October 21, 2015

Survive or Succeed: It Always Comes Back to Supply Chain

A recent article by Farhad Manjoo detailed the challenges faced by American Giant, a clothing retailer, this year in handling unmet demand for its popular hoodie. The article caught my attention not because their situation is unique, but for the reasons they gave.

The company, a victim of great viral publicity and social media attention, has been struggling to scale at the appropriate rate to meet a spike in, and a sustained high level of, demand. What’s the cause? When asked, the CEO stated: planning. He went so far as to say that it was not “supply chain” (likely yielding sighs of relief from his suppliers, procurement managers, and logistics partners).

He’s right that it does comes down to accurate planning. However, I challenge his conclusion that the supply chain didn’t have something to do with it, too. Considering the factors of operating a business, manufacturers in any industry have to consider end demand (sales forecasting), capital investments, distribution center and inventory management, procurement, access to raw materials, logistics, and much more. What I see as the real issue, hidden behind the planning problem, is the information across these supply chain functions that his business trusted for its decision-making.

Planning can be especially challenging when a curveball, like viral growth, supplier bankruptcies, labor strikes, or quality issues, is thrown. Companies have to wade through a massive amount of disparate information and raw data in order to respond quickly. Unstructured data such as emails, social, point of sale (PoS) data, video, and so on, offers a rich source for planning. Add in the business applications and ERP systems like SAP and Oracle which house the daily structured (transaction) data, and businesses are dealing with untold numbers of disparate silo’d reports, but with little or no actionable insights.

As many CIOs will tell you, the data is then downloaded into Excel spreadsheets, and voila – a static, maybe monthly or quarterly view, appears. Yet businesses are dynamic and supply chains are in constant motion. While you are analyzing the spreadsheets, the connected global economy is changing. It’s like the Heisenberg Uncertainty Principle. You are looking at one thing, but the other thing has already changed!

Cloud platforms have disrupted the way we look at information in our consumer world. How did we get from point A to B without real-time navigational systems and navigation apps like Waze? Not only do we see the data but we are presented with context-rich information to avoid traffic, understand weather effects, take a detour, and safely and most efficiently get to our destination. Cloud is proving to be a change agent for business, too.

In the case of operations, cloud-based analytics solutions like FusionOps offer the relevant insights at the front- and back-end as well as at critical inflection points in a company’s supply chain. It takes the best of cloud, big data, and analytics to tap into these disparate data sources and deliver real-time contextual information – insights! – in visual layouts that best represent a company’s particular end-to-end operations.

The information is dynamic so to drill down or drill across or run specific calculations on the data, can be done in an instant. With real-time, actionable information versus static template-based reports, business leaders can feel confident in decisions about risk and opportunities related to operations.

These decisions impact everything from style selection to planning, purchasing, lead times, and inventory – and ultimately, revenue, margins, and service levels. Planning may ultimately be at fault, but the quality, relevance and timeliness of information is what makes the difference between surviving or thriving transformational moments in your business.

– Gary Meyers, CEO FusionOps