When thinking about rigidity in the supply chain, it’s common to call out the usual suspects – ahem, spreadsheets – that are routinely blamed for making management less flexible. Less noticeable, however, are the historical boundaries that restrict even the most modern, cloud-based, digital solutions.
Cloud and SaaS technologies have made extraordinary strides toward breaking the systemic and spatial boundaries that otherwise limit effective, networked collaboration. And yet, many of the most progressive platforms and software are draped over the stiff bones of outdated frameworks.
The modern supply chain is capable of so much more than these constricting scaffoldings allow. Here are a few of the secret places where silos and rigidity linger.
Silos are fundamentally ingrained in our conceptualizing – as they should be. Categories create neat, convenient, and helpful definitions. For instance, when we refer to a purchase order, we know a customer desires a product and we have rules and processes in place to facilitate that; when we talk about return orders, we know a customer is sending an item back and we similarly have routines and procedures in place to manage them. In essence, distinctions ensure that the various processes and flows don’t entangle and create confusion and errors.
When technology evolved to automate and streamline management, most systems (OMS, TMS, DOM, etc.) were structured to respect those distinctions. That is, they treat sales, purchase, and return orders separately – inadvertently perpetuating organizational silos.
Strict order categories aren’t so harmful that they prevent businesses from getting on as usual. They are, however, unnecessarily restrictive. No matter who an order derives from or where it is headed (supplier, consumer, etc.), the sender or recipient is a customer. So, no matter the context, the goal is to optimize the flow, minimize costs, and boost revenue. By isolating order types and treating flows separately, businesses limit extraordinary opportunities to consolidate, merge, and optimize flows to reduce costs and enhance service wherever possible.
Static Rules for Order Flows
Management systems are usually designed to perform functions based on a preset model of what has historically worked. Whether it’s an order management system using fixed origin-destination rules to group orders into batches or distributed order management which is defined by its own set of best-practice standards. The latest and greatest systems tend to be those that offer a fancier UI or operate by the most current rules of the game. But while the game itself is routinely changing, and at ever-quickening strides, system rules remain virtually static.
Rather than upgrading systems to reflect the prevailing business models of the moment – a moment which is increasingly fleeting given the unprecedented levels of growth and competition – we would do better by designing systems that are inherently malleable. If the rules keep changing, why not implement a system that lets you set and change the rules as you see fit?
As brands leverage customization as a means of differentiating themselves, a fixed-rule architecture feels especially archaic. Dynamic, rules-based order planning and execution offers businesses greater flexibility to expand their services and delivery offerings in cost-effective ways by optimizing each and every order. Rules-based engines calculate all the given criteria and instruct on the best use of all available network resources.
Similar to order categories, supply chain management systems that work in isolation create functional silos. For instance, enterprise resource planning systems support business operations, but are distinct from supply chain management systems. Apart from basic instructions, transportation management systems tend to have minimal communication with order management systems. Software for vendor managed inventory focuses on planning but is often isolated from the execution.
There have been steps taken to remedy the situation, like API upgrades for better data exchange and software packages to increase visibility between systems and processes. Suite vendors have even cropped up to offer more elements for broader functionality. But while all of these efforts improve discrete capabilities, they don’t undo the greater siloed framework and rigid way of thinking as a whole.
The supply chain has become a complex, networked, and often global ecosystem, and we should treat it as such. Complete optimization requires managing the full, end-to-end flow of goods, so our methods for doing so must be as centralized and integrated as possible.
Technology, such as 3D printing, AI, and driverless cars, is rapidly evolving to make the supply chain as streamlined, efficient, and effortless as possible. Management systems intend to do the same, but as long as they are built on siloed and rigid frameworks, they continue to inhibit businesses from implementing innovations with minimal risk to optimize and realize the full potential of the value chain.
It is through innovation that the supply chain sees its greatest revelations and continues to transform. It requires questioning the norms we take for granted and re-imagining the frameworks that hold us back. It demands a flexible mindset, just as businesses require a flexible platform to accommodate innovation.