Monday, May 09, 2005

Is SCM Just Dumb Execution?

May 09, 2005

The new fashion in the supply chain management is the school of thought that supply chain planning is dead because all that is needed is a good order management system for running a supply chain. This is usually from people who do not understand the dynamics of supply chains or do not understand how supply chain planning has evolved. Plans in a dynamic environment are usually stale. The input data would have changed by the time the planning process is completed and a plan is published. This is definitely true in the context of creating operational plans for supply chains. But supply chains have the levers to be able to get back to plan. Superior supply chains keep the plan fresh by monitoring against the plan, understanding the root cause for deviations from the plan and using any of the available levers to get back to plan. An example of a lever could be to use air freight instead of ground transportation when demand takes of unexpectedly to avoid losing that revenue because of a stock out. A different lever could be to promote an alternate product. Well run supply chains are the ones that master the process and create the tools to do these lever choices rapidly. The state of the art supply chain planning tools focus on helping companies make these lever choices and the decision support on how the chosen levers need to be used.

What do you think?

Karthik Mani

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