Is Your Supply Chain Skating to Where the Puck Is Going to Be?
The famous saying, “I skate to where the puck is going to be, not where it has been” has become hallmark business advice in certain circles. While there’s some debate about whether this adage was coined by hockey icon Wayne Gretzky or whether it was one he picked up from his father, this advice certainly resonates with companies navigating the realities of today’s new digital world.
Nicknamed “the Great One,” Gretzky left an indelible mark on hockey. According to his player profile on the NHL’s website, Gretzky is considered the all-time leader in goals, assists and points. He holds 61 league records from his 20-season career in the NHL. And that’s just some of his accolades: he also won the Stanley Cup four times while part of the Edmonton Oilers, the Hart Trophy nine times, and the Art Ross Trophy 10 times, among many others. There’s no doubt that his bold strategy of “skating to where the puck is going to be” worked well for him.
Many have tried – and failed – to match the Great One’s talent on the ice. I imagine that it must have been frustrating to play against Gretzky, just like it’s probably frustrating trying to manage your supply chain in this new digital world. Yet, there is much value to be gained by applying Gretzky’s advice to the supply chain.
The “puck” of supply chain
Think of the “puck” as the products and assets that are constantly moving through your supply chain to the ultimate destination – the consumer. To play the supply chain game like the Great One, your products and assets must be moved to where they need to be. While trucks, trains, 3PLs and other providers are always looking for ways to streamline and make the supply chain more efficient, it’s become more difficult and the “puck” is moving faster than ever before. The Amazon effect has conditioned consumers that you can buy anything, from anywhere, and have it delivered in two days or less. This is a drastic departure from the traditional lead time of 7-10 days. In some urban areas, the expectation for this new delivery window has been further compressed to hours and minutes.
In addition to the increased speed of the “puck,” it’s getting harder to field because it’s moving in a different way. Today, products and assets are moving along different, non-linear supply chain paths. This is a result of many factors:
- Node skipping is becoming more common. Manufacturers may bypass a finished goods distribution center (DC) and go direct to the consumer. Also, during high promotional periods or times of high seasonality, many manufacturers are going direct to their retail customers to streamline the shipment of goods.
- Direct to consumer shipping is on the rise, thanks to manufacturers’ growing adoption of e-commerce as another revenue model.
- Click and collect services have been successful in Europe, and are starting to gain traction in the U.S. This service shifts the consumer’s relationship to the store from a place to shop to one where you pick up orders placed online.
- The linear supply chain has morphed into a grid. The traditional “buy-make-move-store-deliver” approach to flowing product through the supply chain is no longer competitive in today’s digital world. A grid-based supply chain model, as shown below, enables companies to maximize customer focus and profitability by interconnecting decision paths, processes and systems.
Given these changing dynamics, how are traditional solution providers addressing this issue? Some advocate that you need to be able to sense and respond or know sooner, so you can act faster as ways to better catch up with the “puck.” While this strategy does provide some value, it is an incomplete approach. In-memory supply chain models have narrowed the gap by shrinking the latency between sensing and responding, enabling you to fulfill demand more effectively. These in-memory models are necessary, yet insufficient; ultimately these models just help you skate to “where the puck is” instead of “where it is going to be.”
Because by the time you sense it, it may be too late. The “puck” has moved to a different place.
Imagine a scenario where you sense that a shipment is not going to arrive on time at your DC. You have limited options if you sense this risk the day the shipment is due. However, if you are aware of this risk two days in advance, then you have more options. This allows you to run what-if scenarios to determine the best course of action depending on your corporate business strategies and priorities.
In this new digital world, anticipating where the “puck” needs to be is now possible. The SCM World report, The Digital Transformation Directive, describes the new opportunity:
“Digitisation is exploding the amount of data available to understand both customer demand and supply availability which means planning must evolve to sense more deeply, more quickly and more subtly than ever before. Predictive analytics and self-learning supply chain algorithms could evolve rapidly here.”
Moving to where the “puck” is going to be
How do you adjust your supply chain strategies so that your products and assets are always moving to “where the puck is going to be”? At JDA, this is where we believe digitalization will play a defining role. Supply chain digitalization, as we see it, is the process of using technology advancements linked with physical and digital assets to redefine and reimagine current business practices to improve customer experience and create a significant competitive advantage. Supply chain digitalization is being driven by:
- Physical “things” incorporating computer technology
- Readily available big data (social, news, event, weather)
- Computer systems and software becoming more intelligent
Supply chain digitalization is the new frontier where competitive advantage is going to be won or lost. Today, predictive analytics that capture signals via a digital hub can credibly tell you “where the puck is going to be.” JDA is enabling this through our partnership with TransVoyant to use their integrated digital signal repository, coupled with predictive analytics and then integrating those into the planning and execution processes.
As illustrated above, the typical global supply chain has many different legs – inland, ocean and domestic – that can result in long lead times as the product travels to the end customer. Digitalization provides opportunities to gather data while goods are in transit. For instance, ocean buoys can provide data regarding tidal patterns, leading to insights about whether transit times will be impacted. Likewise, sensors at the ports of exit and entry can help predict levels of congestion. Weather radar signals about impending storm patterns provide insights into when alternate routes may need to be designated. On a more micro level, signals indicating traffic congestion lead to insights into when alternate routes must be taken to ensure product is delivered on time.
Not only do these predictive insights create a better initial plan, but they also allow for real-time adjustments when transitioning to the next steps of monitoring and execution. Of course, having a plan is still a necessary requirement. While access to a digital hub with predictive analytics can help you and your trading partners create a better initial plan, you still need the ability to sense and react to that plan as it is in motion. This concept is often referred to as iterative or concurrent planning.
For instance, if a sensor alerts you to a major storm that’s going to impact your standard shipping route, you will need to divert that ship around the storm – a move that will add another seven days to your lead time. Depending on how soon you are made aware of this new information, you can proactively take action to mitigate the risk before it becomes a problem. If the ship is carrying bill-of-material inventory for your manufacturing plant, you could look at sourcing that inventory from another supplier, maybe in a different mode, to mitigate the risk. Or you could look into trans-shipping product across your DCs to balance inventory now that you know the storm will impact the lead times that your plan is built upon.
The net effect of leveraging these predictive insights is that the product arrives at the consumer location more reliably, with lower supply chain cost and risk. Depending on the organization, the cost savings could be a result of carrying less buffer inventory, less expediting, or operating more efficient transportation modes.
Modeling your supply chain after the Great One
Are you ready to be the Wayne Gretzky of your supply chain? The good news is that it’s now possible to achieve this level of greatness in your supply chain. Thanks to recent technology advancements, his genetic giftedness is not required. Mere mortals can execute on his approach today by taking advantage of the power of supply chain digitalization.
Companies that can tightly couple digital analytic insights with execution will be more successful in battling the Amazon effect. Gretzky also understood that, like supply chain, hockey is a team sport. He is still the all-time NHL leader in assists. Building tighter digital integration and collaboration with your trading partners will boast your win percentage with your customers. As the speed and volume of digital connections continue to grow, along with the number of digital insights, “swivel chair” integration will no longer be a sustainable strategy. Gaining access to these data signals is important, but the key to success is to make the insights actionable.
And of course, these digital connections will only continue to increase. Now is the time to get started. Because in the words of the Great One, “You miss 100 percent of the shots that you don’t take.”
Additional Recommended Resources
Register for the SCM World webinar on Digital Transformation on Tuesday, March 21 at 11 am ET
Read the SCM World Digital Transformation: The Execution Challenge report
View the SCM World Supply Chain Execution infographic