Improving Information Management to Enhance FlexibilityThe virtual supply chain: secret weapon of some of the biggest companies on the planet. In the modern world, simply managing the flow of goods has ceased to be the primary challenge. Information is more thorough and readily available than ever; managing that information in a way that enables rapid, optimized decisions is the new focal challenge.
The value of information is in its comprehensiveness and structure.
The Barilla Company, one of the major pasta producers in Italy, provides a keen example. The firm had offered its customers discounts on delivery by the truckload which sparked off irregular orders. The extreme volatility of order size, unassessed and shared up through the supply chain, generated successively bigger fluctuations at each stage back(the Bullwhip effect).
Perplexingly, shortcomings in information management had forced the supply chain to become excessively flexible. The same effect can still occur today in any enterprise, unless measures are taken to gather information at all relevant points and compile it for an end-to-end view of demand.
The devil is in the details.
Improving Information Management to Enhance FlexibilityNo longer an innocent question or idle chit-chat, even the weather forecast is information that directly affects planning in many supply chains. The more extreme examples include natural catastrophes that can strike suppliers in different parts of the world.
Earthquakes, tsunamis, and flooding in Asia have created panic in recent times among IT vendors, scrambling to find available stocks of hard disk drives and semi-conductor components as subcontractors were knocked out of action. But the weather also has an everyday impact on what supermarket chains sell to their customers, as in the case of Tesco in the UK.
Regardless of the industry, accounting for data that might seem irrelevant at first glance can be the difference between success or disruption.
Communication is the only way to prevent data overload.
Simply doubling IT resources to pull in twice as much data is not a solution. Even Big Data acolytes recognize that you need business brains as well as brawn.
Although bigger supply chain networks naturally require a bigger technical infrastructure, the benefit is first of all to be found in improving business information processes. Getting supply chain planners to communicate between themselves and making forecasts in collaboration with key suppliers are often effective information management techniques in the first instance.
Spreadsheets are a double-edged sword.
Improving Information Management to Enhance FlexibilityInformation in spreadsheets is too often information that does not flow or that is not shared. One of the key functions of good supply chain information management is to make all the information available to authorized users who then have the collective and individual responsibility for keeping it up to date and relevant.
Excel brought new light to the business world through its modeling and data collection abilities. But when data files become riddled with errors or stashed away on personal computers, their value to the company is nil.
It’s not Excel’s fault; it’s a process problem.
The Smarter Model
Software decision analytics applications now exist that can help users construct meaningful representations of their supply chains and the elements that drive them. These applications also help businesses by predicting which aspects of the supply chain will most influence its performance, allowing the model to be simplified and supply chain information management to be further improved.
However, supply chain information models for developing flexibility are only as good as the data fed into them and the parameters used to define them. When looking to improve information management, it’s imperative that your collection be broad while your analysis maintains an acute eye for the details.
Video – The Importance of Supply Chain Risk Mitigation
We are curating a conversation about supply chain risk at costflexrisk.com. We put this video together to highlight the impact of supply chain risk in the news. Please take a look and then let us know what you think at @GSCSOptimize!
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