ERP: Next generation solutions by JDA Software
Enterprise software origins come from ERP systems (Enterprise Resource Planning) managing the basics of recording transactions. Then, the 1980s and 1990s ushered in the era of advanced planning systems that focused on functional excellence around demand planning, production planning and scheduling.
During 2000-2010, there was growing emphasis on cross-functional alignment with initiatives around integrated business planning at manufacturers and wholesale distributors and merchandise planning at retailers. The practice of supply chain management is now at yet another inflection point, driven by three key trends: changing nature of supply chain problems, changing nature of technologies, and changing nature of delivering enterprise software.
The nature of supply chain problems is changing from functional optimisation to cross-process and cross-value chain synchronisation; from mostly deterministic planning to predictive, probabilistic and risk-aware planning; and from sequential processes to concurrent, iterative and dynamic event-response processes across the supply chain. There are also significant technological shifts underway. These include widespread adoption of service oriented architectures, growing momentum of cloud computing and advent of new usability paradigms such as mobility and task specific “apps.” Finally, the nature of how companies buy enterprise software is also changing. Companies demand fast time-to-value, lower long-term total cost of ownership and non-intrusive solutions that can deliver sustained value over time – even as business conditions change.
All these changes have led to the emergence of new practices for managing the next generation, high performance supply chains. This evolution of supply chain practices, illustrated in Figure 1, represents significant paradigm shifts in supply chain processes. That, in turn, requires fundamental innovations in underlying decision support technologies to enable new levels of optimisation, agility and scalability.
Figure 1. The origins and evolution of supply chain management practices
Summarising this evolution in supply chain management practices, Figure 2 illustrates the scope and capabilities needed for the next generation high performance supply chains. These supply chains will need to be connected to the end-customer, segmented for profitable one-on-one relationships, integrated end-to-end and highly agile.
Figure 2. What high performance supply chains look like
Evolution of technology and delivery mechanisms
Process-driven workflows: The latest supply chain technology offers role- and task-based workflows, allowing planners to perform all tasks for any given business processes. Process-driven workflows with a consistent user interface allow planners to fulfill their job functions seamlessly, intuitively and efficiently.
Packaged Resolution Levers and Playbooks: Workbenches provide visibility into exception events prioritised by business impact. Built-in analytics automatically diagnose root causes and constraints and then suggest the most profitable resolution actions from a library of packaged resolution levers. Using fast, in-memory simulation capability, planners can evaluate selected levers and immediately see impact before taking final actions.
Consolidated demand signals: Improved technology now offers dynamic data aggregation and disaggregation through highly efficient in-memory processing. Organisations can analyse how various streams of business interplay to improve demand planning accuracy while adhering to material and capacity constraints.
Supply chain management in the Cloud: Today it is much easier to manage, monitor, maintain and upgrade software. The relative complexity of software solutions in the supply chain arena, coupled with cloud technology advancements, provide a unique opportunity for companies to achieve the highest possible value from their investments in supply chain software.
Changing nature of supply chain management problems, technology and solution delivery have driven an inflection point towards the next generation of high performance supply chains. These supply chains are connected to the end customer, segmented and highly agile to unleash new levels of profitability. Next generation solutions from leading software companies are beginning to tackle these new challenges effectively. This is the beginning of a broad range of innovative solutions in the bold new era of high performance supply chains.
Driver shortages: Why the industry needs to be worried
While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks.
A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so.
What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.
"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"
That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.
But where has this skills shortage stemmed from?
Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.
COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.
It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing.
So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done?
Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change.
Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.
Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line.
On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains.
Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months.
Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector