Editorial from the December 2007 issue of Managing Automation

An Intelligent Response

by Robert Malone, Contributing Editor

Globalization and pervasive outsourcing have turned supply chains into vital links in the response to customer demand. The ability to adapt to cycles of change in supply requires vision beyond what's visible.

We all know from high school physics that for every action, there is an equal and opposite reaction. The consequences of our actions build over time to become the equal and opposite reactions that Isaac Newton noted. These days, we call this the "tipping point." An example is the tilt point when the manufacturing business shifted from a mass manufacturing push strategy to a customer-driven pull strategy. So now we might ask: What will be next?

The notion of the tipping point came up in an extended conversation with Kinaxis Corp. (formerly Webplan) CEO Douglas Colbeth. Kinaxis offers response-driven software, geared to adjust to constantly changing demands. Kinaxis' tools are part of what might be called the reaction to the initial actions of globalization and outsourcing. The company offers management new levels of visibility into the supply chain, and constant change is coupled with collaborative analysis tools that then respond to the changes. This is not simply another kind of supply chain or business planning methodology.

As I asked Colbeth: How does a multi-national manufacturer plan, in advance, the program for a supply chain that turns on a dime and may take into account a civil war, a tsunami, a stock market dive, a massive recall, a competitor's hot product introduction, and more? Well, no planning tool to date is this robust. It might be safe to say that no planning tool will ever be this robust. Does this mean you don't plan? Of course you do.

Planning is a guide; it is not what really happens on a day-to-day or hour-to-hour basis. It is as difficult to plan a multi-national supply chain as it is to plan a war. Given the growing complexity of managing a global supply chain — what with increased security, tighter time deliveries, stretched suppliers, the need for better quality control (no lead, no salmonella, no killer cribs, please), more and more distant suppliers, more intensely designed and technologically advanced products (think iPhone) — the game has switched. Yes, the tilt is taking place. The game now is to respond to these changes in a reasonable way that calls on the intelligence of managers, and not merely a tub full of spreadsheets and an army of IT people and line managers with furrowed brows.

Piling on more ERP and supply chain management tools may not be the right response to today's business challenges. Less may be more, as architect Ludwig Mies van der Rohe said last century. More software modules do not necessarily help the response process and, in fact, may encumber it. What we need is an intelligent response from people who are well-informed and backed up by modern equipment and responsive software.

The need to know exactly what is happening to an order right now in India is not arbitrary. It is vital to making an informed response to changing conditions within the supply route. Who ever considered a herd of elephants in the way or a parade celebrating the joys of life? What planning module covers such events and their consequences?