Leading companies have mostly used supply chains and sales and operations planning to create competitive advantage as measured by bottom-line finance metrics. Meanwhile, the remaining industry participants have cumulatively experienced static or worsening financial results.
Global GDP analysts have assessed about $13tr of stock buffers that have remained continuous or increased over the previous centuries. Inventory is generally kept as a buffer between demand and supply lead times. Despite the use of business and supply chain technology, synchronization of supply and demand has not enhanced over the previous 20 years.
Supply chain winners haven’t improved technology; they’re using easy instruments that work better. They use their size to compensate for working capital and exposure to inventories, and transfer most of this danger to their upstream networks. The true issue is why, after centuries of conversation and promises, why alternatives are not available that benefits the entire supply chain?
The Disconnect of Enablers
In selecting suitable technologies to automate complicated decentralized activities, there is a tremendous discrepancy. Only centralized technology enablers are used by packaged software and cloud vendors to provide alternatives to a decentralized process.
But true success is found in mapping, modeling and embracing actual human workflows. A focus on human decision-making dramatically decreases the cycle times necessary for assembling, aggregating and matching demand and supply. Highly decentralized and cooperative methods have been deployed an approach that we call “Synchronizing the Independent.” However, it is hard to scale these methods beyond individual customers because it runs counter to I.T’s preferred streamlined architectures and departments and suppliers of packaged software. These problems have been magnified over the previous decade, as on-site technology is moving into the cloud and being confused with enhanced cooperation.
Blockchain: A New Enabler
Blockchain is an internet-based technology valued for its ability to validate, record and distribute transactions in unchanging, encrypted ledgers publicly. The technology has been developed to help Bitcoin transactions, a digital cryptocurrency operating independently of a central bank. Blockchain technology essentially provides the platform for creating and distributing the ledger, or record, of every bitcoin transaction to thousands, if not millions, of network-linked computers across the globe.
Interest in blockchain seems to provide an avenue for real-world collaboration’s real scaling by adopting decentralized technology, encrypted safety, and peer-to-peer networking technology. In the supply chain context, blockchain is increasingly being discussed, but the focus is often on replacing existing applications such as tracking. The biggest needs, and the highest return on investment, are processes that cannot be automated using centralized technology.
As an example of this disconnect, as much as 90 percent of all real planning and coordination is still done via spreadsheet and e-mail despite decades of new supply chain technology. In specific, coordination of S&OP building plans outside a department or business is practically always done in this way.
The incorporation of decentralized, distributed technology that promotes supply-chain workflows is needed and starts to embed decision-making into the whole network. The increasing underground of decentralized technology is a recognition that human insight is critical to achievement at the edge of the company. These spreadsheets and emails are in many ways a decentralized technology that syncs the independent just one that is not scalable or optimal.
Companies and people rarely operate in real time, as they often have to create demands and promises that involve self-interest assessment. Essentially, this is the design of decentralized network technology. Today, companies need to decrease cycle times from months to minutes and seconds while maintaining their independence and profits and allowing value-added production. It will always fail alternatives that try to invalidate this immutable truth. It’s time for a fresh strategy after a decade of bad outcomes and investment worth billions of dollars.
Putting Manufacturers Back in Control
Imagine S&OP becoming the technology equal to the supply chain for the production of 3-D printing. Instead of demand being met from inventory buffers, a scheduling bill of material and master plan may hold lead times for demand and supply. Commitments can be achieved by quickly pegging up and down the network manufacturing, rather than drawing on stacks of constructed inventory. This can lead to breakthrough business models that allow value-added companies to take the lead in client demand rather than enabling big distributors or retailers to dictate SKU pricing revenues.