December 22, 2016
Disclaimer: Since it is the holiday season, we had a little fun coming up with our own take on a classic holiday story.
“How the Grinch Stole Christmas” may be a heart-warming holiday classic, but it’s also a cautionary tale about the dangers of having an inflexible supply chain. In Dr. Seuss’s masterpiece, the Grinch decimated Whoville’s logistics network with little more than a dog dressed as a reindeer, a fake Santa suit, a sled and a heart that was two sizes too small.
It just goes to show that sometimes, the only thing between a holiday and a humbug is the quality of your supply chain operations to seamlessly deal with logistical setbacks and other unlikely adversities.
Prepping the Supply Chain For Holiday Havoc
It’s not clear what the Whos of Whoville do when it’s not Christmas, but in our world the preparations entail busy shopping extravaganzas, each more lucrative than the year before. In 2016, retail sales are expected to increase 3.6 percent over 2015, reaching a value of $655.8 billion. Meanwhile, e-commerce sales will account for approximately $117 billion of that value, up by about 7 to 10 percent over last holiday season.
Historically, long lead times have been the big challenge of planning for the holiday. The idea is to estimate demand well in advance of the holidays (think Christmas in July), and then make plans to accommodate projections – i.e., how much roast beast can we expect the Whos to eat on Christmas morning?
However, it’s another thing entirely to balance supply and demand in the moment. For example, some products may unexpectedly outperform others. Have you seen the hysteria about Hatchimals? If you are not as lucky as the creators of this popular toy, you can also end up with an overabundance of goods that were forecast to fly off shelves. In either case, the result can be lost opportunity, or degradation of the customers’ experience in the form of order delays, shipments that won’t arrive until after Christmas, out-of-stock items and more.
Not to mention, customer demand is hardly the only wrinkle in what would otherwise be a smooth supply chain. If a certain supplier is late with a critical shipment, your entire value chain can suffer. What’s more, this hardly even begins to address the issue of post-holiday returns. Ball all of these factors together, and the inherent challenge of creating a flexible supply chain becomes apparent.
Without supply chain flexibility, this box is all you’ll have left when your inventory runs dry.
Avoiding Christmas Chaos Through Digital Transformation
Lead time will always play an important role in holiday shopping. But as we’ve witnessed through Amazon’s incredible use of analytics to make one-hour deliveries in some parts of the country, flexible and responsive are becoming more central to supply chain management. In the not-too-distant future, it’s possible that some of the pressure placed on companies to precisely measure customer demand will be offset by a more flexible supply chain.
The problem for many organizations – and for the Whos of Whoville – has been that the level of insight and real-time autonomous action required of such a responsive supply chain was previously unfathomable. However, thanks to the inclusion of cloud computing and machine learning in supply chain analytics, even the Whos can wrap their little minds around the concept of an on-demand economy.
Using the prodigious quantities of Big Data that are now available, businesses can achieve two things:
- Crawl and categorize data that is obtained through cloud integration.
- Interpret this data with cognitive applications that are business-aware, and automatically prescribe an action to get the desired result.
Taken a step further, that action can be automated. The second there’s even a tiny indication of last-minute complications, adjustments are made to the supply chain. In other words, every data-driven operation or piece of equipment that is integrated with your digital supply chain is automatically responding to change in real-time, all the time.
If the Whos existed in this time of a business-aware supply chain, perhaps the Grinch never would have been able to attempt to steal Christmas. Why? With autonomous supply chains, the manufacturers of trees, ornaments, cookies, and of course, roast beast, would have been aware of dwindling stock and automatically identify inventory in another Seuss town to stock Whoville. In the end, despite the Grinch’s meddling, little Cindy Lou and the Whos of Whoville would have a Christmas to wake up to.