The demand for near real time supply chain collaboration will, in turn, place an increasing emphasis on any company's ability to immediately commit itself to promising orders' delivery dates on a global basis and to consistently meet those commitments ever after. This available-to-promise (ATP)/capable-to-promise (CTP) aptitude will be made more complex as companies rely on an increasing number of business partners and suppliers to procure raw materials, assemble, and deliver finished goods. One should therefore take into consideration many more constituencies at both ends of the supply chain and within the organization, such as in research and design or engineering, sales, marketing, and finance.
For example, there is the need to drive suppliers and sourcing initiatives as far back into the design process as possible to ensure the lowest possible cost and the highest possible quality and delivery performance. Hence, product lifecycle management (PLM) and customer relationship management (CRM) are now a part of the supply chain equation, as are operational functions like procurement, supplier performance, spend management, and contract management. In fact, most traditional supply chain thinking has taken place on the supply side, involving operations planners and factory managers. SCE is, therefore, gaining increased awareness lately among companies that realize that planning can do only so much without the ability to make the correct and timely decisions and execute on the shop floor, in the warehouses or within the entire distribution chain.
Yet, planning and execution in the supply chain are slowly but surely converging because no plan is useful if it cannot be executed. The irony is that the best plan cannot help when there is a shortage of certain items, though such an event is the reason for having a plan in the first place. Thus, it would be too na�ve to dismiss the need for proper planning. Regardless of how responsive a SCE system may be, waiting for chaos to happen and only then trying to act would be equally disastrous. It is the same as compiling nearly ideal plans (through cumbersome algorithms) and never doing anything about executing them or never obtaining feedback about their outcomes.
There are disturbance factors that make plans vulnerable, such as unplanned, demand increase from a customer; an engineering change as a result of a field failure; a capacity constraint from a production line or work center failure; inventory shortages or supplier notification of late order; and simple acts of nature. One should then imagine the complexities of coordinating and optimizing available resources within companies that produce thousands of diverse products that are sold through diverse channels and that are comprise of even more thousands of parts and components, each of which is sourced from a multiplicity of suppliers.
Thus, enterprises have for some time now begun to move beyond simple applications for balancing supply and demand to technologies that let them quickly analyze the impact of various decisions to improve product margins, lower costs, and so on. Consequently, operations such as sales and operations planning (SOP)—which aligns the production plan to the fulfillment plan to the product availability plan—needs to be a dynamic document, not a "set in stone" series of Microsoft Excel spreadsheets filed away for later analysis of variances to plans. Businesses need to determine the reason for these variances through analytic and other tools for planning revision.
Evidently, as supply chains become more dynamic and operate in near real time, the lines between planning and execution continue to blur, which bodes well for their functional convergence. Thus, some SCE vendors have started to move beyond pure execution to offer some planning and optimization capabilities, often with the "adaptive" moniker.
A new requirement is that beyond making plans happen, adjustments need to take place quickly with the ability to tweak the system to respond across a variety of organizations and functions. Companies need real time information from execution systems to develop and adjust optimal plans, while the execution side should benefit from more realistic plans for some readiness sake, rather than merely reacting after the fact in a firefighting fashion. The demand-driven supply chain requires a single, consistent, demand-based plan that optimizes marketing, inventory, and replenishment decisions.
We believe that planning and execution will become inseparable in a trend that will see ERP, SCP, SCE, supply chain event management (SCEM), PLM, CRM, MES, and analytics and CPM (i.e., decision support tools and multidimensional analysis on information aggregated from all levels of the commerce chain, and an extensive sets of predefined performance indicators, as well as strategic planning or forecasting and balanced scorecard functions) coming together into an adaptive system. Harnessing this technology should lead to the so-called "self-healing" or adaptive supply chain—when a software engine monitors all the numerous events taking place supply-chain-wide, identifies and escalates exceptions, sends notification, and reacts appropriately to those exceptions, ideally (and only in the long term) without human intervention.
