I’ve been researching and writing about supply chain management for 20 years. I’ve seen a number of supply chain “revolutions”.
In the first revolution, the concept of supply chain, as opposed to logistics, was put forth. Constraint based optimization tools for the extended supply chain were developed to support the new philosophy. As this was going on, Lean and Six Sigma approaches to improving capabilities, not just at the factory level, but in other internal departments, as well as across the supplier and 3PL base, were gaining in strength.
It took a while, but it was recognized technology was not enough. The key process in SCM is the sales and operations planning (S&OP) process that balances supply with demand intelligently. S&OP itself is going through a second rev and we now talk about integrated business planning (IBP), a form of S&OP that is more closely aligned with finance. A related “revolution” that improves the demand half of S&OP is based on the concept of demand driven supply chains; this is the idea that it is important to not just create a forecast based on historical shipments, but having real visibility to demand at the point of sale to improve demand management.
In recent years, the topic of supply chain risk management has emerged and new processes and ideas have begun to be codified and turned into a distinct discipline. An emerging topic is supply chain sustainability; and indeed in many corporate social responsibility reports the topics of both supply chain risk management and sustainability are addressed.
Even as work remains to be done in the previous revolutions, I think I’m beginning to see the emergence of a new revolution based on a new generation of supply chain control towers. Here is what I think will be included in this new approach.
- Quick corrective actions designed to rebalance supply and demand as profitably and quickly as is possible. These corrective actions will be based on prebuilt playbooks, supply and demand simulation, and the use of social network collaboration.
- The technologies needed to support this include:
- Granular track and trace based upon a many-to-many, public cloud architecture that is built with common network master data. Further, far more types of sensor data will be used to provide visibility and there will be less reliance on EDI.
- A new generation of more powerful supply chain applications.
- New methods of handling Big Data, real time analytics, and better technologies for visualizing data.
Today, I am aware of only a few very large companies with advanced supply chain capabilities moving down the road I’ve described. Further, at present, you can’t go to one supplier and get all the pieces you need to build the kind of advanced control tower I have described, although one major supplier shares this vision. But it is my hypothesis, that this is the next revolution in supply chain management.