Events of the past two years have made people sit up and take notice of the supply chain and its impact on our lives. The limelight has fallen on those responsible for planning and managing supply and demand as they have grappled with unexpected shocks and challenges. What are the implications for how they work both now and in the future? The question of how to deal with supply chain disruption was put to a panel of supply and demand planning practitioners representing more than $50 billion in combined revenues at last week's Kinexions conference. Their answers pinpoint important changes in the practice of supply chain planning and some takeaways for the future.
The most fundamental change has been a switch from working in functional silos to adapt to far more collaboration across the entire supply chain. In his role as Director of Supply Chain Planning and Analytics, Ben-Marvin Egel leads supply and demand planning at leading RV components maker Lippert, a $4.5 billion revenue company with 140 facilities in 13 different countries. There's been a dramatic change from the past, he says:
Two, three years ago, those disruptions were all handled by a silo team. If it was a customer, it was a sales team that handled that. They figured it out working with operations. If it was on the supplier side, it would be our purchasing team or logistics team figuring out how we're going to get around that. It was very segmented into those smaller pieces ...
Now it's shifted to a mindset of, let's try to solve this problem together and come out with the best solution for everybody — and not just have sales go and try to fix a customer's problem, or purchasing fix a purchasing problem. We're now communicating much better and figuring out the best end-to-end solution.
The same trend to greater collaboration has happened at L3Harris, a leading defense contractor with $18 billion in annual revenue and 50,000 employees. It specializes in what is known as C6ISR systems, spanning a wide range of technology-based military capabilities, from command and control to surveillance and reconnaissance. Moving away from Excel spreadsheets to be able to do planning in Kinaxis RapidResponse has helped prioritize what really matters, says Jamie Harshman, who is Project Manager and RapidResponse Product Owner in the Supply Chain COE. He comments:
We've shifted our culture from, 'What is the earliest thing that I need to be working on?' to, 'What is the most impactful thing that I can be working on?' Instead of, for example, [working on] the earliest need date on my list of all the things that I need, we've shifted that to working on, what is the critical-path item completely in the entire BOM?
What that's enabled us to do is maximize the value of our users, enabling them to make, obviously, the most impactful decisions, but it's actually helped drive our culture to be a more collaborative organization, [doing] concurrent planning across the functions. We're able to make our employees enjoy their job more, because they're able to see the marginal improvements of the steps that they're taking to perform their daily activities.
Becoming more adaptable
One disruptive factor that pre-dates the pandemic is the growing pace of technology change. Lizet Tyman is Senior Supply Chain Management Director at Jabil, one of the world's top contract manufacturers, with around $30 billion in revenue and over 120 sites in more than 50 countries. She observes:
In recent years, we have seen product lifecycles shrink dramatically. So we will be releasing new products every six months versus every couple of years. That has an impact on the way you plan and execute.
Jabil had already been using Kinaxis for a couple of years when the pandemic struck, but the new disruption it brought meant that processes suddenly had to become more agile. Prior to the pandemic, its 3,500 users of Kinaxis were running some 3,000 active scenarios. That zoomed up to 5,000 during the pandemic, but also the focus changed. She explains:
Customers were [saying], 'Just tell me what I can build.' On-time delivery went out the window, because you're so constrained, you're just trying to figure out what you can produce. That's a whole different exercise in the tool itself. We had to modify the workbooks.
You have to really rethink your analytics, because the way you've designed it relies on a certain stability that you no longer have.
As stock started to get stuck in transit once the initial lockdown eased, the need to become more adaptable in turn led to greater collaboration. She elaborates:
You start operating in a completely different environment. Your processes no longer serve you, sometimes, so then you really rely on people to figure it out and to collaborate. So that drives the collaboration. I think the takeaway from this crisis is, the importance of the people to really know their business and try to adapt to these challenges.
This means that training and skills development will become much more important, particularly as companies automate the more predictable tasks so that people can focus on responding to less predictable circumstances. But it's also important for that automation to be as adaptable as possible, so that it can be reconfigured when needed. She continues:
You're going to depend on people to help you navigate through these disruptions. So you almost have to raise the skill set of your people as you automate some of the other things with technology ...
Some people had a highly automated process before the pandemic that completely was useless during the pandemic. So you've got to field very smart technology solutions that would allow you to be agile and adaptable. Versus prior to the pandemic, I think we were thinking, 'Everything is going to be stable. I'm just going to automate everything.' I think that's not going to work.
Processes need to be flexible too, rather than being tied to targets and metrics that may no longer be relevant. She adds:
The metrics need to serve the business. We saw that during this disruption. Some of those metrics that we were very hyper-focused on, were no longer the priority, and we had other things to tackle. The metrics I think should be fluid and the business needs to drive how we're going to react to these things.
Looking to the future
Harshman agrees on the importance of selecting the right metrics and argues that they should be forward-looking rather than simply reporting on what's already happened. He says:
You get what you measure. It's critical that your focus, your metrics, are around actionable things that are both today forward, and not so much what happened six months ago. We have a tendency to focus in on, how did we get into this situation? Not, how are we going to get out of it?
The way we've designed metrics in RapidResponse, and some of our other tooling, is, does it drive action? Is it something that actually, you can see this and go do something about it?
The next piece of it is, can you automate it? And does it drive value of the organization? What it comes down to is, are we enabling people to be successful? Or are we using it as a leverage to [say], 'Why did you do this?' That comes into the cultural aspect of the talent and the teams we're talking about, which is, we're all in this together. We've got to work as a team. We've got to be focused on the future, to be successful.
Working closely with colleagues in IT and the business so that they can see the impact of planning is equally important. He comments:
Once you've deployed the software, once you've done some sort of improvement, rope them in, so that they're able to see that value that they've helped add to the organization. That just creates this positive culture of continuous improvement across your teams.
Looking ahead to the future, the panel is bracing for more challenges ahead. Tyman says:
The world is not going to get less disrupted, it's only going to get more. We expect more disruptions around climate change. The pandemic is not over, certain parts of the world continue to battle through it. That's driving relocation of companies all around the world — getting out of China, getting out of other locations and trying to build some resiliency.
But I will say that one of the biggest disruptions that we've all experienced also on a personal level is technology and digital technologies. There's a lot of technology out there, and the companies that are leveraging it will succeed. But it is very hard to pick what you're going to invest in.
One challenge in the midst of this will be retaining and attracting the right people. With the increased focus on supply chain as a result of recent events, there's something of a talent war going on for those with relevant skills. At Lippert there's a strong culture of skills and leadership development. Egel says it's important to engage with people's aspirations:
The more that we can align people with their passions, it makes training pretty easy, because they want to learn it, they're really engaged with that process ...
We're giving people a roadmap to future growth within our organization. I think the more that you can show them that, with specific training plans tied to that, the more engaged they're going to be with that training. It doesn't feel like forced training, like, 'Hey, I need you to learn this, because I just need you to learn it,' it's, 'Hey, here's your growth path, and here's the things that are going to help you grow in that area.'
A very consistent message there coming from three panelists each from very different manufacturing organizations. To stay competitive in today's highly connected, digitally enabled world, enterprises need to become more adaptable, drive end-to-end collaboration, and nurture talent. That message is right in line with diginomica's concept of Frictionless Enterprise and rings true for all functions across the business. But it's become of critical importance in supply chain management at a time when the apparent certainties of the past have been found wanting and organizations need to reshape their operations to adapt to the new reality.
For more diginomica stories from Kinexions22 visit our Kinexions22 event hub. The event was live in San Diego from May 9-11th 2022 and many sessions, including the above, are available to view on-demand until the end of June. Click here to register and view now.