What Murmuration And Supply Chain Collaboration Have In Common (Part 3)
Part 3 in the “Murmuration and Digital Supply Chain Collaboration” series
In Part 1 of this series, we discovered murmuration as a way for starlings to communicate extremely quickly and act in an extreme agile manner in large flocks. In Part 2, we discussed what companies, as part of large supply networks, can learn from murmuration. In Part 3, we will continue to discuss potential learnings.
Become the same species: Help others to become “starling-ish”
One of the reasons starlings can act in a flock is that they all belong to the same species. Applying this concept to business networks can be a challenge – many members of your supply chain will be in different industries and execute different business processes. Many members also exhibit different levels of maturity in how they plan and execute these different business processes. However, to help your supply chain become the same species, consider the following:
Develop your network: Invest in your network partners and actively share collaboration best practices. Make sure your network follows the same principles, and vice versa: Apply best practices from your partners and actively ask them to share those. One of my customers started to collect forecasts, PO’s, and related confirmations from its upstream network partners (4 tiers) in order to evaluate potential disruptions (see Figure 1 level 2). The project failed due to difficulties in the interpretation of the information and because some trading partners did not want to share the information.
Instead, they now just ensure that all trading partners introduce a best-practice collaboration process (see Figure 1 level 3), and share a six-month forecast on a weekly basis, receive forecast commits accordingly and receive order confirmations for all orders, as well as ASNs for all deliverables. This is also what they control as part of their audits.
Industry standards: Maintaining industry standards is the classic way to “starling-ize” your network partners. But because not all of your network partners are from the same industry, there’s always a certain degree of unharmonized processes. Still, you might want to apply best practices from other industries. For example, think of your automotive customer, who shares a scheduling agreement of 24 weeks with you. As a high-tech company, you do not create such long-term forecasts for your suppliers today. But why not share the transparency the scheduling agreement from your customer provides with your suppliers?
Map processes and technology: In cases where processes cannot be standardized across the network, you might want to invest in mapping capabilities from a technology perspective, where modern collaboration platforms provide large catalogs of reusable mappings and simple ways to create and test new ones; and from a process perspective, in which you interpret the information shared by the other partners (or at least have a clear understanding of the decision-making process of your trading partners) and apply the consequences to your own process. Create the exact same understanding of a supplier managed inventory process between you and your supplier.
The momentum created through recent digitalization waves is a great point in time to analyze internal and external processes, reduce side processes, and clean up the way you collaborate.
Become more agile
Communication with trading partners is one thing; receiving the information and quickly turning it into action is another. Starlings can perform incredible formations because they focus on simple rules and they do not carry any sort of buffer. In supply chain terms, they don’t carry operational buffers such as safety stocks, systematical buffers such as long lead time settings or lot sizes, or data buffers. Think about a company carrying more data than they can consume or interpret. The information noise will certainly slow down its agility.
Here’s an interesting case that shows the importance of agility and communication going hand-in-hand: I meet with companies on a weekly basis who report that their standard lead times have grown significantly over the past decades, due to simple safety measures caused by disruptive events in the past — but nobody ever revisits those lead time adjustments. Some organizations have planners who artificially inflate lead times to ensure the right time/quantity/quality of supply.
To become more agile, you might want to reset those parameters as part of a process standardization and digitization initiative. First, understand what your real lead times are by analyzing your and your trading partners’ shipping and receiving dates and applying predictive analytics. Second, mitigate the risk. The buffers have been introduced for good reasons. A tighter, automated collaboration with your trading partners helps to mitigate the risk once you reset your 20-day lead time to 10 days.
You’ll never be part of a murmuration if important network information is absorbed in error-prone, time-consuming manual processes. The right business network, which allows for different processes and technologies, will increase the chances of your supply chain “flock of starlings” behaving like a real flock.
Read the entire “Murmuration and Digital Supply Chain Collaboration” series.