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The Cost of Denying your Supply Chain Orchestration Problems

Posted by Nader Mikhail | Dec 12, 2018 10:56:16 AM

Every quarter you spend millions chasing better demand forecasts and more accurate supply plans, yet your teams still spend all their time in reactive and costly fire-fighting. Trying to improve supply chain outcomes by investing more in planning is like trying to increase your salary by staying in school for a fifth doctorate instead of getting some actual work experience. The benefits of squeezing out another 1-2% of planning accuracy are tiny compared to the huge costs you’re currently paying for the 30-40% that doesn’t go according to plan. Without a system to effectively manage the inevitable gaps between plan and reality, you’re hemorrhaging money in the form of high staffing costs, expensive expedites, and worst of all, missing commitments to your most important customers that can result in billions of lost revenue.

When companies think of supply chain systems, they think about transactional systems, data lakes, and planning tools. But they’re missing the piece that is costing them the most: a supply chain orchestration platform. In this context, orchestration is all the work supply chain professionals do every day to “connect the dots” between disparate but interdependent teams, partners, systems, and data sources. This usually appears in the form of status report manually exported from ERPs, spreadsheets full of macros and pivot tables, long email chains to figure out which teams and partners should be involved, and phone calls to chase the latest updates towards desperate attempts to mitigate. And by the time they get a grip on one problem, they’re already too late on a slew of other problems.

Instead of this painfully slow, reactive, and expensive manual process, imagine having an inbox that highlights the potential problems you care about — delayed shipments, at risk orders, unforeseen production issues, or poorly deployed inventory — all prioritized by customer impact. And imagine simply clicking on one to understand the root cause, and pull people across teams and enterprises into a shared workspace to help drive rapid resolution. With such a system, teams could discover and mitigate issues in a matter of hours — avoiding all the costly spot purchases, rushed production, and expedited deliveries that are typical when it takes weeks of chasing information through spreadsheets and telephone calls to understand every exception.

Don’t let sunk costs and organizational inertia hold you back. “There are 10 other projects for me to worry about before I can even start thinking about this orchestration problem.” This common refrain is a dereliction of duty disguised as responsible prioritization. Which of your other projects is more urgent than throwing hundreds of millions of dollars away each year? Orchestration will bring all of your current supply chain IT efforts together and empower your organization to proactively solve incidents before they snowball into disappointed customers, lost revenue, and wasted resources.

In today’s “I need it now world”, it’s not a question of “if.” It’s a matter of “when.” Like smartphones or the internet, implementing a supply chain orchestration platform will seem obvious in retrospect — a fundamental enabler of basic productivity. With the growing threat of disruptive competitors, incumbent industry leaders will be defined by the bold strokes they choose to take now. In a world that is defined by speed, choosing to play it safe is choosing to become irrelevant.

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