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Supply Chain Normalcy Not In Sight.

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Summary

This article discusses the current state of the global supply chain, which has been heavily affected by increasing demand volatility and supply constraints. It discusses the history of supply chain management, the Y2K scramble, investments in ERP, the effects of China's WTO membership, and the rise of inflationary pressures. It also examines the effects of traditional planning processes, organizational alignment, digital transformation, and the need for adaptive modeling, in-market sourcing, and demand planning. The article concludes by emphasizing the importance of defining supply chain strategies and processes, and understanding the cost and value of supply chains, before focusing on technology investments.

Q&As

What does the current economic climate mean for the supply chain?
The current economic climate means that companies have higher demand volatility and supply is longer and more variable.

How has the practice of supply chain management evolved since 1982?
The practice of supply chain management has evolved from managing logistics, procurement and manufacturing as separate and distinct processes to managing assets and flows across source, make and deliver.

What are the most significant factors to improve resilience in the supply chain?
The most significant factors to improve resilience in the supply chain are organizational alignment and developing a shared vision for the organization on supply chain excellence.

What steps can be taken to shift from traditional demand planning processes to more effective ones?
Steps that can be taken to shift from traditional demand planning processes to more effective ones include building adaptive modeling, training teams to model variability, building a planning master data layer, focusing on market data instead of transactional data, and using network design technologies to enable cross-functional inventory discussions.

What is the Global Supply Chain Pressure Index?
The Global Supply Chain Pressure Index (GSCPI) is a metric produced by the New York Fed that integrates a number of commonly used metrics to provide a comprehensive summary of potential supply chain disruptions.

AI Comments

👍 This article is incredibly informative and provides a comprehensive look at the challenges of the supply chain in the face of rising inflationary pressures. It offers a great perspective on how to drive resilience and make better decisions.

👎 This article is overly technical and complex, making it difficult to understand for those who are not well-versed in supply chain management.

AI Discussion

Me: It's about the implications of the current state of the supply chain due to global unrest, government policies, and rising inflationary pressures. It talks about how traditional supply chain processes are not sufficient for responding to the volatility, and it suggests five steps for companies to take in order to improve their supply chain resilience.

Friend: Wow, that's really interesting. It sounds like companies need to rethink their strategies and processes in order to successfully navigate the current challenges. What do you think are the most important steps for companies to take?

Me: I think the most important step is for companies to develop a shared vision for the organization on supply chain excellence. This should focus on the role of the supply chain in business strategies, rather than just focusing on cost reduction. Companies also need to invest in adaptive modeling and in-market sourcing, and they should focus less on digital transformation and more on practical delivery. Finally, they need to redefine their demand planning processes and inventory management techniques to account for the increased variability.

Action items

Develop a shared vision for the organization on supply chain excellence that focuses on market price shifts and product mix changes.
Train teams to model variability and build a planning master data layer to understand layers of variability.
Redesign demand planning processes to focus on modeling channel data with less data latency.

Technical terms

Enterprise Resource Planning (ERP): A system of integrated software applications used to manage a company's core business processes, such as inventory and order management, accounting, human resources, and customer relationship management.
World Trade Organization (WTO): An intergovernmental organization that regulates international trade.
Y2K: The year 2000, when many computer systems were expected to fail due to the inability to recognize dates beyond 1999.
S&OP: Sales and operations planning, a process used to align a company's supply chain with its business objectives.
Digital Transformation: The process of using digital technologies to create new or modify existing business processes, culture, and customer experiences to meet changing business and market requirements.
Web 2.0: A term used to describe the second generation of the World Wide Web, which emphasizes user-generated content, user-centered design, and collaboration on the Internet.
AI Transformation: The use of artificial intelligence (AI) to automate and improve existing processes, or to create new ones.
Descriptive Analytics: The analysis of data to identify patterns and trends in order to make predictions about future events.
Network Design: The process of designing a network of interconnected nodes, such as computers, routers, and switches, to enable communication and data transfer.
What-If Analysis: A process used to evaluate the potential outcomes of a decision by considering different scenarios.
Simulation: A process used to model a real-world system in order to predict its behavior.
Digital Twin: A digital representation of a physical object or system that can be used to monitor and control the object or system.
Shelf Takeaway: The amount of product taken off the shelf by customers in a given period of time.