CONCURRENCY AND ITS IMPLICATIONS

Thanks to our old favourites at Kinaxis, we’ve been mulling over a profound piece written by Matt Davis at SCM World, entitled “Concurrency — Embracing the death of S&OP, SCOR and other supply chain paradigms”.

While the article’s provocative title appears to directly attack principles and practices in which we believe so firmly, we were reassured that the tone of the article is more along the lines of the title statement followed by “as we know them”. Sure, we’re always up for being progressive, so that is much more appealing.

(For the uninitiated, S&OP is sales and operations planning, and SCOR is Supply Chain Operations Reference, a wellknown industry model.)

However, before we share Matt’s executive summary with you, let us consider the regional context where we work, in Thailand, Southeast Asia and China: here, we are still struggling to establish the very basics in terms of skills, behaviours, processes and disciplines in order to get the “old school” things to work. We find that most companies are still not even using the earlier generations of IT tools. Are we really ready and/or able to embrace what Matt is presenting?

We must admit that perhaps there is merit to promoting a “leapfrog” approach to moving forward. In any case, the following is a slightly abridged version of what Matt wrote:

Future business leaders will look back at 2016 as the end of an era.

Both a disruption and a massive opportunity, digitisation, value chain collaboration and a greater need for real-time decision-making are coalescing as a disruptive catalyst to end a roughly five-year stagnation in supply chain planning. This confluence of factors demands innovation.

We have taken a quantitative perspective of five years of SCM World Future of Supply Chain research, which captured over 1,000 responses from cross-industry supply chain executives each year. We have matched this survey data with the most innovative strategy and planning case examples from our community across 2015 and 2016.

The results of our analysis underline the tension between the challenge and opportunity as echoed in recent years of our research.

In 2015, a third of respondents still called S&OP “a necessary evil”. Less than half (42%) said their supporting technology was effective and impactful.

Digital technologies increased in importance and as agents of disruption by an average of over 20 percentage points between 2014 and 2016. Most notably, the cloud jumped from 33% in 2014 to 58% in 2016.

Data security was the top risk for 2016, with 30% rating their organisations as “very concerned”.

We expect that many will be caught off-guard by the speed of change from 2017 to 2020. The actions of several first movers and early adopters in our community have shed light on a path forward: the future of planning is concurrency.

Concurrency is the ability of many people to simultaneously and seamlessly plan scenarios across multiple time horizons on one unifying system. It is powered by the recognition that all levels of the hierarchy and every individual have a role in both short-term and longterm planning.

While it is a simple concept, concurrency is a result of three capabilities.

1. Simulation: the representation of the behaviour or characteristics of one system through the use of another system, especially a computer program designed for the purpose.

2. On-demand history: the ability to return to previous decisions in the exact environment in which they were made.

3. Democratised decision-making: the ability for multiple parties in different organisations, locations and levels of the hierarchy to test ideas and simulate different scenarios in virtual environments.

Advances in supporting technology will allow for more distributed and more frequent simulation both of short-term and long-term scenarios. The speed at which this analysis will take place will actually consolidate horizons rather than drive them apart.

As a result, S&OP — in its current form — must evolve or it will be killed off.

Leading organisations are using digitisation as a unifying platform to marry legacy systems with new digital disrupters to make concurrency a reality. The change to corresponding business processes and organisational constructs will be massive.

The concluding section of this report presents a six-point action plan. We share the insights from several leaders to demonstrate how a set of practical actions taken in the near term, coupled with a few correct big bets, will bring an end to the era of several outdated supply chain paradigms.

We will follow up, next time, with a discussion of the proposed six-point action plan.

The Link is coordinated by Barry Elliott and Chris Catto-Smith as an interactive forum for industry professionals. We welcome all input, questions, feedback and news at: BJElliott@ ABf1Consulting.com, cattoc@freshport.asia