Despite the rise of sophisticated planning tools in the enterprise software market, there remains one huge, persistent gap that causes huge inefficiencies across the globe. This incredibly prolific problem is one of the most prominent reasons for inventory issues, long planning cycles, and costs due to organisation churn. What, you may ask, is this problem? Connecting the supply chain.
Singapore – a nation touted to be a leading supply chain hub in the APAC region – recently announced a new S$12.7bn in value-add chemical and energy sector roadmap. The new plans will most definitely make use of its existing supply chain networks. The hope is that the current networks and connections in place work seamlessly and efficiently to handle the load.
The supply chain legacy
It sounds simple at first; connect the network of suppliers, customers and trade partners that are the driving forces of success. This has been ongoing for centuries. One of the first efforts made to connect multiple organisations was undertaken in 50 A.D. when the Roman military implemented a system for disseminating bi-directional communications between Rome and their colonies. The system was based on standardised and efficient messages – usually only containing the number of words needed to convey critical information. Rome was enabled to communicate with remote regions of their empire within 8-10 days and formulate plans to react to information a mere 8-10 days later, utilising a system (non-digital of course) that averaged a speed of approximately 270 miles per day. This was impressive for the time—but even this information exchange system could not save Rome from the fall of their empire—a fall that can be compared to that of many large companies of the last several decades of our current generation.
In 1968, the Transportation Data Coordinating Committee created something called “Electronic Data Interchange”, or EDI. EDI was created to be essentially a digital version of the Roman Empire’s bi-directional communications. Adopted first by highly standardised industries fairly quickly – grocery and automotive companies were in an excellent position to leverage the technology because of the minimal variance across multiple enterprises when it came to operating processes. Keep in mind, this was before cloud software, so standardisation was not just beneficial for these companies to possess, it was a necessity. On-premise database solutions needed to speak “apples to apples” when communicating with other companies’ systems. Transactions could easily flow if this was the case, but nearly 50 years later, this technology is still not widespread as one might have thought.
Stopgap measures
Despite attempts from Microsoft, SAP, Oracle, IBM, and countless other software companies, the potential of EDI narrowed continuously, eventually acting as a mere vehicle for delivering transactional data to parties that it might benefit. This is not to mention the difficulty of interacting with trade partners across multiple industries and operating models that became ubiquitous during the industrial revolution and intensified in the internet age. The flexibility simply was absent, and the information being shared was not adequate. Business was moving much faster, and companies needed more than just a few transactions; they needed to let one another know what they were planning to do.
Over the last couple decades, many businesses have hacked together a delicate and error-prone solution to this problem: they use a combination of Excel spreadsheets and emails to communicate rich datasets, filled with short, mid, and long-term plans with plenty of context— enough that their trade partners can begin to formulate plans. However, at the scale of business today, a single error or misstep in the process can send everything haywire, costing millions—even billions of dollars across an entire supply chain before being caught. Most individuals in today’s workforce live with this reality every day.
Their world revolves around sending these high-risk files that may or may not be biased in fact to their unsuspecting trade partners. In many cases, when something goes wrong, their counterparts at other companies will simply stop listening— turning off the flow of information and operating in a complete silo—this is surely one of the most significant causes for reactive, inefficient planning and business performance in our global economy. Growing data security concerns have only intensified these trends, and it has become clear that something must give.
The first real solution: The cloud
Today, there is an opportunity to solve one of the most ubiquitous business problems of the last millennia: making collaborative planning secure, flexible, contextual, and incredibly fast. With the rise of the cloud, detailed plans can be shared not only within companies but also outside of them.
A simplified web interface that can deliver any size, shape or type of information across supply chain trade partners can enable diversified corporations to share information and collaborate on living plans as they must to achieve the best results across each and every product line.
Finally, advances in security have graced the industry with ways to share data in unprecedented privacy—sharing only the information that must be shared without needing to standardise. As the world begins to align with the trend of connecting the supply chain, we will again start to see benefits not just of lower inventories, reduced operating costs, and lower churn, but will find new and innovative ways to collaborate with their network at a scale that were previously thought impossible.
About the Author
Jim McParlane, Managing Director APAC, Anaplan
Jim brings more than 25 years of leadership to Anaplan. McParlane leads Anaplan’s APAC operations as they experience unprecedented growth and serve some of the most notable brands in the region, including Globe Telecom, PT. Telekomunikasi Selular, NBN Co, and Casella Wines. Prior to Anaplan, McParlane held the position of Regional Vice President ANZ, Coupa and Vice President Japan, ANZ, Ariba. Early in his career, he was a manufacturing, supply chain, and procurement consultant with Price Waterhouse. McParlane holds a bachelor’s degree in Logistics, Materials and Supply Chain Management from Michigan State University.