Commentary: Supply chain separation

Eric Johnson, Research Director and IT Editor of American Shipper, has analyzed the concepts of “sentient supply chains” and “plug-and-play supply chains.”    Even in the best of times, it’s tough to keep up with all the interesting supply chain technology ideas bouncing around out there. These days, it’s downright impossible.
   The sheer number of bright minds addressing longtime supply chain problems with intelligent technology is staggering, even overwhelming. But two concepts I’ve come across recently stuck out in my mind: “sentient supply chains” and “plug-and-play supply chains.”
   The first term I noticed in a white paper from the supply chain visibility and analytics provider Transvoyant, a company we chronicled in American Shipper that supplies visibility data to major transportation management systems providers. Transvoyant has been striking out on its own in earnest of late as, it attempts to convince the market to make the leap from using visibility for simply monitoring supply chains to actively influencing them.
   This is a key distinction. Visibility tools create a lot of data, and rather than consuming the data over a short period and then dispensing of it, more sophisticated tools aggregate and analyze that data to detect patterns and predict future behavior.
   In the paper, Transvoyant portrays a scenario where “sentient” supply chains are guided by real-time data to “sense and respond to changes, and predict and avoid disruptions.”
   A retailer fulfilling orders from inventory stored in warehouses is just one example of a business that requires such an approach, as that strategy is no longer sufficient, according to Transvoyant. “Organizations need to commit inventory in transit – which they may not even own yet – in response to dynamic demand signals,” the white paper said.
   The idea of sentient systems is hard enough to imagine. The idea of a whole interconnected network of systems all governed by a sentient command center using machine learning? That’s even more of a stretch.
   But Transvoyant cautioned that this is not a play to eliminate human decision-makers. It’s more of a necessity to effectively comprehend the massive amounts of data being generated in supply chains today.
   “Having a sentient supply chain does not mean all decisions and actions will become 100 percent automated,” the paper said. “Determining which decisions can be made ‘machine-to-machine’ versus which still need to be made by humans will still be up to the supply chain professionals and business leaders. The value of sentient supply chains is their ability to analyze massive amounts of real-time data very quickly and to apply advanced machine learning algorithms to those data streams to produce intelligent insights.”
   This is really the dilemma that supply chain managers face these days: you can get access to an avalanche of data, but it can bury you if you’re not prepared for it. If you are prepared for it, you can make a pretty cool snowman.

Supply chain managers have access to an avalanche of data, but it can bury you if you’re not prepared for it.

   The other term, “plug-and-play supply chain,” is a concept being touted by DHL Supply Chain, the supply chain management arm of Deutsche Post DHL.
   The idea behind a plug-and-play supply chain is to identify as many processes and systems as possible that are common across a company with multiple supply chains, and then standardize those processes and systems through “building-block” solutions.
   The goal is to leave the remaining aspects unique to the individual supply chains, while increasing efficiency and reducing costs associated with having different processes for the same functions across multiple supply chains within an organization.
   The concept is best suited, DHL said, to supply chains with global and regional complexities. The logistics provider used LEGOs as a visual example to help understand how it works. A company would develop “building-block” core solutions for its standardized processes. Those LEGO blocks could fit in any number of areas across a company’s set of supply chains to address similar functions.
   DHL theorizes that up to 80 percent of a global supply chain could be constructed with these building blocks. At its core, a plug-and-play initiative helps shippers think more concretely about what in their supply chain can be standardized and what needs customized attention. There’s a tendency for every company to think the characteristics of their supply chains are unique, that everything needs to be customized. It’s likely one of the primary factors that kept companies from investing earlier in standardized, multi-tenant software.
   But there absolutely are areas that can be standardized, and there absolutely are things that humans are doing that are inefficient or redundant, things that are not adding value to the enterprise.
   The common thread between sentient supply chains and plug-and-play supply chains is the importance of bifurcation. In other words, separating what should be automated and what shouldn’t, what should be standardized and what shouldn’t.
   These are considerations best left to a member of senior management, like the vice president of supply chain or chief supply chain officer, because operations people are often too deep in the weeds to see the forest in terms of what needs automation and standardization within the supply chain. Input from operations is invaluable, but ultimately, the financing associated with modernizing a supply chain will always come from the top.