Having a highly responsive and cost effective supply chain depends on good planning. But creating such plans requires a sound strategy and access to accurate, timely data. Could it be that social media has a role to play? By Nick Allen
Supply chain planning starts at the very top. According to Dawn Dent, associate at consultants, Oliver Wight, “It’s important that an organisation ensures that the supply chain plan is integrated with its supply strategy. So it starts with strategy, being very clear about the strategic business objectives.”
In a large corporate enterprise it is critical that there is an integrated plan for the whole business, and that the plan is cascaded down through the business. However, there can be obstacles. Dent outlines some of the key problems that can be encountered.
“Sometimes the business strategy, or the supply chain strategy, is just not clear enough – it’s not understood. It may be too high-level or it may just not have had enough involvement of, say, the middle management team in the creation of it,” she says.
“Secondly, there are some key issues that can cloud the whole area of supply chain planning – not least data. If people don’t have a solid data foundation, that they maintain, that underpins the planning process, then people can get very confused with the noise – just trying to make sense of what the business data is telling them.
“Another thing is reaching agreement on the supply chain model and some key policies. “Are we clear about how we do things in this business?’
“Then there are key constraints. “How good are we at understanding the constraints within our supply chain?” she says.
Dent emphasises the importance of understanding what customers are really looking for, “Do we ask them?” she says. “Do customers actually express exactly what they are looking for, or do we have to get behind what they are saying, to understand what they are trying to achieve. And then [we should] innovate in the way we develop and plan our supply chain to tap into what the customer is looking for.”
Some of the more mature organisations are starting to segment their supply chain plans to respond to different groups of customers in different markets.
“Once you have the basic controls in your own organisation and you have worked with some of your key suppliers to remove some primary constraints and any disruption that is coming through from the supply base, then it is a good time to start thinking about how to add more value to your customers,” says Dent.
“First of all, by understanding what we can change about our own organisation, to segment and tailor our response, and then when we have got to that level of maturity, reaching downstream and upstream to our customers and suppliers and collaborating to make any changes to the supply chain design and delivery model.”
But further to strategy, what is happening in terms of technology?
Research conducted globally by Redshift for Epicor Software Corporation suggests that 60 per cent of ERP users are less than satisfied with their ERP systems, demanding extra mobility, device freedom and social collaboration for competitive advantage. So in the future, will we see greater use of social collaboration feeding through to our planning processes?
Steve Winder, regional VP for Epicor, says: “A few years ago people were interacting with their systems directly via screens, then it was via Outlook. Now the latest generation of people using these systems are much more familiar with social collaboration, like Twitter.”
He believes managers are looking to be more interactive with their systems on the move, making changes to plans and updating schedules using mobile devices, such as tablets.
But despite this desire by managers to be more in-touch with their supply chain on the move using the latest technology, the use of spread-sheets for planning is still prevalent. Winder says: “We find that a lot of planners and schedulers are still using spread-sheets, so [our planning systems] have the capability of either extracting information from a spread-sheet or moving it the other way.”
He says a lot of people are more comfortable using a spread-sheet to interact with but then letting the system do the processing behind the scenes.
Richard Wilding, professor of supply chain strategy at Cranfield School of Management, sees the emergence of a new influence on supply chain planning, that of Social Media.
Wilding offers the example of BMW, where the automotive manufacturer is taking strides to be proactive on risk management by mapping out suppliers and then using a combination of “geovisualisation” techniques and input from social media to identify potential disruptions.
“They are using ‘geovisualisation’, a technique where all you need is the address of first and second tier suppliers, then they overlay that onto Google Maps and, because a lot of the data that is freely available also has geo co-ordinates attached to it – so earthquakes, storms movements, traffic issues, even say, a missile crisis in Korea – they are able to overlay that onto these maps as well. Then they use ‘e-listening’ too, which is monitoring social feeds, because there may be bloggers and micro-blog sites saying ‘hey, what’s going on here?’ so they filter that in too,” he says.
“This gives them insights so that they can be proactive. Or if a disruption occurs, say an earthquake, they can pick up on it very quickly and understand the impact it will have on their network,” says Wilding.
Another, rather bizarre, example of social media influence over the supply chain offered by Professor Wilding is TweetPee. In Brazil a major nappy brand is trialling a service where a tweet is sent to the parent when baby wets its nappy. He suggests this may create opportunities for the nappy manufacturer to develop demand sensing by tapping into the tweets and then using the data to predict demand.
But he also point out that social media technology, through services such as Yammer, can offer a highly effective way of enabling collaboration across an enterprise, or more specifically, a supply chain. A key difference between Yammer and Twitter is that Yammer is a private social network.
Wilding believes that the immediacy of social media technology applied to the supply chain will enable planning to enter a new phase, creating greater agility. According to an article published in the Financial Times in January: “IT departments adapt to a Facebook generation” – companies adopting social collaboration tools obtain a 15 per cent boost in productivity.
With all the technology available to help create slicker planning processes, most managers still turn to the traditional spread-sheet. Nowhere is this more common than in manufacturing.
However, Mike Straiton, business development manager for Orchestrate planning and scheduling software at Access Group, believes that a spread-sheet approach to planning often fails to fully factor in a critical dimension, and that is “time”. He says the problem is, time can be hidden on a spread-sheet resulting in misleading results and poor decisions being made.
“People doing run-of-the-mill spread-sheets, will add up how many hours that are required on a machine and it [the spread-sheet] will say, “okay you need 35 hours in this department, I’ve got 40 so therefore I’m okay”.
But often they cant actually spend those 35 hours for various reasons and therefore what happens is, either they flood it with work in progress, so they build up a load of stock and incur the cost of that, or they suffer with their on-time delivery,” he says. “It’s that time dimension that is the key component.”
Straiton goes on to explain the core issues around capacity planning. “Its really trying to understand the interactions between all the various process steps in between the machines, and that is particularly important when we have a bottleneck – and everyone has a bottleneck,” he says.
“We have to manage the bottleneck to make sure that we never starve it. So we have to make sure that we have all the materials available, we need to make sure that we have the right people with the right skills available, and we have to make sure that all the predecessor tasks are coming through on time – without flooding the factory with work in progress to keep the bottleneck running.
“But the nasty thing about bottlenecks is that they move around. So as we change the product mix – particularly for component manufacture where we have a different mix of components – we have no idea where the bottleneck will be, because we have never done this particular mix before. Therefore we need to have a window on production, and this is what the finite capacity plan gives us.”
International pharmaceuticals company, Novartis, uses Access’s Orchestrate planning software to gain insights into potential bottlenecks at the company’s vaccine production facilities in Liverpool, helping management to scenario plan, invest and allocate resources to meet future demand.
Mark Hyde, master black belt IQP and operational excellence, Novartis Vaccines & Diagnostics, says: “Everyone can tell you what they want more of – it’s this problem or that problem – but no one can tell you in what order you have to fix them [the problems] to maximise production or deliver the demand.”
Hyde believes making the right decision is all about being evidence, or data, driven. He says, “We can all make choices. But how do you verify that the choice is correct and what do you miss out on by making that choice?”
To fully understand the dynamics of such complex processes sophisticated tools are required that reveal the true nature of the problem and all the possible outcomes.
Hyde says, “It’s the ability to change scenarios within minutes, to work out ‘well what’s the impact of putting in an extra x, y or z, or changing the shift pattern? Where will the next constraint be?’
“The key to me is getting the data, modelling it and validating the model and then acting on that model. There is no point in having the model unless you validate that it functions,” he says.
First published in Supply Chain Standard, November 2014