 4.0 technologies to the value chain over the last few years, things have been changing at an ever-increasing pace. Where once there were information silos, spreadsheets, and clipboards, now there are SCMS solutions, AI-powered advanced analytics, and IoT sensors. Rather than being the purview of autonomous managers acting in their own departments’ best interests, there are CSOs (chief supply chain officers) acting in the best interest of the whole company. And along with that shift has come a renewed understanding that the company’s best interest is generally synonymous with the customer’s.
It’s a story one hears surprisingly frequently: a mid-sized enterprise company adopts a new mega-ERP solution, and they’re almost immediately mired in constant disruptions. Of course, changing out your entire IT infrastructure all at once (instead of piecemeal) is bound to cause some short-term disruption, especially if the process is long overdue—but that doesn’t account for all of the late or missed orders, the expensive IT support requirements, and other issues that we see in these scenarios.
Topics: Postmodern ERP