The demands placed on supply chain leaders have increased significantly. Leaders used to have to deliver on service, cash and cost. Now, there are even more dimensions: sustainability, supply chain resilience, and agility to adapt to both digital technology and new business models. Some of these demands are conflicting.
What are some ways supply chains have evolved in the past decades?
Antoine Clogne: Supply chains have become a lot more global, more connected, and are composed of a lot more stakeholders who have become more specialized in their field. These specializations have led to significant improvements in performance but have also increased interdependencies.
Additionally, the scope of supply chain has grown. Today, it includes planning activities like inventory management, risk management and network design; but also execution tasks like material management, customs or transportation management. All of this creates the risk of working in siloes and a need for additional synchronization.
What kind of environment have these changes created?
Vineet Khanna: For chief supply chain officers and other leaders, we’re seeing three things happening.
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As a result, leaders need to balance these demands while ensuring profitability grows.
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All this is happening in an environment fraught with risks and disruptions, and the added cost pressure of inflation.
How can supply chain leaders overcome these challenges?
Vineet Khanna: Supply chains today are very efficient but very fragile. Now is the time for supply chain to show its importance for the business. Orchestration of planning and execution is a great way to do this.
Today’s supply chain leadership needs more skills and capabilities than ever before. They need end-to-end integration, scenario planning, real-time responses, and complete visibility.
On the planning side, these capabilities help ensure a robust supply chain plan. Think of the plan as a bridge from your business targets to execution and the intended results. To achieve that, the plan must be:
- Feasible – otherwise, it’s just wishful thinking
- Aligned both internally and externally, with sales, finance, suppliers and other partners
- Optimized for your business targets, whether that’s cost, profitability, sustainability, or something else. Optimization cannot be an afterthought, but rather embedded in planning.
And how can you address disruptions on the execution side?
Antoine Clogne: In execution, your plan meets reality, and you start seeing disruptions and fluctuations. The key is the ability to manage them so you can still serve customers and meet your business objectives.
That again requires the technology-supported capabilities Vineet mentioned – for instance, demand prediction and disruption sensing, end-to-end visibility, and scenario simulation.
These capabilities should be as close to concurrent as possible. That’s the key to connecting supply chain functions and achieving the kind of orchestration we’re speaking about.
What does supply chain orchestration look like?
Antoine Clogne: By supply chain orchestration, we mean a holistic and central view of the entire value chain. Of course, there are still teams working on planning and on execution, but they work hand in hand towards an aligned goal. State-of-the-art technology is the foundation for this collaborative framework. These tools integrate all relevant processes and exchange large amounts of data to support decision making.
Additionally, a central orchestrator has an overview of the entire supply chain. This role uses planning intelligence to simulate the impact of disruptions on the final customer. End-to-end visibility enables the orchestrator to evaluate solution scenarios and implement the best option.
How can businesses start their supply chain orchestration journey?
Vineet Khanna: Determining a vision is a good place to start. Determine priorities by answering questions like:
- What are our current challenges?
- What do we want to achieve?
From there, businesses can focus on a strategy before planning their transformation and beginning implementation.
Interested in learning more about supply chain orchestration?
Interview with
Vineet Khanna
former Global Head of Supply Chain at Nestlé and advisor to 4flow
Antoine Clogne
Director
4flow management