The "next-generation" supply chain is "all about anticipating and planning," says Johar. Companies need to be looking at their supply chains in a holistic manner. Previously, they might have approached it as a collection of discrete processes – plan, source, make and deliver, for example. Today, an immense amount of computing power, coupled with more sophisticated systems, allows for a more integrated approach.
There remains a significant gap between planning and execution, the result of “supply-chain amnesia.” The term refers to decisions that were made in the planning stages, yet forgotten by the time a company proceeds to execution.
“Don’t throw the plan away,” advises Johar. At the same time, companies need to accept that not everything will go as planned. Many have struggled with the idea of devising one fixed planning number for the entire organization, but Johar says multiple numbers are acceptable. They allow for the anticipation of unexpected events. Multiple paths allow a company to be better prepared to handle reality.
Johar details the three rules of forecasting and planning: the forecast is always wrong, the closer one gets to the moment of fulfillment the more accurate it is, and it’s easier to forecast at an aggregate level than at the individual item or product level. Having multiple forecasts allows companies to do a better job of risk management, he says, leading to a more accurate balance of supply and demand in the end.
Social networks and the phenomenon of “consumerization” must also be incorporated into the mix. “Consumers today are always connected,” says Johar. “Social networks allow for opinions to be formed about your products much more quickly than before.” What’s more, “bad news always travels faster than good news.”
Manufacturers and suppliers should be able to react quickly to changes in the public perception of their products, Johar says. The challenge today lies in the ability to sense and respond. “It’s a huge shift,” he says.
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