Almost everyone knows global supply chains have experienced challenges over the past year. The causes of trouble are myriad; however, synchronization is not often mentioned. The Oxford Languages dictionary defines synchronization as “the operation or activity of two or more things at the same time or rate.” When it comes to global supply chains, there are a lot more than two activities that must take place in harmony if things are going to proceed as planned. To help synchronization, many experts insist that supply chains must digitize. Mark Burstein (@MarkBurstein), President of NGC Software, insists that supply chain digitization and supply chain synchronization go hand-in-hand. He writes, “Supply chain synchronization is key to a digital future.”[1]
Elaborating on that thought, Burstein writes, “To deliver on the benefits of digital supply chains, companies must synchronize every aspect of supply chain optimization, planning and execution throughout their supply chain network — bringing together previously disparate disciplines, departments, vendors and technologies into a single ecosystem that ties everyone and everything together. Information and departments that were previously siloed and disconnected become part of a synchronized digital supply chain, where all activities are orchestrated, information flows freely, and companies can easily adjust to changing demand signals.” That certainly sounds reasonable; however, those kinds of statements prompted Kevin O’Meara (@Logisticsexpert), a Vice President at Shaw Industries, to ask on Twitter, “Have the billions of dollars invested in supply chain technology really made a significant difference in the outcomes?”[2]
What Must Be Synchronized?
In order to answer O’Meara’s question, you must understand that technology investments can only be maximized if all other supply chain investments keep pace. Burstein insists three things must be synchronized: optimization, planning, and execution. Each of those areas involves a different kind of synchronization.
Optimization
Dave Graham (@d8vyg), Head of Business Partnerships at Gravity, notes, “Digitizing the supply chain enables the opportunity for supply chain excellence to occur. The provision of significant quantities of data allows businesses to design and implement strategies that can simultaneously: increase revenue opportunities; lower operational cost; improve efficiency and flexibility; [and] enable complete visibility and transparency.”[3] Optimization, as described by Graham, is the area where most technology investments referred to by O’Meara have taken place. Why haven’t they shown a better ROI? Logistics expert Adrian Gonzalez reports, “The disconnect Kevin highlights between the large investments companies have made in supply chain technology and the seemingly lack of improvement in outcomes is due, in part, to the disconnect between the Physical Supply Chain and the Digital Supply Chain.”[4] This disconnect (or lack of synchronization) will be discussed further below.
Recently, the Council of Supply Chain Management Professionals (CSCMP) released its “33rd annual State of Logistics” and the researchers concluded, “Logistics are out of sync.”[5] This lack of synchronization is partly due to “the logistics sector [having to] simultaneously contend with the hangover of red-hot demand and worries of a revenue-diminishing and inventory-swelling downturn.” Although technology cannot completely solve this synchronization problem, cognitive systems, like the Enterra Global Insights and Decision Superiority System™, can help supply chain professionals better understand how the business environment is changing so they can better adapt. As the CSCMP study concluded, “How logisticians can respond can be best summed up by a single word: agility.”
Planning
Planning synchronization involves both in-house planning and value-chain planning. As I noted in a recent article, “Planning and optimizations are done in many departments within a business, such as supply, manufacturing, distribution, warehouse, transportation, budget, labor, and so on. Often, departmental planning functions are disconnected from one another and may have conflicting goals.”[6] Cognitive planning solutions, like the Enterra Concurrent Planning Intelligence Solution™, can help minimize conflicts and create a balanced concurrent plan. Our Solution does this by creating an objective function (i.e., an overarching objective) that balances departmental goals with an overarching corporate goal. This ensures corporate alignment is maximized.
Planning in synchronization with the broader value chain is even a greater challenge and misalignment remains a real possibility. Whereas agility is the most important supply chain characteristic when it comes to optimization, collaboration is the most important aspect of better value-chain planning. The staff at Planet Together explains, “Collaboration and engagement facilitation are key [for] supply chain synchronization. You must enlist supply chain participants as stakeholders and ensure that everyone is engaged within their role in making production run as smoothly as possible, both internally and externally.”[7] Of course, it’s not just production that requires collaboration. Every step of the supply chain from sourcing to delivery requires seamless collaboration.
