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Demand & Supply Chain Management Evolution




16 Oct 2020
The need for rapid transformation raises the bar for supply chain

Patrick Van Hull
Kinaxis

During his Big Ideas in Supply Chain webinar, former supply chain leader and now consultant, Dirk Lembregts described the immediate response to Covid-19 as “five years worth of change [that] happened in five weeks.”

Nearly everywhere there were stories of people and organizations collaborating to make things work while also planning for future solutions. For example, to help facilitate the restarting of its season, the National Basketball Association (NBA) volunteered to support and partly fund the Yale School of Public Health’s development of SalivaDirect, a faster and less invasive testing method. The partnership was so successful that within two months of its announcement, the US Food and Drug Administration granted SalivaDirect an “emergency use authorization.”

This is just one example of what Lembregts suggests we will see more of in the future: “more intense collaboration, with more value chain partners.” Along with that will come a need for that collaboration to occur more frequently and more quickly with collaborators having the ability to handle greater volumes of data. It’s a convergence of thinking and acting that links digital supply chain transformation to the creation of digital supply chain capabilities.

 

Forecasting, planning, and execution come together

In the past there was a linear flow to supply chain planning: Forecasting predicted customer needs, planning extended those predictions to upstream requirements and resource allocations, and execution allocated supply against real orders to put those plans into action. Over time, incremental improvements to these sequential processes were realized, however, the extreme nature of disruption has since required more urgent and impactful transformation. As such, technology and capability are merging as forecasting, planning and execution become a single concurrent process which drives benefits for the entire business.

When Constellation Brands slowed production and consumer demand remained strong, it quickly decided to prioritize production of top-selling SKUs to ensure consumers could still find its brands on store shelves. By simultaneously updating its forecasts and plans, it was able to evaluate which supply chain options would give the entire company the best chance for success then take action.

Similarly, at life sciences leader Novartis, the business was counting on the supply chain to not only maintain supply continuity, but also increase capacity despite reductions in staff. As described in this article from Fierce Pharma, the company relied on “robust inventory levels and ‘dual supply points’ that allowed Novartis the flexibility to take a hit to operations and keep moving ahead.” The Novartis supply chain’s open communication with suppliers and end-to-end visibility is also credited for the company’s success in concurrently planning and acting, with Steffen Lang, Ph.D., global head at Novartis Technical Operations stating, “The more digital we are going to be, the less and less vulnerable we will be.”

 

Empowering process-led and technology-enabled transformations

Expectations will continue to grow as the rest of the business sees how supply chain can deliver value, in addition to goods and services. To continue this process-led, technology-enabled transformation, Lembregts suggests that supply chains follow the sequence of asking:

  • What are the business objectives?
  • What process changes are needed to meet these objectives?
  • What technologies are required to enable these changes?

Even then, Lembregts stresses that technology should be expected to act as the “driving assistant” while people fill the critical role of “the guardian of trust in supply chains.” As such, a key success factor will be the ability of supply chain professionals to go beyond their current functional expertise, especially in the skills and competencies of:

  • Business acumen - “If you are responsible for developing and reconfiguring supply chain designs in lockstep with the other company strategies, then it's very important to understand the total breadth of these other company strategies.”
  • Digital literacy - “Not every supply chain professional needs to be a specialist in, for example, machine learning, but they need to understand the functional principles of it, how it works, what it can do and — equally important — what it cannot do. And in this is the need to fill the translator role between business and technology.”

In closing, Lembregts reiterated that this is a moment of truth for supply chain: “We have a window of opportunity to make a decisive step up to this role of value chain orchestration. If we're able to do that as a function of a supply chain, it will make a very important contribution towards shaping a better new normal.”

 

 

 

 

 









 
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