I recently learned that the new incoming CEO of Flex, one of the largest global contract manufacturers in the world, has highlighted the book I wrote with Tom Linton last year called the “LIVING Supply Chain: The Imperative of Operating in Real Time”. The CEO, Revathi Advaithi, noted in one of her opening messages to shareholders and the public, that real time data is essential for delivering supply chain accuracy. The story notes:
Tom Linton, Chief Procurement and Supply Chain Officer at Flex, and Robert Handfield, Ph.D., explain in the book “The LIVING Supply Chain,” that operating in real time is an evolving business imperative that delivers multiple benefits:
- Better decisions can be derived from up-to-the minute information vs. yesterday’s news. To make decisions based on data, the data needs to be as fresh and current as possible.
- Ability to quickly respond to changes in demand, exploit market swings and make your competition wonder what you’re up to.
- Faster, more effective response to disruptions that could derail your supply chain, including materials shortages, natural disasters, trade law changes, geopolitical upheaval and labor disputes.
- Better ways to spot vulnerabilities. Knowing what could happen (even if it’s not always possible to know “when” and “where”) means you can put plans in place to minimize repercussions.
- Less reliance on gut feelings based on past experiences and estimates using standard predictive models that rely on siloed data and old information.
- Right place, right time inventory levels that are consistently balanced to keep service high and costs low.
Forecast Accuracy Depends on Visibility
Forecasting is about using a mathematical expression to capture what happened in the past to anticipate what will happen in the future. There are two time-honored rules involved:
- Forecasts based on aggregate points of view are more accurate than those made in the context of a single source of data.
- Forecasts made later are more accurate than those made with long lead times.
Therefore, decisions will be most accurate when data is available from all sources and when data is available in real time, allowing predictions to be made at the last minute. Full visibility encompasses the concepts of “end-to-end” and “real-time.”
Visibility really is everything when it comes to supply chain success, and, according to Linton and Handfield, transparency is now the law of the land. While forecasting by definition is never a sure thing, access to current data from across the supply chain goes a long way toward minimizing risk associated with predicting the future.
Delivering on the Promise of Real Time
The authors of “The LIVING Supply Chain” establish that real-time data from multiple sources is critical to creating the transparency needed to make informed supply chain decisions. Linton and Handfield identify other keys to making real time work for global enterprises:
- Leverage cloud-based computer algorithms to centralize knowledge.
- Provide anywhere/anytime access to enable visibility and intervention on any device.
- Rid your culture of signoff processes and decision-making gates that slow things down.
- Instill the exception-based management that limits human interaction to issues deviating from the norm.
- A supply chain ecosystem with these characteristics lets you estimate with reasonable certainty, react in an agile way – and optimize supply chain success.
We are excited to be highlighted in this story, and look forward to engaging with Flex in the future to explore this brave new world of real-time data.