A breakthrough for supply chain management
Andy Birtwistle is joining Concentra to head up our Supply Chain Practice. Having just picked up the technology category award at the European Supply Chain Excellence Awards for a project he lead over the last 2 years, we are delighted to release the first blog in his series on supply chain analytics.
Good business is built on good decision-making and winning means making more correct judgment calls than the competition. This is true from the CEO to the analyst, and nowhere more so than in supply chain. There is nothing new here. Yet if we all know this, why are businesses struggling to make good supply chain decisions consistently?
To make good decisions on an ongoing basis managers need ‘knowledge’. That is, a deep understanding of the business, business environment and the impact of change on the business. Everyone needs to have the same understanding, so agreement and decisions can be made.
There is a hierarchy of knowledge and common understanding, which I’ve set out below, with some comments:
- Personal Intuition and views: ‘Knowledge’ built up through years of experience. But as people have different experiences, and even different recollections of the same event, the views and opinions of groups of people are rarely aligned.
- Data: Having good data and facts can help to break through differences of opinion and help to align people. But in supply chain the amount of data can be enormous. So it is often not timely, and probably not trusted.
- Information: Converting the mass of data into accessible information is a powerful step forward. Context and meaning is added to the raw data so managers can now receive that same, fact based information. But can this analysis be performed on a clear and timely basis?
- Common Understanding and Knowledge: Knowledge is the ‘objective’ truth about the situation at hand. It is a combination of three areas above; the information has been refined and analyzed, tested and validated. Scenarios evaluated, personal views and questions scrutinized and answered. Actions identified with their impacts clearly set out.
Why don’t we have knowledge?
Currently there is a problem with business modeling tools. They are usually standalone, not integrated into the business transaction systems and tend to model at aggregated levels of data.
The result? Supply Chain Managers are constrained by making decisions based on their own experience, as the business systems and decision support tools are not doing the job to support them. Business politics and personal bias is then also enters into the mix. No wonder the decision making process is not trusted by the wider organization.
To compound the situation, businesses are becoming more complex and so the number of decision variable is increasing. In addition, the pace of business change is accelerating; businesses need to be more agile and responsive, so more decisions need to be made in shorter and shorter time frames.
The question is: Is it valid to run multi-million pound businesses on gut feel? A breakthrough is required, and this has to come from new technology.
A breakthrough in supply chain management: Why technology is revolutionising supply chain decision making
A breakthrough does not mean we have reached the destination. However, a new path has opened up with new technological capabilities. Without the introduction of new technology there would be no improvement, we would be trapped in the current decision making process, reliant on the experience and judgment of individual managers.
So what is new about this technology?
Advanced analytics: The ability to deal with large amounts of data, finding correlations and causations, and gain knowledge and understanding about the supply chain.
The systems are integrated into transaction systems so information is timely, accurate and detailed. Hidden value in the detail can now be revealed as the tools have great data visualization capabilities to make information accessible.
Modelling: Technology now supports scenario planning to help test and compare decisions to ensure robust decision-making. This can also enable debate, collaboration, broader input and a better change management process, leading to collective buy-in to the decisions
Mobile: Instant access across all devices means you can analyze on the go. Often the best insight comes when the subject matter is on your mind. With mobile you can analyze and investigate at that opportune moment.
What does this mean for the business?
Technology is providing the opportunity to drive;
- Guided and fully aligned decisions to the business strategy and objectives
- Consistent decisions with business improvement plans aligned to the strategy
- Trusted and transparent decisions, which are easily understood and can be communicated and explained to the business.
- Repeatable, robust and future proofed decisions, using scenario planning and sensitivity analysis to test decisions.
- A new wave of performance improvement and efficiency, by revealing detail which was not available.
With this decision-making support, managers can set clear direction for the business and the supply chain, and consistently make decisions aligned to the strategy and direction the business is going in. Supply chain policies and guidelines can be evaluated and set, and management by exception can become a reality.
Ultimately, a model of the business, its environment and how it operates needs to be built into a modeling tool and not just in the minds of managers. This will truly move the basis of decision making from the intuitive to the analytical.
Find out more about our new Supply Chain Analytics Hub.