In the 1960s, activities and processes that encompass the term “supply chain management” were performed in siloed departments (e.g., demand forecasting, distribution planning, transportation). As these concepts began to converge under a single, holistic program (“supply chain management”), technologies supporting these functions remained function-specific. While some software vendors began offering a suite of supply chain solutions covering a wide array of functions, the tools themselves still required point-integration and never truly achieved a single data model. Today, despite availability of supply chain technology in the market, companies are still struggling to make decisions and respond to issues on each end of the supply chain due to the lack of collaboration and access to real-time, quality data. Through the convergence of supply chain planning and execution, companies can enable and control a more reliable, agile, adaptive and cost-effective supply chain.
Prerequisites to Planning & Execution Convergence
Before tackling the challenge of supply chain planning and execution convergence, companies need to have mature processes in place from both a planning and execution standpoint. For example, a company that is able to accurately forecast product but lacks execution ability may not be able to fulfill customer expectations for on-time delivery. In addition, poor execution abilities result in a company’s inability to respond to supply chain adversity (disruptions in the supply chain such as natural disasters, supplier malfunction, etc.). Likewise, a company that is able to execute through use of a large carrier network, but does not properly plan for capacity, may experience higher transportation costs due to reliance on transportation brokerages (typically a 10-25% markup on negotiated contract rates due to last-minute capacity requests). Both processes need to be mature and capable in order to enable the benefits of supply chain convergence.
Enabling an Integrated Supply Chain Management Process
The goal of converging supply chain planning and execution processes is to ultimately create a streamlined, collaborative and responsive environment where the business has simultaneous visibility, control, and synchronization of planning and execution processes. A truly integrated supply chain organization is able to understand the impact of changes to each side of the business – and help companies make the right decisions accordingly. To enable this level of control, businesses need to have the following in place:
- Reliable, available data – Probably the most critical and foundational component to enabling an integrated supply chain is having the right data to make decisions; this doesn’t just mean having access to the same types of data across planning and execution stakeholders, but having the same data among all parties. Companies need a “single source of truth” when it comes to data in order to make the right decisions.
- Aligned strategy – Although both planning and execution departments may have clear strategic goals that translate into operational decisions, lack of a consolidated vision for the entire supply chain can result in conflicting priorities and responses to supply chain adversity. For example, the planning department may have a target service level goal of 99%, but the transportation department’s goal is to keep all freight in-house (through the use of a private fleet) and is therefore unable to execute on the service level promise. Without a consolidated and balanced strategy, businesses may be tripping over their own aspirations despite the best intentions.
- Integrated technology tools – Although businesses may have a tight-knit organization touting great communication, visibility and aligned strategy across departments, the next step in achieving true end-to-end convergence is finding an enabling technology that transcends these functional areas. As the idea of supply chain convergence becomes more relevant and critical to supply chain control, traditional full-suite solutions are adding more capabilities to their existing platforms including shared, collaborative UI among differing modules, singular data models, and business-logic that notifies other functions when they are impacted. Alternatively, companies can also achieve supply chain convergence through an underlying singular data model with several integrated point solutions, however there needs to be mechanisms in place to support a collaborative environment among all systems.
Where To Start
With the right strategy, processes, and tools in place, companies can truly create a more synchronized and responsive supply chain. However, there may be a large effort from getting a business’ current state environment to the ideal future state. A good starting point for businesses striving to improve the collaboration among these processes is to conduct a current state assessment to understand where the gaps are:
- How mature are our current supply chain processes?
- Where are our current touchpoints that enable collaboration and synchronization between these disparate parties?
- Do our existing tools and technology allow us to make informed, unified decisions?
- Is there a “champion” that acts as a liaison between planning and execution teams?
By answering a few of these questions, companies can understand the people, process, and technology gaps that need to be filled in order to achieve planning and execution convergence. From there, the business can create an actionable roadmap that can be executed to reach this goal.