Supply Chain Systems

Three Things to Avoid During Production Planning and Supply Chain Collaboration

February 21, 2019

Production planners don’t have it easy. They must precisely schedule production and incorporate all the labor, capital, and materials to go with it. Then again, supply chain managers have their own set of challenges. Materials (at the right price and quality level) must be there, where and when needed.

In order to promote a cohesive workflow between production planning and supply chain management, however, there are three things to avoid:

  1. Failing to embrace the digital power of today’s supply chain. According to Accenture, “A supply chain thus reinvented is a next-generation supply chain: smart, connected, living and learning, with the customer at the heart of everything it does. Faster, fitter and vastly more flexible, such a supply chain is also the foundation of an intelligent, Industry X.0 business, which embraces constant technological change—and profits from it.”

Supply Chain SystemsSounds good. The catch is, most never do it. When Accenture surveyed more than 900 chief supply chain officers and supply chain executives (across twelve industries and seven geographies), that’s what they found. There’s plenty of technology tools available to improve your supply chain: transportation management systems, warehouse management systems, order tracking and processing, inventory management, massive and extensive ERP systems, and more. But leaders must take action: find them and put them to work. To discover how they are leveraging digital to create competitive advantage, many of them were failing to unlock value, despite the application of new IT right across the supply chain.

Production planners and supply chain managers should embrace available digital technology for mutual benefit. Production planning systems should welcome supply chain management systems. Neither should encumber the other.

  1. Allowing legacy systems to slow down supply chain improvement. Production planning, particularly in manufacturing, often relies on archaic systems. When it comes to knowing what tools could help, and which are not fitting now, production planners and leaders must separate the wheat from the chaff. They must know what legacy systems they have in place and identify what technology is available to either replace it or hitch onto it.
legacy systems in production
Both production planners and supply chain leaders must identify the legacy systems currently in place and work to understand what technology is available to either replace it or hitch onto it.

Accenture is not shy about trumpeting the merits of digitization for the next-generation supply chain. They state: “The supply chain revolution is happening right now. With the continuous need to enhance customer experience, businesses are adopting new and efficient ways to procure, manage and handle goods and materials, leveraging new technologies such as digitization, analytics and automation. These intelligent technologies help unify the supply chain ecosystem and augment their human workforce to make more accurate, data-based decisions—faster.”

When Accenture conducted another cross-industry survey of supply chain leaders, they found that leaders may search, select, and purchase technology tools to improve the supply chain, but they do so inefficiently. As Accenture describes it, they are “still encumbered by older legacy systems that hold them back from creating a full end-to-end experience.”

Thus, leaders must look beyond the old and embrace the new. Tap intelligent technology that makes the most difference, soonest, for your business and your existing infrastructure with respect to the supply chain. Doing so will bring progress with a more agile and improved supply chain.

  1. “Aim well and execute effectively.” (But nobody measures results.) That’s how McKinsey advises industrial firms to improve their operations (and supply chains). Production planners must use available technology to improve overall production, while ensuring the supply chain benefits as well. By measuring improvement, supply chain managers will sign on and better collaborate to bring their needs to the effort so both can benefit in unison. But both should measure the results. If they do, everybody wins.

McKinsey claims that disruptive technologies like machine-to-machine digital connectivity, artificial intelligence (AI), machine learning, advanced automation, robotics, and additive manufacturing (all components of Industry 4.0) can yield handsome cost reductions and improvements in bottom-line cost accounting. They state: “We estimate that productivity gains and cost savings alone could deliver near-term impact of 200 to 600 basis points of margin expansion across advanced industries, worth $200 billion to $500 billion.”

They cite an aerospace company, challenged by supply chain problems, that used the power of digitization to streamline data from purchasing, inventory tracking, and monitoring. A remote dashboard view that combined these multiple streams of data resulted in a 20 percent improvement in procurement productivity and a 5 percent improvement in on-time delivery.

The lesson here is to ensure that any execution of technology helps boost production planning and the end-to-end supply chain; then monitor and measure outputs from both functional areas. Doing so will justify costs, time, and investment moving forward, while capturing the share of mind that’s sometimes missing when it comes to technology implementation efforts.