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Supply Chain Digitization Myths: Debunking Magic Solutions

By Bernard Milian
Magician waving a wand

I think supply chain managers see themselves as pragmatic, concrete people. 

Confronted with the reality of customers to deliver to, production resources to manage as best they can, and supplier relations to nurture, they should have both feet on the ground and some common sense. 

There’s really no room for magic in this field, is there?

Where the magic comes in is in the fact that many decisions must be made long before market demand is known. In fact, each one of us as consumers doesn’t know that we’ll be buying this or that product in four months, while a manufacturer somewhere in the world is in the process of starting production for that product we don’t know we’ll buy.

Curiously, it seems to me that many solution providers – whether software or consulting – promote approaches that border on the magical…

Let’s look at some of these myths.

Myth: Artificial intelligence will save us!

There’s no doubt that artificial intelligence has its share of magic. The texts generated by ChatGPT may lack a sense of humor, but they’re impressive, while Midjourney’s photorealistic image generation will confuse professional photographers.

When it comes to the supply chain, all this must be put into perspective. Yes, we can process a mass of data to characterize demand signals, and yes, we can refine forecasts with exogenous factors, but what is the real impact on operations? It must be said that we can’t see many convincing tangible results as of yet.

Myth: Accurate forecasts are the key to everything!

With our algorithms, your forecasts will be x% more reliable, so your out-of-stocks will be reduced by y% and your stocks by z%. It’s magic!

OK, let’s make sure we make relevant forecasts, capture useful information from the markets, and don’t spend more time on them than necessary, because actual demand will differ from these forecasts.

If you only knew, in thirty years of supply chain management, how much time I’ve spent with my teams working out precise forecasts that turned out to be grossly wrong every month – and how much I regret that waste of energy…

Myth: Just make better use of the existing system!

Back to basics. Clean up your data. Review your forecasting process. Implement or strengthen your S&OP (Sales and Operations Planning). Strengthen your MRP (Materials Requirement Planning) process. Use the system, not Excel. Reinforce adherence to the plan. Etc.

Have you done it before, with some consultants? Try again, with other consultants… Magic.

Here’s a tip: if you apply the old methods to the new problems…  

Myth: Digitization is the key!

Our digital, cloud-based solution will give you unrivaled visibility so you can make the right decisions at the right time. Magic.

Myth: XYZ methodology is revolutionary and will solve everything! 

In my career as a supply chain veteran, I’ve heard this in multiple waves: MRP2, MPS, S&OP, JIT, ERP, MEIO, TOC, APS, DBR, DFT, MES, AI, DDMRP – and many other acronyms that have made the buzz.

There’s a lot of good in these approaches, a few pitfalls, but no magic.

The real magic recipe.

With your teams’ critical thinking skills, focus on designing your flow model. What are the response times, the critical resources, and the key control processes? Where to use pull flow, where to use push flow?

Knowing that forecasts will be wrong, what buffers should be built into the system? What investment should be made in agility and resilience? What rules of engagement and information sharing with customers and suppliers?

Do our information systems facilitate the work of our teams? Do our teams spend their time on the right things? 

Can a modern digital solution structure and catalyze system change and take performance to a new level?

Pragmatism is undoubtedly the best recipe for building and developing an agile and resilient supply chain… forget about magic wands.

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