The future will thus see a blend of real time event management (i.e., execution side for the tactical time horizon) and SCP with its strengths in inventory management and capacity planning (i.e. planning or optimization side for mid-to-long-term horizon), as to enable the successful execution of the plan given current conditions.
For example, there is the need to drive suppliers and sourcing initiatives as far back into the design process as possible to ensure the lowest possible cost and the highest possible quality and delivery performance. Hence, product lifecycle management (PLM) and customer relationship management (CRM) are now a part of the supply chain equation, as are operational functions like procurement, supplier performance, spend management, and contract management. In fact, most traditional supply chain thinking has taken place on the supply side, involving operations planners and factory managers. SCE is, therefore, gaining increased awareness lately among companies that realize that planning can do only so much without the ability to make the correct and timely decisions and execute on the shop floor, in the warehouses or within the entire distribution chain.
Yet, planning and execution in the supply chain are slowly but surely converging because no plan is useful if it cannot be executed. The irony is that the best plan cannot help when there is a shortage of certain items, though such an event is the reason for having a plan in the first place. Thus, it would be too na�ve to dismiss the need for proper planning. Regardless of how responsive a SCE system may be, waiting for chaos to happen and only then trying to act would be equally disastrous. It is the same as compiling nearly ideal plans (through cumbersome algorithms) and never doing anything about executing them or never obtaining feedback about their outcomes.
There are disturbance factors that make plans vulnerable, such as unplanned, demand increase from a customer; an engineering change as a result of a field failure; a capacity constraint from a production line or work center failure; inventory shortages or supplier notification of late order; and simple acts of nature. One should then imagine the complexities of coordinating and optimizing available resources within companies that produce thousands of diverse products that are sold through diverse channels and that are comprise of even more thousands of parts and components, each of which is sourced from a multiplicity of suppliers.
Thus, enterprises have for some time now begun to move beyond simple applications for balancing supply and demand to technologies that let them quickly analyze the impact of various decisions to improve product margins, lower costs, and so on. Consequently, operations such as sales and operations planning (SOP)—which aligns the production plan to the fulfillment plan to the product availability plan—needs to be a dynamic document, not a "set in stone" series of Microsoft Excel spreadsheets filed away for later analysis of variances to plans. Businesses need to determine the reason for these variances through analytic and other tools for planning revision.
Evidently, as supply chains become more dynamic and operate in near real time, the lines between planning and execution continue to blur, which bodes well for their functional convergence. Thus, some SCE vendors have started to move beyond pure execution to offer some planning and optimization capabilities, often with the "adaptive" moniker.
A new requirement is that beyond making plans happen, adjustments need to take place quickly with the ability to tweak the system to respond across a variety of organizations and functions. Companies need real time information from execution systems to develop and adjust optimal plans, while the execution side should benefit from more realistic plans for some readiness sake, rather than merely reacting after the fact in a firefighting fashion. The demand-driven supply chain requires a single, consistent, demand-based plan that optimizes marketing, inventory, and replenishment decisions.
We believe that planning and execution will become inseparable in a trend that will see ERP, SCP, SCE, supply chain event management (SCEM), PLM, CRM, MES, and analytics and CPM (i.e., decision support tools and multidimensional analysis on information aggregated from all levels of the commerce chain, and an extensive sets of predefined performance indicators, as well as strategic planning or forecasting and balanced scorecard functions) coming together into an adaptive system. Harnessing this technology should lead to the so-called "self-healing" or adaptive supply chain—when a software engine monitors all the numerous events taking place supply-chain-wide, identifies and escalates exceptions, sends notification, and reacts appropriately to those exceptions, ideally (and only in the long term) without human intervention.
The future will thus see a blend of real time event management (i.e., execution side for the tactical time horizon) and SCP with its strengths in inventory management and capacity planning (i.e. planning or optimization side for mid-to-long-term horizon), as to enable the successful execution of the plan given current conditions.
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