In between attendee meetings and booth duty at the Gartner Supply Chain Executive Conference this week, I was able to attend a good portion of the week’s sessions. I’ll be providing highlights from a few over the next few days. First up, Supply Planning: Beyond the Next 12 Months, with Gartner analyst, Noha Tahomy and Procter and Gamble’s Jake Barr.
Most Supply Chains are Historical Accidents
According to Jake, the global director of supply chain for P&G, a typical supply chain evolves based on necessity, rather than a strategic plan. Unfortunately, traditional supply chain design could never have anticipated the pace of change we experience now or how quickly innovation happens. As an example, Jake stated that prior to P&G’s supply network assessment, the company was writing off one out of every three dollars that the company brought in due to inefficiencies along the chain. Now, P&G’s supply network design (SND) process ensures that the supply chain meets the business needs of: cost-effectiveness, responsiveness, and pace of innovation. Their are six key steps in the P&G process
- Business strategy assessment
- During this stage, the core business team assesses what the business will require to win
- Six key questions are asked of the different stakeholders (finance, product supply, branding, etc). These questions include shopper requirements, competitive validation and iterative risk assessment
- Strategic assumptions need to be aligned, and choices need to be made about what the business is and is not willing to do. (For example, are you willing to increase production when sales exceed expectations by 5% or 10% or more)
- Map out a set of changes so that if they occur, you already have approval rather than having to going back to the team
- Identify the areas where there is disagreement and get re-asses goals for clarity
- Entails the development of detailed options from which the structural design of the eventual network will be based
- Look at the range of prices you might have to compete in, challenge the team to look at the best ideas for making a product win no matter where it is
- Jake’s team builds out a simulation mode to see what the supply chain will look like before it is built
- Here they determine the parameters for how the supply chain wil operate when it is fleshed out
- This is when all the planning comes to fruition. Start to develop operational plans based on the previous six stages of development
Stay tuned for next week’s report from the HP keynote and let me know how you’re implementing SND in your supply chain.