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At first there was Big Data, a process of collecting, organizing and analyzing large sets of data – to discover patterns and determine the most relevant information to the supply chain and future business decisions. Big Data analysis has had a definitive impact on how we look at supply chains. One of its greatest values is that it covers infinitely more ground than humans possibly can. Big Data can sense better what is happening all around the world, at much greater breadth and depth. It’s limited, however, to providing a picture based on reflections of the past.
The supply chain industry has arrived at a point where we can gather, streamline, analyze and strategize with the use of Big Data. How, though, do we optimize, efficiently, in real time? When we begin applying Big Data in an automated, real-time way using Big Calculations, we’re elevating the efficiency of the supply chain to its highest potential.
In today’s supply chain, human beings still have ultimate responsibility for making decisions. The reality is that they are still responding relatively slowly. For example, a main resource goes offline in a factory; an urgent order comes in; the quality of a product comes out below par and needs to be remanufactured. Employees gather as much information as possible regarding the unexpected change, apply business knowledge rules developed to address similar situations, and make informed decisions about how to best continue given the problem.
Taking it further: Big Calculations mediate these disruptions by continuously reading events and re-calibrating in real time. Essentially, Big Calculations works by applying sophisticated optimization algorithms that interpret a company’s stored data, business intelligence applications and strategic planning decisions, to continuously update the best “next steps” in the supply chain.
I’m a puzzle solver at heart.
What I find most fascinating about Big Calculations is that not only have we found new ways to solve complex supply chain puzzles, we are actually doing so with a dynamic puzzle: one with constantly moving pieces.
Consider the transportation industry. Five to 10 years ago, truckers would go out onto the road with a plan for the day. Mishaps would inevitably occur, and couldn’t be addressed during the day in real time. Now, trucker networks are monitored in real time. Drivers can get instructions for next steps a moment at a time. The challenge is to be able to have a clear view of the entire supply chain picture. What if driver instructions for taking an alternate route will impact refueling efficiency later down the line?
A solution that “seemed like a good idea at the time” can come back to haunt the supply chain later if the big picture isn’t fully accessible. Big Calculations has the capacity to take all of the following factors into account at the same time, in order to optimize the outcome:
• Where are all the drivers?
• What are the most efficient routes right now (i.e., where is there traffic congestion, accidents, open routes, bad weather, etc.)?
• What data is coming in “from the road”?
• Which applied algorithms will produce the best strategy in real time?
• What is the best strategy to be employed in the field that will maintain optimal functioning for that specific time period?
Obviously, Big Calculations doesn’t operate in a vacuum.
A company must take foundational steps in order to be ready to apply Big Calculations to its supply chain. Quintiq has identified Five Steps to help companies make calculated decisions which ultimately deliver Big Value.
1) Select strategic goals with highest priority. Do you want to go from next-day to same-day delivery, for instance?
2) Define planning decisions. Many people don’t realize that they’re already making decisions and choosing from an infinite number of possibilities every day. Defining decisions is critical.
3) Model your supply chain. Figure out which decisions are important, identify and define them, and then do your model. It must be done in this order! You can only model your supply chain in the context of the planning decisions that you need to make. For example, if you’re only going to decide about investment in a factory or where to place strategic stock, you don’t necessarily need to know exactly how long it takes to run something on a particular production line. However, if you need to make a sequencing decision on the production line, you definitely need to know all about the details of what can be sequenced and why.
4) Measure planning key performance indicators. Planning KPIs are different from overall KPIs. If you want to have lower inventory over time, you don’t want to just be able to find out six months later whether you’ve achieved it. Measuring planning KPIs allows you to track what is happening on a daily basis, so that you can measure what will occur in future, and you’ll know what’s going to occur before it actually happens in your supply chain.
5) Optimize real-time planning. Use Big Calculations to bring your supply chain to the next level of speed and efficiency.
Big Calculations essentially captures the planning decisions that a company is making and continuously re-applies next steps. Human beings are subsequently empowered to respond to highest-level exceptions, make clear decisions, and take the best and most strategic action – in real time, on a continuous basis.
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