Digital Transformation of Supply Chain Planning

A couple of years back, IBM released a study “Digital operations transform the physical” (capitalization theirs).

Citing client examples the report states,

“Perpetual planning enables more accurate demand and supply knowledge, as well as more accurate production and assembly status that can lower processing and inventory costs . . .

Analytics + real-time signals = perpetual planning to optimize supply chain flows

They are describing the space to which manufacturers, retailers, distributors, and even service providers (like say, health care delivery) need to move rapidly with value network planning.  This is a challenging opportunity for software providers, and the race is on to enable this in a scalable way.  The leading software providers must rapidly achieve the following:

1)      Critical mass by industry

2)      Custody of all the necessary data and flows necessary for informing decision-makers of dynamic, timely updates of relevant information in an immediately comprehensible context

3)      Fast, relevant, predictive and prescriptive insights that leverage up-to-the-minute information

Some solution provider (or perhaps a few, segmented by industry) is going to own the “extended ERP” (ERP+ or EERP to coin a phrase?) data.  Whoever does that will be able to provide constantly flowing intelligent metrics and decision-support (what IBM has called “perpetual planning”) that all companies of size desperately need.  This means having the ability to improve the management of working capital, optimize value network flows, minimize value network risk, plan for strategic capacity and contingency, and, perhaps most importantly, make decisions that are “in the moment”, spans the entire value networkThat is the real prize here and a growing number of solution providers are starting to turn their vision toward that goal.  Many are starting to converge on this space from different directions – some from inside the enterprise and some from the extra-enterprise space.

The remaining limiting factor for software vendors and their customers aspiring to accomplish this end-to-end, up-to-the-moment insight and analysis remains the completeness and cleanliness of data.  In many cases, too much of this data is just wrong, incomplete, spread across disparate systems, or all of the above.  That is both a threat and an opportunity.  It is a threat because speedily providing metrics, even in the most meaningful visual context is worse than useless if the data used to calculate the metrics are wrong.  An opportunity exists because organizations can now focus on completing, correcting and harmonizing the data that is most essential to the metrics and analysis that matter the most.

What are you doing to achieve this capability for competitive advantage? 

I work for AVATA, and in the interest of full disclosure, AVATA is an Oracle partner.  With that caveat, I do believe that Oracle Supply Chain Planning Cloud delivers leading capabilities for perpetually optimizing your value network, while Oracle Platform-as-a-Service (soon to integrate DataScience.com) provides unsurpassed power to wrangle data and innovate at the “edge”.  Both are worth a look.

Thanks for stopping by.  I’ll leave you with this thought of my own:

“Ethical corporate behavior comes from hiring ethical people.  Short of that, no amount of rules or focus on the avoidance of penalties will succeed.”

Have a wonderful weekend!

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The Supply Chain of the Future

Source: Consumer Goods Forum

At last week’s conference of the Council of Supply Chain Management Professionals, John Phillips, Senior Vice President, Customer Supply Chain and Logistics for PepsiCo, presented findings from Building Strategies for the New Decade – Future Value Chain 2020.  The report is definitely worth a look and to whet your appetite and stimulate your thinking, I have summarized the twelve root trends below (supporting stats are sourced in the Report):

Increased Urbanization – By 2050, roughly 70% of the world’s population will live in urban centers.

Aging Population – Consumers 50 and older may soon represent the majority of the voting public.

Increasing Spread of Wealth – The population in low- and middle-income countries with purchasing power parity (PPP) is expected to triple by 2030.

Increased Impact of Consumer Technology Adoption – By 2013, more than 2 billion mobile users globally will have made a purchase via their handsets.

Increase in Consumer Service Demands – Over the next decade, the online channel will grow to 25% to 30% of total retail sales, up from the current 4% to 15%.

Increased Importance of Health and Wellbeing – In the U.S., for example, the “Lifestyles of Health and Sustainability” market is estimated to comprise approximately 19% of the adult population, representing a market of 41 million consumers.

Growing Consumer Concern about Sustainability – According to the Natural Marketing Institute (NMI), the green marketplace in the U.S. is predicted to grow from $420 billion in 2010 to $845 billion by 2015.

Shifting of Economic Power – China will overtake the U.S. to become the world’s largest economy as early as 2017.  And by 2012, India will have overtaken Japan.

Scarcity of Natural Resources – By 2030, the world’s population will reach 8.3 billion, with the demand for food and energy increasing by 50% and for fresh water by 30%.

Increase in Regulatory Pressure – Over the next decade regulatory pressure is expected to increase.

Rapid Adoption of Supply Chain Technology Capabilities – In the coming decade, improved collaboration together with new supply chain/logistics technologies and information transparency will enable a more synchronized value network with greater visibility and traceability.

Impact of Next Generation Information Technologies – Information technology will no longer be just an indispensable support function, but an expansion of the organization’s intelligence, a universal connector, the way to become adaptive.

This list brings up two questions:

1)      Are you seeing any of these trends today?

2)      What are you doing within your value network to capitalize on these trends – that’s right – capitalize on them, not just mitigate their effects.

With all this talk of trends and change, I will leave you with my favorite quote on change.  It was Leo Tolstoy who said, “Everybody thinks of changing humanity, and nobody things of changing himself.

Have a wonderful weekend!

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