For decades the focus has been on planning better, but that isn't good enough anymore, says John Sicard, chief operating officer at Kinaxis. Response to plan variance is what's required now.
For the past 25 years or so, people have concentrated on planning because they want some degree of control over where they are headed. Supply chain optimization technologies are all about learning how to plan better, Sicard says. But with volatility on the rise today, people are realizing that planning won't guarantee them the certainty that they would like. That's so whether volatility is in demand or in unexpected events in the supply chain.
"What organizations need to learn today is how to deal with plan variance better," Sicard says. "We've exhausted all of the technological capabilities, and now it's a question of building a competency and responding to plan variance. I think that's where the biggest change is today."
Establishing this kind of supply chain competency is critical, in Sicard's view. The change in consumers' buying habits illustrates his point. Customers are less loyal than ever, and of course they want what they want when they want it. "You get a demand signal, and you can wish that your demand signals are going to be accurate, but the truth is that they rarely are. So the companies that actually win are the ones that establish a really strong supply chain competency."
Visibility is key to that capability. But just knowing something isn't necessarily enough, Sicard says. The sooner one has information, the sooner one can make course corrections. Quoting a Lean manufacturing premise, he says, "It's kind of like time to detect, time to correct."
It's one thing to capture data inside one's firewall; it's quite another to know what's happening among one's outsourcing partners. Consider how difficult that it is when partners may have no common language and aren't in the same geography.
A world-class supply chain will be equipped to know not only what's happening in real time but be able to project into the future and know - once risk or opportunity has been identified - specifically who needs to be involved in any changes that are to be made.
"That kind of innovation is definitely emerging and is one of the most important ones," Sicard says. "If a system knew what you were responsible for, then the system would know when to call you, when to tap you on the shoulder because you're required for some collaboration. That is, I think, an absolutely key innovation that's driving supply chain excellence."
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