Why orchestrating your supply chain is hard, and what to do about it.
Designing a great process is tough.
Delivering it in the real world is tougher.
Building processes is like making plans. Even if you’ve thought of everything, you haven’t really. Because the world is a messy, glitchy, dumb, chaotic place.
Tasks get stuck in Excel sheets and Email inboxes. Deliveries arrive late, wrong or not at all, manual workarounds suck time and energy.
You try your best and hope for the best. But you can’t run a business on hope. Things have to work as planned, even when life has other plans.
While the modern supply chain is often seen as a technological and digital challenge. It is wrong to assume that the next leap in productivity will come from AI algorithms alone. Supply Chains are still fundamentally a combination of people, sometimes robots, doing work back to back following more or less rigid ways of working. It is a multi agent dynamic ecosystem where multiple silo optimizations happen toward some global equilibrium. Basically, it is a complex, living organism with thousands of moving parts. Algorithms can and do generate faster and more accurate forecasts, replenishment plans and smarter inventory strategies.
Yet, making things happen against those plans requires the collaboration and synchronization of hundreds of individuals across geographies and functions, each having their own objectives, biases, and convictions. A complicated task.
The last thing to do is to underestimate the importance of the human factor for companies. Digital approaches that work with people, rather than impose outputs on them, tend to achieve more results in the long run. To succeed, companies need to combine "no black box" algorithms with easy diffusion and access to information. Aid decision-making and enable cross-functional collaboration. Doing this will achieve end-to-end improvements rather than silo optimization that occur naturally such as muscles atrophy when not stressed enough.
In this article, we will focus on process orchestration and why automating first is a mistake. We argue that companies needs to start with dispatching. Dispatching of information, actions, routines and procedures. Once, in progress, they can orchestrate work so it is sequenced properly. Life is a marathon, not a sprint, you cannot expect from yourself nor others to fit a month worth of work in a week.
Orchestrating is all about balancing and prioritizing the important over the urgent but non important. In a nutshell, how to deliver against customer's expectations sustainably. Once, dispatching and orchestration are in motion, it is time to go for process automation.
Companies that have a human focused approach to their supply chain will thrive.
There is no blueprint. Just commonsense.
To reach a high-performing, digitally orchestrated supply chain with human beings at the epicenter, there is no one-size-fits-all solution. Knowing the desired end-state is essential, but it is equally important to develop a plan for how to get there. The challenge with supply chains is that they are unique to each business, based on their product selection, operational area, and consumer requirements. This can make it difficult to create universal models such as Toyota's Total Productive Maintenance (TPM) in Manufacturing. Even with years of experimentation, it may never be possible to develop such archetypes.
High-performing organizations consistently run effective processes. They understand that while they may not have perfect processes, any issues that arise can be faced with a robust, agile and resilient plan, rather than reverting to Excel spreadsheets and emails.
By orchestrating a supply chain, everyone involved knows what to do and what the other people in the chain are doing, up or down the supply chain. They receive the necessary information and insights. Routines happen, procedures get done, everything is visible, auditable, and traceable. with visibility, auditability and traceability. This allows for faster decision-making and supports progress.
Companies like this often have fewer middle managers and don't need to rely on 'superstar managers' to make decisions. This results in greater customer, staff and leadership satisfaction, as service level, cost and working capital remain at target.
Imagine for the 20th time today that you or someone on your team has identified a delayed supplier delivery. You would then have to manually check other systems to determine if production or customer orders are likely to be affected based on the current stock levels. However, this could all be avoided. A simple process could be put in place to trigger when a potential hazard arises, such as a late delivery, a large customer order, or a spike in forecasting. This would bring together key stakeholders from sales and marketing, supply chain, and finance with all the necessary data to make a rapid decision and resolve any issues before they are seen by customers - in a matter of seconds.
WHAT ARE THE INGREDIENTS YOU NEED TO ORCHESTRATE?
People + Process + Infrastructure + Data
To orchestrate, first you need to dispatch the right activities to the right people. Good news, your people are already in your organization, otherwise you would not look for Supply Chain Orchestration solutions.