Execution
As O’Meara noted, perhaps the biggest synchronization problem (or disconnect) is between physical and digital supply chains. Gonzalez explains, “There is the Physical Supply Chain consisting of infrastructure, assets, and people (e.g., trucks, trailers, roads, ports, containers, chassis, warehouses, drivers, warehouse workers). There is also the Digital Supply Chain, which involves connecting trading partners electronically to share real-time data, documents, and information with each other and leveraging software applications to enable smarter and more automated transactions and business processes.” Trying to pry those two supply chains apart is impossible. As Graham notes, “Supply chain synchronization requires the collection, analysis, and use of information to take place in real time to enable the management of the critical path order lifecycle with pinpoint accuracy to mitigate risk so that: suppliers can organize raw materials and plan production around realistic and quantified lead times; logistics providers can determine shipping requirements with certainty; distribution centers have visibility for receiving and planning, labor and stockholding optimization; shop floor optimizers get to understand when product is due to store; [and] finance departments know with certainty when to trigger payments and hedge currencies, etc.”
Clearly, many of the problems currently being experienced are found at the intersection of digital and physical supply chains. As Graham explains, “We live in a world where perfect order fulfillment is expected, but this can only occur when all participants in the supply chain operate together in unison — the key is synchronization.” To determine where most of the blame lies for today’s challenges, Gonzalez asked a number of experts: “If you had to pick one, which supply chain is more broken — the physical one or the digital one? In other words, which one is more to blame for the current issues in the industry?” Not surprisingly, almost three quarters of survey respondents (74%) believe the Physical Supply Chain is more to blame for the current issues in the industry. Since the physical and digital supply chains must advance at the same rate to achieve maximum efficiency, it is little wonder O’Meara is disappointed that technology alone couldn’t make things better.
Concluding Thoughts
Scholars Daniel A. Pellathy, Michael H. Burnette, and Theodore (Ted) Stank assert, “There haven’t been such across the board supply chain disruptions since the end of World War II.”[8] They go on to observe, “Despite headwinds, businesses still expect supply chain managers to find a way through this minefield while continuing to deliver value to customers at a profit. New research by the University of Tennessee, Knoxville’s Global Supply Chain Institute highlights end-to-end supply chain synchronization as a leading-edge strategy that companies can use to manage shocks, recover stability and set the stage for future gains.” Like the experts cited above, Pellathy and his colleagues understand physical and digital supply chains must synchronize across what they call the “Three Ps of Supply Chain Synchronization.” They explain, “Supply chain synchronization focuses on building supply chain capabilities and linking them to a core business driver to create a platform for long-term organizational success. It requires a deep understanding of the core business driver and the creation of a supply chain where physical assets, business processes and people systems (the Three Ps of Supply Chain Synchronization) are intimately linked to its strategic imperatives.” They add, “Synchronization can help companies weather the challenges and opportunities of economic uncertainty.”
Uncertainty will characterize the global business landscape for the foreseeable future. Companies need to do everything within their control to synchronize physical and digital supply chains and work with other stakeholders to do the same. As Pellathy and his colleagues conclude, “By reducing costs and enhancing value, synchronization helps protect margins and sets the stage for future growth. While not a silver bullet, end-to-end supply chain synchronization does represent a powerful new strategy for managing risks and deliver value in uncertain times.”
Footnotes
[1] Mark Burstein, “Why Supply Chain Synchronization is Key to a Digital Future,” Sourcing Journal, 27 June 2018.
[2] Adrian Gonzalez, “A Supply Chain Executive Asks: Is Supply Chain Technology Making A Difference?” Talking Logistics, 22 August 2022.
[3] Dave Graham, “5 Steps that Will Drive the Synchronization of Your Supply Chain,” Gravity Blog, June 2021.
[4] Gonzalez, op. cit.
[5] David Sparkman, “The State of US Logistics 2022: Logistics Are ‘Out of Sync’,” Material Handling & Logistics, 24 August 2022.
[6] Stephen DeAngelis, “Supply Chain Planning in a Post-S&OP Era,” Enterra Insights, 11 October 2022.
[7] Staff, “Five Steps to Achieve Supply Chain Synchronization,” Planet Together Blog, 30 May 2019.
[8] Daniel A. Pellathy, Michael H. Burnette, and Theodore (Ted) Stank, “End-to-End Supply Chain Synchronization: A strategy for uncertain times,” Supply Chain Management Review, 9 November 2020.
