“Who says supply chain cannot be a hotbed of creativity?” Says speaker Josh Linkner, jazz guitarist and founder of digital promotions company ePrize (now HelloWorld) and Detroit Venture Partners. Linkner’s guest keynote was on the second day of Gartner’s first annual Supply Chain Planning Summit, held at Denver’s sparkling new Gaylord Resort Nov 4-5 for the supply chain planner.
Josh peppered his presentation with often humorous out-of-the-box examples of creativity from the supply chain world. Ever face the dilemma of having to buy green under-ripe bananas, the kind that sticks to your tongue, or ripe fruit that will be overripe tomorrow? Korean produce company Bana Valley solved this problem by fresh packing several bananas of varying degrees of ripeness together – enjoying a nice margin bump from their cleverness.
Josh mentioned the time when DHL punked its competitors by videoing their delivery staff dragging cumbersome oversized packages with “DHL Is Faster” on the front to inconvenient drop points, to drive a viral campaign. And Dutch bike company VanMoof greatly reduced their damage rates by brilliantly packing their bikes to resemble big screen TV boxes.
Everyone can apply creativity within their roles and their teams, regardless of what they do in the company; you need not have to be a designer or content creator, Josh maintained. And creativity applied to business problems across the organization – even in the supply chain departments – in fact, will be a market differentiator moving forward.
The Outside-In Mindset for the Modern Supply Chain Planner
Marko Pukkila kicked off the Summit on Monday morning with a keynote emphasizing the importance for planners to have an outside-in mindset. Over 80% of companies now have a Sales and Operations Planning program running. Now those that use the petabytes of data available to proactively enable business goals rather than to act reactively in response to forecasts will set themselves apart.
“The thought behind an outside-in mindset is to be aware of what is happening around you – be it a business objective or an upcoming recession – and use the planning function proactively to set up internal processes that are optimized for what will happen in the future” according to Pukkila.
The Supply Chain Planner Will Never Surrender
Gartner analyst Mike Griswold compared S&OP with wartime prime minister Winston Churchill, and framed his analogy around three of Sir Winston’s quotes. At QAD DynaSys one of our favorites is “It is always wise to look ahead, but difficult to look further than you can see.” The farther you forecast into the future, the less reliable your forecast. For one thing, you will likely have less useful data at hand. For another, the longer the time frame the higher probability of unforeseeable events. An effective scenario planning capability is imperative.
“However beautiful the strategy, you should occasionally look at the results.” The forecast does not end with the strategy presentation and implementation. You must keep informing it with data as you go through implementation, and as your strategy unfolds and evolves. No forecast-driven business plan runs like clockwork from start to finish; planners should not hold their forecasts so dear as to make them immutable. The strategy of Churchill and the Allies underwent many changes, based on actual battlefield results, before they completely liberated Europe.
Gartner’s Hype Cycle for Supply Chain Planning
Gartner’s Sr. Director of Analysts William McNeill adapted a unique and proprietary piece of business content, Gartner’s own Hype Cycle, to supply chain planning technology. Essentially within any tech-driven space there are concepts, platforms and practices being talked about and adopted at different rates. Bleeding edge ideas start on the left end of this Malibu beach break-like wave, get promoted by the media both paid and social through a peak of maximum interest, then suffer a “trough of disillusionment” as early adopters find that they’re not panaceas. Ultimately those that stand the test of time reach a “plateau of productivity”, as companies learn to capitalize on their advantages, discover and adopt best practices, and communicate their success stories.
There were nearly forty examples of supply chain planning technologies and strategies on our Hype Cycle. For example, on the left side just out of the starting gate were items like automated planning and digital twins, intriguing but with as yet few full adopters or complete sets of best practices. In the trough of disillusionment, McNeill suggested machine learning may be moving at this point. It’s loaded with promise and will have its day, and some users are beginning to gain useful experience and value, but many are impatient for measurable returns to the point of wondering if machine learning could be a little overrated.
On the plateau of productivity are such technologies as S&OP itself, a primary theme of the conference, and the Supply Chain Planning System of Record. These are proven, accepted, vetted systems and concepts that companies are using with great success in many industries (and many companies should not be without). McNeill concluded his presentation by emphasizing Gartner’s view that companies should make technology investments and vendor selection based only on their own particular needs, not on what the industry or media seems to be hyping at the moment.
Cisco’s Integrated Fulfillment Workbench
Cisco and Gartner discussed how the diverse technology giant put together its own Integrated Fulfillment Workbench. Cisco runs multiple IBP systems covering 38,000+ SKUs within a dynamic, fast development environment. Its Workbench ties together the data from these sources for ease of use and access by their planning teams.
To gain buy-in across its teams and promote understanding of the system’s goals, boundaries and capabilities, Cisco put forth an IBP Charter covering its planning teams, simplifying a complex process down to five feature sets for its planners. The company’s Director of Strategy and Business transformation Arif Rehman maintained that using such a document as both a guide and a mission statement made a big difference in the IFW’s successful launch and implementation.
Should Supply Chain Planners Adopt Artificial Intelligence?
Towards the finish Gartner VP Analyst Noha Tohamy made some astute points about the promise and adoption of AI technologies in supply chain planning. She started out by making the analogy between AI applications in the space and maps for driving, classifying technology evolution across three levels: Traditional, Assisted, and Autonomous.
- Traditional: Rand McNally paper maps for driving. Excel spreadsheets for supply chain planning. Both were commercially available in 1985.
- Assisted: GPS in your car and mobile phone. Cloud-based demand and supply chain planning, S&OP, and IBP solutions. Both are proven, available, and the go-to solutions for the foreseeable future for their respective uses.
- Autonomous: Driverless cars. Autonomous planning supporting supply chain planning departments. Both are technologies we look forward to at some point in the future, but are now only in testing mode.
According to Tohamy, the notion that “everyone is doing AI except me, so I must find a way to invest in it and make it work now” is not true. In reality, it is true that ninety percent of the world’s top 25 largest companies have AI pilots going. But out of the rest of mid-sized to large companies, less than ten percent are working with AI technology now.
That said, across all potential private sector applications of artificial intelligence technology, supply chain planning ranks number one for AI adoption in 2019. Tohamy discussed that demand forecasting, demand sensing, and supply planning are currently the top use cases, in that order.
She ended her presentation with a trio of short case studies of AI application in supply chain planning – a farm equipment manufacturer that reduced in inventory by 18% in one year, a high tech manufacturer that improved its exception management, and an HVAC manufacturer that increased inventory turns by 25%.
Gartner’s 2020 Conference
Gartner has already booked and planned for 2020’s Supply Chain Planning Summit. It will be at the Gaylord again in Denver. For the supply chain planner interested in staying on top of S&OP, IBP and demand planning best practices and supply chain planning methodologies, it is well worth considering.