Kinaxis Continues Its SCM30 Series
August 23, 2012
In a post entitled Thirty Years of Supply Chain Management, I noted that Kinaxis bloggers are writing a series of posts looking back over the past thirty years of supply chain management. Trevor Miles, John Westerveld, and Carol McIntosh have continued the series by each contributing their thoughts on how supply chain management has evolved over the past three decades. Miles discusses what he considers to be the three greatest advancements in supply chain management [“SCM30: What Are the 3 Greatest Advancements in Supply Chain Management?“, The 21st Century Supply Chain, 6 April 2012]; Westerveld discusses how technology has impacted the field [“SCM30: How Has Technology Changed Supply Chain Management Today?” The 21st Century Supply Chain, 4 May 2012]; and, McIntosh discusses what she sees as supply chain management’s top ten worries [“SCM30: Top 10 Supply Chain Worries,” The 21st Century Supply Chain, 8 June 2012]. Miles writes:
“When Lauren Bossers asked me to write about the three greatest advancement in Supply Chain Management over the past 30 years, I was ‘over the moon.’ But in truth, I turn quickly into ‘a deer in the headlights.’ Paralyzed more by choice than by fear in this case. But I guess I am really paralyzed by the fear of making the wrong choice given the wide range of choice. How does one choose just three from a long list, and aren’t many of them interlinked? … Also, it is just easier to identify the ones that have failed, because that is a fact. But to choose the three greatest advancements is to predict longevity too, not just past impact. And we all know how well we can forecast demand, don’t we? So in the end, I decided to make this personal—to be less analytical—which is tough for me. So let me take a crack at defining the three greatest advancements of supply chain management, and all of you armchair experts out there are welcome to agree, disagree, or just comment.”
Miles admits that even becoming “personal” didn’t make the selection of the three top supply chain advancements much easier. His first great advancement might surprise some people. He writes that simply defining the term was a huge step forward. He explains:
“The whole point of having a name or term to describe something is that now people can study it, debate it, enhance it. Without the term there is no cohesion and therefore little progress. … A term is very important shorthand for communicating ideas and concepts.”
The second great advancement that Miles identifies is the “technology to support the process.” He notes that in the mid-1990s companies like “Manugistics, Think Systems, Aspen Tech, Numetrics, and a host of others, which have now come and gone … tried to add science to how companies were purchasing, manufacturing, and distributing product in order to satisfy customer demand.” He continues:
“Of course, before this there had been a lot of work done by Jay Forrester and others, and there was quite a lot of academic study of things like operations research, which were the basis of much of the software that was developed to address the needs of supply chain management. But this was the first time technology had been developed specifically to satisfy the emerging practice of supply chain management. … There are two major drawbacks, which we are still experiencing today, that resulted from this period. The first is that the software products were developed to satisfy specific supply chain management sub-processes, such as demand planning/forecasting in isolation and with no thought being given to how the different processes are interconnected. The second is that it was assumed that an optimization algorithm could arrive at a better answer than a human being, ignoring the fact that the model itself is an approximation and is based upon assumptions that usually have a fairly short half-life. Nevertheless, we are considerably further along in the development of supply chain management as a profession than if these companies had not emerged to fill this gap.”
Miles’ final “great advancement” is the fact that supply chain management professionals have finally made their way into the C-suite. He writes:
“Until recently supply chain management, if such a department even existed, would report into all sorts of functions, often procurement or manufacturing, reflecting again the emphasis on the term supply. Or even into IT, reflecting the perception that supply chain management was mostly technology rather than process. A couple of years ago, Gartner began using the term ‘Chief Supply Chain Officer’ to describe the emergence of the second generation of supply chain practitioners in the executive ranks of organization. … The most obvious example of the emergence of this operations-savvy senior executive is Tim Cook as the CEO of Apple. … And what better exemplar can we get that a geeky function such as supply chain has produced the CEO of the hippest company in the world.”
As noted in the introduction, John Westerveld focused his comments on Miles’ second great advancement — supply chain management technology. He paraphrases comments from a number of supply chain analysts that discuss the impact that they see that technology has had on the supply chain management field. He then adds his own experiences with technological advances. He then concludes:
“The biggest change that I think can be attributed directly to technology is the velocity of business and the incredible rate of change we are seeing around us; new products come and go in the blink of an eye. If you bought an Android phone last month, it’s already out of date. The iPad has gone from not existing a few years ago to selling millions per quarter. Technology plays multiple roles in making this happen. In one role, technology itself drives the demand for new products. Technology websites, blogs, podcasts and YouTube all help drive up demand (or drive down demand in some cases) for new products. In another role, technology enables companies to design, source, manufacture and distribute these incredibly complex devices at a blistering pace. What technological changes are enabling manufacturers to keep up with this insane pace of innovation and demand change? The obvious technology enabler would have to be the internet and how the internet enables communication and collaboration. … Collaboration is also enhanced via the internet. Video conferencing, instant messaging, sharing pictures over mobile devices all means that ideas and concepts can be shared around the world without the need to travel. … Looking to the near future, the next change to watch in terms of supply chain management is mobile. The day is coming when planners will be able to monitor supply chain performance and manage day-to-day supply chain issues from their smartphone. We are already seeing supply chain apps that enable some supply chain interaction through devices like the iPad. These applications aren’t perfect but they are clearly showing the path ahead. It’s a great time to be in supply chain management!”
Thanks to te
chnology and other advances in the field of supply chain management, Carol McIntosh notes that there are a number of things that supply chain professionals no longer have to worry about. But technology, she writes, has not solved all of the challenges or eliminated all of the worries. She provides a top ten list of “what you DO worry about today. They are:
- How can you support your organization with visibility and planning intelligence across your global footprint?
- How do you maintain some level of control of your distributed and outsourced supply chain?
- What more can you do to reduce latency across processes and increase your responsiveness?
- How can you know sooner and capitalize on market events that drive increased market share penetration?
- How are you going to differentiate yourself from your competition knowing that brand loyalty is a thing of the past?
- How do you improve customer service and reduce costs at the same time?
- How do you take processes like S&OP and modernize them to be more integrated and collaborative?
- How do you involve your partners in a more collaborative and win/win business model?
- How do you move from a silo approach to supply chain planning to a integrated end to end supply chain approach?
- Do you have the right skills in your supply chain organization to effectively execute to a new vision?
Although she doesn’t suggest answers to those worries, good answers always begin with good questions. A number of the “worries” that McIntosh listed are being worked on by companies like mine and hers. That’s why she concludes, “Your worry list is rather daunting, but nothing is better than a good challenge. With the right people, processes and tools, organizations are extremely successful in meeting the challenges of the 21st Century Supply Chain.” The technologies required to meet some of those challenges are only now being developed; but, they are on the horizon. That’s why I agree with Westerveld, “It’s a great time to be in supply chain management!”