'Black holes’ are a common supply chain problem, caused as much by disjointed systems as by lack of visibility into data, processes and workflows. That may not have been an issue historically, but in today’s fast-moving, demand-driven landscape, it could mean the difference between gaining market share and losing it.
You might not like it, but your supply chain contains black holes. Almost every business has them, regardless of size, location, complexity or content.
There are many reasons why these black holes or grey areas exist, but they frequently arise due to a lack of data related to your internal and external operational systems, or, more commonly, too much data – overloading the people responsible for making sense of it.
Anyone working within the planning, sourcing and making process will be familiar with the huge volume of data coming in from an ever-increasing number of systems being used – warehouse and yard management, transportation management, supply chain and distribution management, ERP and purchasing.
At the same time, organisations and business functions can no longer compete solely as individual entities. Collaborations and partnerships have become a necessity in today’s constantly changing business landscape.
It’s a situation being compounded by the number of organisations continuing to operate inside fragmented, isolated silos, with employees booking in materials or dispatching finished goods without a clear understanding of how they arrived or what happens to them once they leave.
To better satisfy customer requirements, organisations need a solution that collects highly detailed information about all movement and storage of raw materials, work-in-process inventory and finished goods from point-of-origin to point-of-consumption, providing a single view across the entire supply chain.
This will also enable them to react more quickly to both market opportunities and threats.
We live in a world more connected and data-rich than at any previous time. So, why aren’t businesses achieving the full supply chain visibility available to them?
The reason is two-fold, according to Andy Noyce, FMCG lead for business intelligence and corporate performance management platform, BOARD International.
“Black holes exist where there are gaps. Typically, businesses already have the data needed to fill those gaps, but simply can’t make sense of it. GPRS tracking data, for example, will be logged in system A when it could be of far greater value in system B, or it could be as simple as the data entering the business not being in a format that is easy to digest and requiring manual work to understand.
“Moving away from silo-centric operations towards a more value-stream thinking approach is the ambition of many organisations, particularly in CPG, where the supply chain is fundamentally the lifeblood of the business. They’re looking to bridge silos by connecting production planning into their P&L systems to provide an end-to-end view.”
The challenge, according to Noyce, is that to achieve such a transformation, businesses need to structure the cost drivers behind every major process.
“To accomplish that, most businesses are overlaying individual point solutions on top of a data set or they’re bringing everything together in a spreadsheet, which is time-consuming, can’t handle complex data sets and encourages siloed processes.”
According to Noyce, what typically happens is that data or reports are pulled out of a platform into a spreadsheet, manipulated and a new version of the truth is created which only half the organisation starts working from.
If a handful of people do that every month, it’s easy to see how organisations can get to the stage where no-one knows what’s going on and which figures or forecasts to trust.
Start small, think big
The advantages of full, end-to-end traceability and transparency are starkly apparent – cost and risk go down, efficiencies and agility go up. So, what are the successful companies doing differently?
A common strategy is is to start small, think big. Trying to boil the ocean at once represents huge outlay from a cost, labour and resource perspective. Instead, focus your initial efforts on where the greatest untapped value resides in your particular business, be that getting greater oversight of production, or connecting your sales planning with your demand forecasting.
“Start with a small, tactical initiative that generates value quickly, but make sure it’s part of a much broader roll-out to drive momentum forward,” suggests Noyce.
For a CPG business, that initial focus is often concentrated on becoming more self-sufficient in terms of reporting. Many manufacturers currently build their supply chain plans, forecasts and reports in spreadsheets, or ask IT or a third-party, all of which wastes valuable time. Organisations increasingly want to acquire an internal solution that provides greater visibility via a simple, easy to use, flexible interface which, crucially, can be owned as a business function.
“What departments don’t want to do is build out a very rigid, point-centric solution which is reliant on a third party to make any changes or incorporate new modules. You need governance and control, but in a solution that is flexible and scalable,” says Noyce.
Stop counting, start analysing
Having more effective and efficient reporting, scenario analysis and planning enables businesses to have a clearer view of ‘what is’ – making planning for ‘what if’ far more achievable.
Studies show that the market leaders in supply chain are those leveraging predictive forecasting and planning and scenario modelling. These businesses have eliminated the waste involved in overstocking or under-stocking inventory, lowering their cost-to-serve and increasing their profit margins, all while maximising the productivity of individual employees and that of the organisation overall.
“One of the critical value-adds to any organisation is to move away from simply ‘doing’ and begin to ‘analyse’,” explains Noyce. “That’s so typical of CPG manufacturers, especially when it comes to supply chain.”
BOARD’s solutions automate the day-to-day core reporting, enabling teams to have the time and flexibility to analyse what’s happening and move from being responsive to reactive and ultimately predictive.
“Not only does BOARD create automation in the process, we also automate workflows,” Noyce adds. “If you look at supply chain and demand planning, certain people must authorise and approve actions, which creates a bottleneck and inefficiency.
“Automating the workflow and integrating audit controls reduces risk by understanding who’s done what and when, triggering task notifications when necessary to be sent to appropriate users and prioritising time-centric over flexible tasks to keep the entire process running smoothly and to schedule.”
How to enable digital driver-based planning from production to delivery
Coca-Cola European Partners (CCEP) is the world’s largest independent Coca- Cola bottler. Built on almost 100 years of European heritage, the business provides an extensive range of leading drinks brands to more than 300 million consumers across 13 countries.
To continue to lead in one of the world’s largest fast-moving consumers goods (FMCG) sectors, CCEP needed to transform its supply chain finance according to three principles: leaner finance, automated planning and optimised reporting.