As the senseless violence in Charleston reminded us, as did similar episodes in Baltimore, Ferguson, and Newtown, we are far from living up to our nation’s ideal of “One nation, under God.” The question is whether we will once again wring our hands, say our homilies, and perhaps remove a flag, and then go back to business as usual, or whether we are able to really come together to create needed change. As Rodney King said in Los Angeles almost 25 years ago, “Can’t we all just get along?”
Guess what? We are facing a similar need for change and ‘getting along’ in our supply chains. No, I am not being crass by comparing the senseless loss of life to problems in supply chain operations. They do, however, share the same underlying cause—people’s unwillingness to change and desire to hang on to old stereotypes even as the facts prove them wrong.
The fact is, supply chains have changed. They are fundamentally different than they were just a few short years ago. Whether you are a retailer, consumer goods company, 3PL or industrial products manufacturer, the consumer is the new boss, and omni-channel is the new way of life. The old way of life, with manufacturers ‘pushing’ products downstream to distributors and retailers is going the way of horse-drawn carriages and buggy whips. Forecasts based on what you pushed out of the distribution center last month are history. Channels no longer exist because the new boss wants a seamless shopping experience regardless of what touchpoint and device they are using at the moment, and they expect your products to be available whenever and wherever they want them.
The problem is that our supply chains were built for the old way of life, and so was most of our supply chain technology. They aren’t very good at adapting to the new way of life, but even so, it’s really the people who are resisting change most. If you think the divisiveness in politics today is preventing anything meaningful from getting done, think about how corporate politics often work at cross-purposes with misaligned goals and incentives to prevent seamless shopping experiences—or profitability. We all just need to get along—or in supply chain speak—collaborate. And we need our systems to collaborate too.
Why? Because that is the only way you can make a profit. We know this because a recent global survey of CEOs conducted by PwC for JDA Software found that only 16 percent of CEOs said they could fulfill omni-channel demand profitably.[i] Put another way, less than one in six companies say they are making a profit under the new omni-channel way of life. Ergo, we must change.
Tear Down This Wall
As President Reagan said at the Brandenburg Gate separating East Berlin from West Berlin, “Mr. Gorbachev, open this gate…tear down this wall,” so too must we open the information gates and tear down the silo walls within our companies and across our supply chain networks. Companies and networks must collaborate on visibility, information flow, planning and execution even though resistance to change and fear based on the old stereotype that sharing information with other departments or trading partners is too risky. Today, the real risk is not sharing information because you’ll miss the opportunity to reduce costs and improve service levels by collaborating up and down the supply chain.
Convergence and Collaboration
Tearing down the supply chain walls takes slightly different forms internally versus externally, but they both deal with people and systems ‘just getting along.’ Internally, getting along is referred to as convergence—the practice of supply chain planning and supply chain execution working as one to ensure the right inventory is available at the right time and place to fulfill orders at the optimal balance of cost and service levels. This requires planning systems to be fully aware of constraints that will exist in the execution of those plans—information only the execution systems can provide. Conversely, when exceptions and disruptions occur during execution, planning systems must be immediately informed so revised plans can be created to re-optimize execution.
Externally, getting along entails sharing information upstream and downstream in the supply chain so that optimal decisions can be made to streamline execution, reduce inventory levels and improve service, as well as to quickly and efficiently recalibrate when disruptions occur. This requires systems to share information on a near-real-time basis—if management will let them! This collaboration has been stymied by fears in the past, but is starting to take place simply because it is critical to compete in the omni-channel world.
Finally, the most straight-forward way to facilitate convergence and collaboration is through the cloud. The cloud makes information sharing faster and easier while providing security safeguards that alleviate many of the fears of sharing information. With convergence, collaboration and cloud we all can just get along and succeed in the new omni-channel way of life.
[i] Global Retail & Consumer Goods CEO Survey: The Omni-Channel Fulfillment Imperative, PwC and JDA Software, April 2015
In his role as Director, Thought Leadership at JDA Software, Jim LeTart is responsible for developing thought leading content to support JDA’s Plan to Deliver suite of integrated retail and supply chain plan and execution solutions. Jim came to JDA in 2013 through its merger with RedPrairie, where he spent over 13 years in various marketing leadership roles. Jim has over 35 years of sales and marketing experience in the computer technology industry, and is a frequent speaker, writer and blogger on how technology can improve business processes and outcomes. Jim has an MBA from the University of Michigan and a BSME from Marquette University.
After doing maybe 100+ startup operations, I couldn’t agree with you more. Very frustrating but I see a couple of elements that make change harder to implement. First is the lack of articulation of the vision and how his project fits into our long term strategy. Second is our compensation systems typically do not reward collaboration, they reward OUR performance.