I’ll take it as read that you’re all fans of the Prussian military analyst Carl von Clausewitz. Who doesn’t have a copy of his 1837 work, Vom Kriege, on their nightstand?
For those unfamiliar, he coined the term “fog of war”. In his book, he writes “War is an area of uncertainty; three quarters of the things on which all action in War is based are lying in a fog of uncertainty to a greater or lesser extent.”
(Stay with me.)
By fog of war, von Clausewitz is talking about military commanders’ incomplete or inaccurate intelligence about the enemy’s numbers, disposition, and capabilities—and the same about one’s own forces. Limited reconnaissance, deliberate misinformation campaigns, and delays in receiving vital field updates all contribute to the challenge of making accurate tactical and strategic battlefield decisions. If commanders make bad decisions on bad data, they could lose the war.
Anyone responsible for making decisions based on information gathered from the field knows this challenge inside out.
Consider supply chain planning teams. They make critical planning decisions based on their customer forecasts. With the right data from their customers, they have a clear competitive advantage. With the wrong data—or, equally bad, the right data showing up after they’ve had to make their decisions—they’re in trouble. In the supply chain world, this “wrong data” translates to lost profits and lost opportunities.
So, how do you cut through this forecast fog? By leveraging ways to help get more accurate and more frequent data updates.
Triple Point’s Mobile Demand Planner (MDP) is one example of technology that supply chain planning teams can use to gather more accurate data more frequently. If you are on the supply chain side of your business, think of MDP as your field salesperson’s link to the overall demand picture. It allows your field representatives to capture forecast data while meeting face-to-face with your customers. No latency, no errors—just real time updates from the field.
Getting these real-time updates gives you an early-warning indicator to issues that require adjustments to your production and distribution plans. With this up-to-date picture of your changing demand, you are one step closer to being able to stop reactively planning and start proactively planning.
So, remove the fog from your forecast. Learn how you can leverage Mobile Demand Planner (available from iTunes, August 23) and other technologies from Triple Point to maintain a clear picture of your supply chain planning “battlefield”.
We recently returned from sponsoring Logichem Europe where over 250 supply chain planning professionals discussed top industry trends. A topic of particular interest this year was supply chain segmentation.
What is supply chain segmentation? It’s a way to have your physical supply chain support multiple, virtual supply chains—each focusing on a different segment of products or markets with unique production costs, distribution costs, and customer requirements.
For example, companies can use segmentation to have their low margin products follow the most cost-effective paths through the supply chain, isolate unpredictable customers into separately forecasted groups to improve overall accuracy, or give premium service only to their highly profitable customers.
That’s good news for an industry facing extreme volatility and price pressures.
If you were to group your company’s products into different categories having similar expected customer service levels, lead times, and packaging varieties, you’d find that each group places different demands on your supply chain and represents different levels of profitability to your company. So why not treat each group differently with product and service offerings tailored to each group’s unique needs?
Supply chain segmentation allows you to do this.
Mature segmentation strategies extend across several areas of your supply chain, involving differentiated customer replenishment programs, supplier replenishment programs, inventory policies, demand policies, allocation and order promising, and Sales & Operations Planning strategies. With segmentation, you can introduce more stability in your production, leverage more economical distribution, and minimize the impact of volatility.
It’s easy to see why segmentation was a main point of focus at the Logichem conference. At Triple Point, we understand the value of segmentation to our customers, which is why our Supply Chain Optimization solution supports such strategies. Contact us to find out how you can implement a segmentation strategy for your company and begin reducing the impact of today’s volatility.
Whatever you do, don’t collaborate with your supply chain planning peers. No need to share information about inventory levels, customer orders or transportation woes. And definitely don’t try to predict sales out into the future, because there’s just no evidence that it’s a worthwhile endeavor.
OK, I didn’t think you’d agree with that. If nothing else, the previous paragraph was an unexpected swim against the current of overwhelming support for doing the exact opposite. Of course you should be collaborating. Of course you need to share information upon which critical supply chain planning decisions are made. Of course you should be doing everything possible to plan out as far as it is practical with as much accuracy as possible. And of course you should be leveraging advanced planning and optimization technologies to help create highly profitable operating plans. Why? Because it’s your best defense against the supply chain planning risk and unpredictability that is here to stay.
A recent survey from Deloitte shows that global executives are increasingly concerned about the growing risks to their supply chains and costly negative impacts, such as margin erosion and inability to keep up with demand. Of the 600 executives surveyed, most converged on the need for a strong risk management strategy to mitigate the impact of ever-present disruptions. Yet, an alarming 45% of the surveyed executives said their supply chain risk management programs are only somewhat effective or not effective at all. And the number one reason why their supply chain risk management programs are not successful: “lack of acceptable cross-functional collaboration.”
Despite strong evidence from all corners of supply chain outlining the benefits of collaboration, including increased visibility, flexibility and control, many companies continue to struggle to achieve an effective level of collaboration across the enterprise. They continue to operate in an array of information silos, preventing the creation of a true picture of the current state and future outcome of the current supply chain operating plan. Look deeper into the Deloitte survey results and you’ll find that “current tools and limited adoption of advanced technologies are often constraining companies’ ability to understand and mitigate today’s evolving supply chain risks. Although many of the surveyed executives report using a wide range of tools to manage risk, only 36% use predictive modeling and less than one-third (29%) use risk sensing data, worst case scenario modeling, or business simulation—tools that can help drive more proactive management of supply chain risk.”
With many advancements in supply chain software over the last decade, it is surprising that companies continue to struggle in these areas. Triple Point’s Supply Chain Optimization solution has been helping process manufacturers achieve enterprise-wide collaboration enabling tactical and strategic supply chain planning for over twenty years.
I’m excited to share the news that Triple Point has acquired WAM Systems, the premier provider of supply chain planning and optimization solutions for the process industry.
WAM has an impressive presence in the chemical industry, and its solutions are also beginning to see adoption within other process industry segments including oil and gas, pharmaceuticals, CPG, and food and beverage. WAM’s worldwide customer base includes leading companies such as PTT Global Chemical, Saudi Aramco, Celanese Chemicals, LyondellBasell, Honam Petrochemical, Indian Oil, PetroChina, Sasol Oil, and Solvay.
Like Triple Point’s previous acquisitions, the WAM acquisition furthers Triple Point’s commitment to having the most comprehensive, advanced solutions for handling all the financial and physical aspects of Commodity Management. Softmar was acquired for its superior chartering and vessel operations solution, and QMASTOR for its exceptional coal and mineral supply chain solutions. Acquiring WAM – the premier provider of process industry supply chain solutions – made perfect sense as a next step.
The process industry is facing many challenges including extreme raw material price volatility and increasingly complex global supply chains. This business environment mandates that process manufacturing companies leverage advanced technology solutions to ensure efficient and profitable operations. With the acquisition of WAM, Triple Point now offers the only Commodity Management solution that optimizes all the physical and financial supply chain complexities that process manufacturing companies deal with on a daily basis.