Then, you need to capture what they do - the processes. You may be lucky and have clear, well-defined and followed processes, but most companies are not there yet. Nevertheless, you know the high-level activities that need doing, including the start and end of your key activities. This can be captured in minutes and fed into process orchestration tools with ease. In fact, there are supply chain orchestration solutions on the market today which can help you to get started with limited process definition or maturity. You can even start without having a RACI matrix or SLAs defined per Supply Chain segment and add these later at no extra cost.
Once you have connected your processes and people through business roles and their scope (e.g. per product category, per factory, etc.), the most important step follows: defining your management infrastructure and how it connects to the work that needs to be done. For instance, to run a MRO activity, one would need an engineer in a specific location with the right tools and all necessary spare parts. The engineer needed will depend on the type of maintenance and assets involved. Similarly, in an organization managing distribution at scale, maybe the bottleneck is that it can process only up to 100 parcels per minute throughout the warehouse. To summarize, you need to define the infrastructure of your company, taking into account their capacities and constraints that impact your ways of working in the real world.
Finally, you are left with connecting and integrating all existing data and systems from your organization to bring this to life automatically.
How do I get started?
At Metronome, we've spent the last three years helping companies to digitally transform their supply chain.
We found that they are easy ways to get started with process orchestration and automation in Operations and Supply Chain:
- Support for Sales Teams, eg. Perfect order taking for Key Account on their smartphone in seconds in front of customers which is routing activities to everyone in the organization from Supply Chain to Finance and Operations.
- Production and Distribution Tracking, eg. Real time time tracking for MtO organizations, so we dispatch work to assembly lines and work stations given people availability, resources limitations.
- End to End Visibility, eg. Last mile information delivery from PowerBI (or eq. data viz tool), these cockpit are often showing all the right things and through orchestration all the logical next steps from KPI analysis can be executed.
- Distribute and Sequence activities at scale, eg. Deploy work to 100s of folks across sites in real time given where they are, what needs doing, the urgency of the tasks. And if issues occur, re-balancing work in real time.
- Supply Chain Hazard & Issue Management, eg. Automatically inform the right sales whenever risks impact their customers orders whether due to suppliers' delays, out of stock, or payment blocks… with 0 emails.
- Handle events and MRO, eg. Ensure reactive maintenance tasks are done on time with right resources, that the right parts is available at the right time for the right experts.
- Supply Chain Operational Excellence, eg. Distribute 5S & Lean checklists and routines across 12 industrial sites, simple tasks but at massive scale.
If you want more explanation about these examples or more, get in touch!
Don't lead with supply chain process automation.
The process of designing and delivering a supply-chain transformation can be intimidating for industrial organizations. This has led to analysis paralysis for many companies. Indeed, there is no clear path to go at supply chain digital transformation. Unfortunately, many of those who have attempted the transformation have ended up with common issues. In this last part of the post, we will discuss the three most common traps and how to avoid them.
Process automation can be a great way to streamline operations and improve efficiency. However, it's important to be mindful of the pitfalls of starting with automation. A common mistake is to adopt a "automation first" approach, where organizations focus on finding impressive digital solutions before figuring out where to apply them. This can lead to digitizing existing sub-optimal processes, which limits the value of the digital approach and makes it harder to capture long-term improvements. To avoid this trap, it's best to start by understanding the current processes, then identify areas where automation can be used to improve them
On the other and focusing solely on processes is also wrong. In an attempt to create highly detailed plans, companies may spend a great deal of time and effort outlining exactly how the processes should work. Others may even outsource their thinking, opting to copy “best practice” templates. This approach is usually ineffective when it comes to implementation, as it leads to organizational rejection often compensated through bespoke change management on steroid. While having a process is important, having the perfect one is not useful as it will unlikely be perfect in a few weeks after hitting day to day reality. It is better to start with a good process with some room for individual autonomy as fast as the boundaries and accountability are clear. This creates more resilient and robust processes.
The third common trap to look out for when you’re transforming your supply chain is pilot decay. Companies may think they can make the problem more manageable by tackling only a small part of the organization in a targeted pilot project. While this may yield some quick wins, it won’t be enough when you try to scale it up. This is especially true if your business has multiple different segments with different supply-chain needs. The shortfalls of the chosen systems and technologies may be easy to fix in the pilot stage, but become a huge headache when you try to roll it out at scale. Make sure you’re prepared for the eventual scale up and avoid pilot decay.
Process orchestration is all about enabling the execution of your supply chain plans every single minutes and reacting changes in real time.