In a world where a 30-second TikTok clip can send demand soaring for a specific product, a port labor dispute thousands of miles away can constrain the supply of critical components or a chip shortage can hold up an entire auto production line, agility and responsiveness have become table stakes. After all, it doesn’t take a global pandemic, geopolitical conflict or natural disaster to bring a supply chain to its knees. One TikTok influencer who features a specific product can literally get the job done within minutes.
“These events are happening much more frequently than they ever have in the past,” says Fred Fontes Gerards, head of growth at Aera Technology. “In light of this volatility both on the demand and supply side, supply chains have to be more responsive than the typical monthly or weekly cycles that most organizations operate within.”
These and other realities of the current supply chain environment are creating an urgency to “find alternative technologies and solutions that can make sense of data across internal and external sources, determine what actions need to be taken and then make decisions in real-time,” Gerards adds. He points to supply chain control towers and Artificial Intelligence (AI) and augmented analytics as two tools that help companies “speed through the analysis” and make faster decisions.
“Demand for decisions is outstripping supply and product portfolios have become larger as companies offer—and consumers purchase—a wider variation of goods,” Gerards says. “As a result, the supply side is fundamentally more fragmented and organizations have many more intersections at which they need to make decisions.”
As they continue to grapple with supply chain disruptions and complexities, companies are increasingly turning to technology and automation to help them work through these challenges. This approach has become even more important during the current labor shortage, where “throwing more people at the problem” is no longer a viable or affordable option.
By balancing supply and demand while optimizing the delivery of goods, services and information from supplier to end customer, supply chain planning (SCP) software is also helping companies navigate the volatile market conditions. When layered on top of transactional systems, SCP provides planning, what-if scenario analysis capabilities and real-time demand commitments that factor in both current and future constraints.
“We’ve seen a big shift over to the idea of giving people better, faster, intelligent tools that incorporate AI or machine learning,” Gerards points out. Responding to this shift, software makers are developing platforms that help minimize the number of decisions made by employees, who instead focus on guiding and controlling processes. He points to sales and operations execution (S&OE) as one area where platforms are helping companies more quickly respond to unexpected shifts in supply and/or demand.
“You may have already built your plan, but on day one of the cycle the world may change and both demand and supply will be different than what was expected. In this situation, you need to be able to react quickly,” says Gerards. Those fast reactions may include reprioritizing demand, reallocating inventory across distribution centers or changing the transportation mode for a specific shipment. “These all have to take place in the spirit of firefighting,” he says, “and to respond to the latest changes in the supply chain world.”
The shift to online shopping is another driver of supply chain uncertainty right now, and it’s pushing companies to reimagine their distribution networks. When e-commerce was in its infancy, for example, a retailer with six DCs was likely planning store replenishments to support the 95% of their business that was taking place in physical stores. Because that approach doesn’t work in the current environment, companies are deploying more platforms that help support dynamic decision making and ensure that the right product is in the right place and at the right time.
“Companies need a single source of truth to support fast decision making, which is why we’re seeing a greater demand for more platform-type solutions,” says Ram Gopalakrishnan, CEO at Bricz. “Platforms consolidate a lot of information in one place and provide the meaningful, real-time insights that supply chain managers need to be able to make those fast decisions.”
Because more software applications can “talk” to one another these days thanks to application programming interfaces (APIs), they can include homegrown systems, large enterprise solutions and best-of-breed applications that focus on specific capabilities.
“Ease of integration and access to readily-architected platforms makes them all that much more attractive,” Gopalakrishnan points out. “The same software vendor doesn’t have to build all of the different modules themselves, but they do need to offer a packaged/integrated solution that is seamless for the end user.”
Providing that seamless experience has become even more important due to the global pandemic and the long-term impacts that it’s had on supply chains and consumer buying habits. Before the pandemic emerged, for example, Gopalakrishnan says the desire to ship from store and/or use urban fulfillment was there, but few companies were acting on it and most were envisioning five-year planning horizons.
The pandemic changed all of that. “Suddenly everyone had to shut down their stores, muscle through and figure out a strategy,” says Gopalakrishnan. “As a result, we’ve definitely seen more interest from companies that want to optimize their existing supply chain software and also leverage new functionalities that support their e-commerce activities.”
With resiliency and agility at the forefront of every supply chain and logistics manager’s mind right now, Mark Balte, EVP of supply chain innovation at Logility, says the focus is on building networks that can withstand disruptions. “It’s not just about a ship stuck in the Suez Canal or the war in Ukraine, which are both disruptive courses,” he says. “Supply chains also face minor events every day that can ultimately add up into some disruption within the organization.”
To address these issues and to keep from repeating themselves, Balte says companies are building out plans that anticipate the potentially disruptive events, factor in the variability in demand, supply side and production, and adding the necessary buffer inventory. They also want supply chain visibility that goes beyond Tier 1 and Tier 2 suppliers and also includes all of their third-party logistics and transportation providers.
The problem for many companies is that their demand, product, supply, logistics and manufacturing functions are still siloed. And, the systems that support those functions are fragmented. Some of these systems may be best-of-breed while some are homegrown, says Balte, but because they’re all “loosely coupled,” communication between them is neither predictable nor fast. Other problems include data latency and a lack of transparency, both of which ultimately hamper operational visibility.
Supply chain planning platforms can help bring down those walls, eliminate data latency and get everyone working from the same playbook. “Platforms in general are built for speed and scalability that companies are looking for today,” says Balte. “They help organizations take a step back, revamp their processes and get the end-to-end supply chain that they need.”
It’s not just e-commerce companies that need good supply chain planning platforms these days. As head of planning-life sciences at Bluecrux, Cédric Van Helleputte says that industry sector has been using more advanced planning solutions (APSs) over the last four years to five years. Companies are also looking for more control towers that can read transactional data and detect events in real-time.
“This has been talked about for some time now, but we’re now seeing the real application of control towers in planning,” Van Helleputte explains. That trend is being driven both by the uncertainty of the last few years plus advancements in the technology itself. “That’s a space where there’s a lot going on in terms of scaling up from proof of concept to live business implementations, many of which incorporate AI-based applications,” he adds. “Last year, in fact, we saw the first signs of companies wanting to move to broader adoption beyond the proof of concept stage.”
One Bluecrux customer recently told Van Helleputte that it can’t afford not knowing what is happening with its supply chain on a near real-time basis, and that its information-gathering needs to extend beyond just planning. The company needed a way to bring its planning, distribution, manufacturing and other operations onto a single platform. Only then would it have a complete picture to work with and base its decisions on. This just one of many examples of how companies are turning to platforms to help them both address their supply chain concerns and also plan for the future.
Looking ahead, Van Helleputte expects more companies to start using extended network collaboration, which includes both internal and external stakeholders. More organizations will also be reassessing their software stacks and deciding whether to acquire all of their solutions from a single vendor or use APIs and other connection points to tie best-of-breed applications into their current setups. This isn’t a new story, but it’s one that’s receiving more attention as companies invest in more software to offset their supply chain woes and integration across applications becomes more feasible.
“We’re beyond a place where technical integration should be so limiting,” says Van Helleputte, who tells supply chain managers who are shopping for software this year to first define their end-to-end scope and goals. You may find what you’re looking for in a single solution, but if that doesn’t happen then augment with best-of-breed solutions in specialty areas like strategic capacity management and external network collaboration. “Build an ecosystem,” he adds, “versus just blindly pushing for everything to be natively available in a single solution.”
The second annual Third-Party Logistics Warehouse Benchmark Report is here.
Thu, August 25, 2022 – 2:00 pm EDT