Personally, I'm a big fan of breaking down silos and the concept of Frictionless Enterprise. A modern business needs a real-time view of data and the ability to act on it without delay. The importance of this in managing the supply chain has been brought into sharp relief in the past year. John Sicard, CEO of supply chain planning vendor Kinaxis, believes this creates a pivotal moment for supply chain professionals. Opening today's Big Ideas in Supply Chain Virtual Summit, he opines:
While many of the disruptions we've experienced over the past couple of decades have motivated some companies to reflect on their supply chain planning governance models, I do believe we are now at a point where necessity is driving the need for reinvention.
There's a growing concern that the planning techniques that got us through the last 30 years won't get us through the next three. Incrementalism isn't going to cut it. There needs to be a breakthrough in thinking.
This is, of course, the sort of thing you expect a vendor to say, but the event also includes plenty of customer testimony along the same lines. Take Will Beery, VP of Global Transformations at storied consumer brand Mars, whose company is prioritizing investment in planning because its traditionally resilient supply chain infrastructure has to adjust to new consumer demands. As he explains:
This resiliency is being challenged because it's not fast enough to adjust. It's not agile enough to adjust to those consumer choices, and it's actually exposing us and it's exposing that resiliency more now than ever before.
Layering concurrent planning over functional silos
Kinaxis has been preaching its message of concurrent planning for some time now, but after the experience of the past year, it resonates more than ever. The problem Sicard identifies is that supply chain planning and governance has been too siloed in discrete functions to cope with rapid change. Bringing the data together using spreadsheets, emails and Powerpoint decks is too slow and cumbersome to allow for efficient sharing of information, with the result that each function takes decisions based on its own goals rather than looking at the outcomes the business as a whole wants to achieve. He elaborates:
This cascaded collection of autonomous boxes, each representing a silo of skills — and usually a silo of technologies — is usually what we see as an existing governance model for supply chain planning today. The fundamental flaw behind this sequential and insular and modular approach is that it creates fog between functions, and nothing moves fast in the fog. You also can't trust what you can't see ... Excel becomes the crutch, the cause for loss of confidence, and often the loss of control ...
This is not a failure of technology. Rather, it's the side effects created by maintaining a flawed and inferior governance model. This is about the difference between a cascaded model and a concurrent one. Technology is secondary.
Where technology plays a role is in joining up these separate silos, layering concurrency across the existing landscape. As Michael Loeffler, VP of Materials Management at iconic helicopter and aerospace manufacturer Bell puts it:
We used to do this in spreadsheets. Now, we essentially have a digital twin of our production and supply chain operations that we can use to model complex scenarios in near real time using live ERP data.
Six 'myths' of supply chain planning
Warming to his theme, Sicard sets out six 'myths' of supply chain planning that should no longer apply in a digitally connected, frictionless world:
- Increasing accuracy is more important than increasing agility — "The belief that if you only could increase the accuracy of your forecast, then the rest would simply fall in place without friction." This is not to disparage math-based modeling, he adds. Accuracy is important, but it cannot stand in for agility. You need competence in both.
- If you optimize every chain link, you've optimized the chain — "Legacy governance models have been focused mostly on measuring and optimizing performance of each function, each chain link autonomously, above performance of the entire chain itself." The problem with this is that functionally focused and siloed plans are often misaligned.
- End-to-end visibility is the path to alignment and agility — seeing what has happened is not enough, he argues, without understanding its impact, which requires cross-functional transparency. "Transparency leads to alignment and trust across supply chain functions," he explains.
- Machine learning and AI is the magic that will cure all that ails you — "Machine learning and AI is just software written by human hands. There's no magic. There's no pixie dust." Although powerful and valuable, it can't solve for a flawed technique, he says.
- Change doesn't have to be heavy-handed or disruptive — While it can be difficult, it's not as scary as some portray it. "Using agile sprints, and leveraging industry best practices has proven to accelerate the journey," he explains.
- My supply chain is really special. I need a unique process to run it — all supply chain challenges have a shared underlying condition, which he defines as: "Experiencing volatile supply and/or demand for things that are constrained." What matters is flexibility to adapt to new supply chain planning requirements as they arise. He sums up: "Build your governance model with clay [not concrete]. Make sure you have massive runtime configurability. You'll never regret it."
According to Sicard, this need not be a long journey — "There's absolutely no need to boil the ocean" — but while it doesn't take long to create a dashboard, aggregating the data to populate it can take a lot longer. Kirk Niehaus, former VP Global Planning & Supply Chain Technology at household brand Clorox reveals that the company spent a year cleansing its data prior to implementing Kinaxis to replace a 1990s-era planning system. That's a prerequisite for joined-up planning. He explains:
When you're not connected, it doesn't matter as much. When you are connected, it matters a lot.
Having completed onboarding its US businesses, it is now retiring "literally hundreds" of spreadsheets, system extracts and PowerPoint slides as users switch to using live dashboards.
The Kinaxis vision is for planning that breaks down supply chain silos of information, action and accountability, extracting information from existing silos and presenting it in real-time dashboards that show the end-to-end context. Sicard sums up:
Imagine every function sitting around the same table seeing the same things, knowing the same things with transparent trust between every party. No more secrets, no more silos. No more accidental surprises. Just one cohesive and aligned team sharing a conversation towards winning, every function playing their part, but perfectly choreographed and harmonized with their teammates.
Kinaxis is one of an emerging breed of vendors — and rated as one of the leaders — that bring transparency to supply chain planning across disparate data sources and systems. One of the most important principles here is the erasing of functional boundaries to focus on the end-to-end outcome. The old siloed approach worked OK when systems were typically standalone, but today's digitally connected infrastructure allows for what we at diginomica call a Frictionless Enterprise approach to data sharing and cross-functional processes. Kinaxis is in tune with that philosophy and has an impressive roster of sophisticated supply chain operators who are demonstrating its impact on their planning and operations. We'll have more of their stories over the next few days from its virtual event.
For more diginomica stories from Big Ideas in Supply Chain Summit 2021 visit our Big Ideas in Supply Chain event hub. The virtual event runs from June 1st-2nd and sessions are available to view on-demand until further notice. This is the event registration link.