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August 13, 2013

The Proactive Supply Chain

A seamless collaborative planning approach will help create a robust, resilient, and risk mitigating supply chain and improve overall performance.

The present industry situation is changing at a rapid pace with events and encounters occurring in market place like never before.  The changing pattern of demands every day in terms of cost and quality is putting pressure on the capacity framework of many enterprises, which is making them search for new avenues of differentiation.  "Supply Chain" assumes prime importance in this direction for enterprises to focus on and walk the path of constant evolution to meet these constant challenges.

The "Supply Chain" these days is no longer an interlinked network of some building blocks performing actions in sequence with step by step information flow between them, but is built to track, monitor and assess the performance of each individual activity elements with feedback and control mechanism established between each one of them. The advent of technologies like RFID -in the direction of item identification and database management, ERP applications - in the direction of providing integrated process architecture;  has made this task easier in terms of faster information processing and reducing manual handling errors. Accordingly all the functional blocks in the chain are closely knit together with defined roles and responsibilities against a set rule of interdependencies and each performing dedicated tasks sharing a common philosophy and methodology of meeting the ultimate objective of end to end performance and value creation.

The challenge however still lies in terms of managing the uncertainty and more so the dynamic nature of this uncertainty, since in spite of having an inbuilt program management capacity for today's supply chain, there are reasonable instances of failures and process inefficiencies leading to either inventory pile up or lost productivity due to high lead time gaps. Enterprises across industry segments are still struggling to plug in these events as & when they come up on a case to case basis with enhanced efforts and rework; with no real solution in hand. As a result the "uncertainty factor" keeps on its spell with failures getting repeated in some or the other form at different parts of the entire supply chain.

The need has definitely come to surface for handling this uncertainty factor and build a more resilient supply chain so that it has the capacity to make internal proactive adjustments in view of the storm around the corner. This would call for designing a mechanism which would make the whole process as "Proactive" instead of reactive one and effect a collaborative planning at all stages of execution between the functional blocks and elements. Like for e.g.:  the "order management process" should have direct access to the "long or short horizon planning" activities of the "demand planning process" as a whole and does necessarily only act on input from the latter as a predecessor activity. This can provide greater visibility at the level of demand planning stage itself in terms of the whole order configuration in consideration and would result into a more accurate plan and setting the milestones for necessary activity trigger at definite intervals. The "order management process" in turn can have a direct participation from "manufacturing process" which can provide real time scenarios of the schedules and current life cycle of products and configurations. This way the demand plan can become a realistic one with back ward integration of milestones, timeline planning and horizon planning in place which are capable of resisting the fall out. In case any uncertainty (demand fall, part stock out, order system issues etc.) sets in some kind of alternative parallel route is available.  Similarly the "outbound distribution process" can have collaboration with the "order management process" to have a visibility of the order volumes and types / configurations along with the shipping mode (SEA / AIR / MIX etc.) in consideration so as to have a more accurate freight planning activity. This would provide flexibility in the planning process and also provide the time and span for working out a better optimized cost baseline which can directly contribute to procurement savings.

Thus by applying a seamless collaborative planning approach the opportunity to become more proactive and accountable comes up within the functional blocks and as a result the overall supply chain performance improves to become a more robust, resilient and risk mitigating one.

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