October 28, 2016 | Written by: Victoria Brown
Categorized: B2B Integration | Procurement
Balancing supply chains is a never-ending puzzle. Determining necessary inventory levels, asset locations, storage capacity, labor availability – it’s a lot of factors to consider – and each time you alleviate one bottleneck, another is created. Retailers and manufacturers alike have recognized this as an issue and a priority. According to IDC’s 2016 Supply Chain Survey, the two of the top supply chain priorities for retailers, manufacturers, and wholesalers in the next 12 to 24 months are eliminating waste and improving service performance. Furthermore, the top three areas they found value in employing analytics were Demand Planning & Forecasting, Supply Planning, and Inventory Management. For years, industry has used various amounts of simulation and calculated KPIs to balance as much of the equation as possible, but as more nodes in the supply chain are added, the complexity multiplies, and it quickly becomes unmanageable to orchestrate the full network from a single perspective.
As the complexity grows and more resources are added to try to balance the network, communication becomes of the utmost importance. Why were decisions made? What was the anticipated outcome of each change, and did it work as expected? Roughly 56% of retailers identify their biggest gap in collaboration and communication in their supply chain is within their own four walls – not with suppliers or customers. The more information gathered, the more that can be planned for the next time a similar situation rolls around.
But what happens when those individuals leave that supply chain with all that tribal knowledge? If decisions aren’t explained or mapped out somewhere, past mistakes will be repeated and all the ground that was gained is lost. While a single individual is often not the only wheel on the wagon, they may be the lynchpin that undoes the cart from the horses leaving the proverbial “cart” to have to start from the beginning again.
While succession planning is essential in any role, in areas of high execution where a single decision has a domino effect on the rest of the company such as supply chain, having a system of record is also important. But what if this system of record could also take the cognitive aspect that has previously been human learning, and truly be the continuity this industry so badly needs?
On Tuesday, October 25th, IBM announced at their annual World of Watson event in Las Vegas that they intend to introduce Watson Supply Chain to the market. This move is a strategic one that builds off of the Watson platform that made its debut into the cognitive market just a few years ago. Watson has revolutionized the way humans and machines interact, and what machines have shown they can contribute to the world’s work.
For retailers who are still trying to figure out this whole “Omni-Channel” thing, it could potentially mean that their DOM has a partner to help make even more intelligent decisions no longer just about where inventory should go, but how it gets there. Watson Supply Chain could be the peanut butter to DOM’s jelly. No longer would inventory “just” be reallocated to fulfill orders in ecommerce or across the network, but then Watson Supply Chain would add information to the puzzle on warehouse space capacity, trailer loads that are going LTL, and ultimately, the best route not only based on cost or labor, but all of the extraneous details that aren’t apparent at the onset of an order.
While Watson is enabling more intelligent decisions and guiding leaders to make more strategic moves, one particular functionality that really stood out was that the solution also includes a “war room” of sorts for troubleshooting, which brings all the key stakeholders into one place to resolve conflict or anticipate surges or bottlenecks. Not only is it a place for collaboration, but the system actually recognized and recommends participants for the conversation that would have value-add for the conversation at hand. No longer will decisions be made while leaving key stakeholders out by accident. Often when responding to an urgent need, quick decisions might be made, forgetting to include others in the conversation and ultimate decision. This will help negate that risk.
After the announcement, there was a clear buzz of excitement across the room and on the expo floor. Attendees could be overheard speaking about problems they had faced within their supply chain that could’ve been mitigated if they’d had this tool. In a conversation with a few retailers in the hours afterwards, one even joked about wishing they’d had this just a few weeks ago in anticipation of Hurricane Matthew, which halted freight movement up and down the Eastern Seaboard of the US and Caribbean in early October. While the tone was generally positive, there was still much conversation and curiosity around other ways in which this technology could be applied to the supply chain, and as is always a concern in collaborative intelligence – the level of security for intellectual property.
Moving forward, Watson Supply Chain looks to be an extremely strategic solution that will benefit retailers greatly if used optimally. Every segment of retail has vastly different margins, and in tighter margin segments, this tool could potentially be the game changer that pushes supply chain optimization and savings over the tipping point to catch the rest of the low-hanging fruit that front-line managers may be too busy to get. Precise decisions are essential when margins are thin, and if this new solution is as effective as it looks to be, this could be a game changer for those segments and retailers who come aboard. While I have excitement for the possibilities Watson in the Supply Chain could unlock, only time will tell the true benefits retailers find in their networks.
If you’re a retailer assessing the value for your own supply chain, the following are a few thoughts to start your evaluation process, and areas to consider before investing:
- How much tribal knowledge resides in your supply chain that would be lost if key individuals left?
- What’s the tenure of decision makers on the front lines?
- At what level are decisions made in your supply chain? Front-line level, regional, or higher?
- Do you currently empower your front-line or regional manager to own their results?
- Is there a need for continuity that does not yet exist in your information pass?
- What percent of your supply chain do you understand and have visibility into right now?
- What does that equate to in dollars spent that you don’t have visibility into?
For more information about Watson Supply Chain, visit the microsite.