Are you still using the supply chain F-word?
“Were a more sophisticated society t...
Don’t use the F-word with Hein Pretorius, founder and CEO of Onpro Consulting; he’s not impressed when you do.
“We’re a more sophisticated society these days,” he says, “and its high time we stopped using that term.”
This specific F-word to is “forecasting”. According to Pretorius, reliance on forecasting prevents businesses from adopting more powerful approaches to supply chain management.
“It’s a system based on guesswork, regardless of how educated the guess is,” he says.
“It’s also the reason so many companies lack the agility they need to compete at a global level.”
Update planning approach for better supply chains
Pretorius reports that several advanced systems for efficiently managing the supply chain have arisen over the years, one of the newest being DDMRP – Demand Driven Materials Resource Planning.
“I’m not an evangelist of any one approach,” Pretorius admits.
“But I’m a proponent of demand-driven methods because they free companies from rigid forecasting assumptions and empower them to respond to market needs as they occur.”
He insists that basing one’s output on previous sales and variables like seasonality is archaic in today’s connected landscape.
“The technology exists to determine replenishment in real-time with a high level of confidence.”
In the demand-based world, each purchase by an end consumer is a pull signal to downstream vendors and manufacturers, with no need for forecasting at all. All it takes to achieve the right level of visibility is sufficient integration.
However, says Pretorius, companies need to lift their game above managing their isolated supply chains.
“If you aspire to become a force in the global economy, you must consider the supply chain not at a corporate level, but at a national one.”
That means being open to developing a unified platform by which retail demand can be consolidated and shared with vendors throughout the supply chain. They could then efficiently determine their output based on reality instead of forecasted consumption.
Some companies may see this as problematic because it suggests consolidating their data with that of competitors and possibly exposing their strategies.
“Nothing could be further from the truth,” assures Pretorius.
“These days, encrypting and anonymising data is a trivial exercise. Companies can easily collaborate to promote efficiency in the national supply chain without jeopardising their competitive advantage.”
Develop a new mindset
Pretorius explains that it’s not a lack of technology that prevents such a system from being developed. Rather, it requires a collaborative mindset, and that means a willingness to work together in a spirit of trust.
“We need to build a social supply chain, to start integrating systems and sharing information, not just inside our organisations, but across the board.”
“The fact is,” he continues, “if we don’t look after our effectiveness as a country, it won’t be long before our internal supply chains start to suffer. So my warning to South African companies is that it’s time to wake up to the reality that the days of forecasting and hoping for the best are over.”
Onpro Consulting invites interested parties to learn more about the cutting-edge technologies available for improving their supply chain.
Follow @SupplyChainD on Twitter.
Pandora and IBM digitise jewellery supply chain
Pandora has overhauled its global supply chain in partnership with IBM amid an ecommerce sales boom for its hand-finished jewellery.
The company found international success offering customisable charm bracelets and other personalised jewellery though its chain of bricks and mortar retail destinations. But in 2020, as the COVID-19 outbreak forced physical stores to close, Pandora strengthened its omnichannel operations and doubled online sales.
A focus on customer experience included deploying IBM’s Sterling Order Management, increasing supply chain resiliency and safeguarding against disruption across the global value chain.
Pandora leverages IBM Sterling Order Management as the backbone it its omnichannel fulfilment, with Salesforce Commerce Cloud powering its ecommerce. Greater automation across its channels has boosted the jeweller’s sustainability credentials, IBM said, streamlining processes for more efficient delivery. It has also given in-store staff and virtual customer service representatives superior end-to-end visibility to better meet consumer needs.
Jim Cruickshank, VP of Digital Development & Retail Technology, Pandora, said the digital transformation journey has brought “digital and store technology closer together and closer to the customer”, highlighting how important the customer journey remains, even during unprecedented disruption.
"Our mission is about creating a personal experience and we've instituted massive platform changes with IBM Sterling and Salesforce to enable new digital-first capabilities that are much more individualised, localised and connected across channels and markets,” he added.
Pandora’s pivot to digital
The pandemic forced the doors closed at most of Pandora’s 2,700 retail locations. To remain competitive, it pivoted to online retail. Virtual queuing for stores and virtual product trials via augmented reality (AR) technology went someway to emulating the in-store experience and retail theatre that is the brand’s hallmark. Meanwhile digital investments in supply chain efficiency was central to delivering on consumer demand.
“Consumer behaviour has significantly shifted and will continue to evolve with businesses needing to quickly adapt to new preferences and needs,” said Kareem Yusuf, General Manager, AI Applications and Blockchain, IBM. “To address this shift, leading retailers like Pandora rely on innovation to increase their business agility by enabling and scaling sustainable supply chain operations using AI and cloud.”
Yusuf said Pandora’s success was indicative of how to remain competitive by “finding new ways to create differentiated customer experiences that protect their enterprises from disruptions to help mitigate risk and accelerate growth”.