What should supply chains do when the plan doesn't match reality? Harry Ault, chief revenue officer with Elementum, urges companies to embrace digitalization.
SCB: What do you see as the main challenge that companies are facing today in their supply chains, when the plan doesn't match reality?
Ault: Supply chains are under so much pressure, which is increasing with the scale of global operations, political uncertainty and external disruptions. There’s a constant influx of challenges that we have to manage. Currently, it’s very manually oriented. “Firefighting” is ubiquitous in supply chains today. The process is tribal and internal, and there’s no source of record that’s aggregating all of those issues. If I were to ask the chief supply chain officer of most companies, "How many issues did you have last quarter?" They would say “a lot.” They wouldn’t have an exact number.
I joined Elementum with a background in managing the server and storage business at Broadcom. We went through a complete supply-chain re-architecture during that engagement, and we had some of the most demanding customers in the common server and storage area. If I was asked by my CEO how many issues I had, I didn’t have a central dashboard to consult. Best case, I maybe had an Excel sheet that captured some historical issues for that given period of time, and I would anecdotally know what the hottest ones were. I had to look back and try to recognize patterns around a specific supplier, carrier or region. I didn't have a platform that aggregated all that information in an incident-management approach, or provided the type of granular data that exists in other functions like IT service management.
SCB: What recommendations can you make to companies as they attempt to embrace this whole concept of supply-chain digitalization?
Ault: A starting point is to get your head around a digital roadmap and, like any such exercise, create priorities. The second thing is getting your core systems in place and modernized. The real challenge comes in how you prioritize where to invest time and resources. It’s important to understand, categorize and learn from the issues and escalations that are happening in the supply chain. This is where incident management can play a role in that prioritization exercise.
You need to determine the appropriate investment or corrective action. Does it lie with the sales organization? Is it about the need for better forecasting? Or is it a single use case that seems to be recurring around one product for which you need to take prescriptive action?
SCB: I'm interested in this chicken-and-egg concept. To what degree is incident management tied to supply chain digitalization? What needs to be in place first? Or do they have to move in lock step?
Ault: There’s a separation between sales and operations planning and execution. On the planning side, we've seen a massive investment in modernization. All sorts of companies have come along, providing ERP [enterprise resource planning] upgrades, and visions of control towers. On the execution side, it’s about how to manage when things go wrong.
SCB: The real world.
Ault: Yes. That side of the business has historically been an underinvested area, largely because of the complexity associated with introducing the people needed to manage issues. With regard to the chicken-and-egg situation, you need to do both — you need a good foundation in your core systems, and also be aware that there are still going to be issues and problems. When you have all these sophisticated systems in the S&OP world, and something goes wrong, if you still try to address it the way you did things 20 years ago, you're not letting your organization progress. Most importantly, you're not introducing agility, and learning from those issues and escalations.
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