No Plan Survives Contact with Reality

You may have heard the military quote - “No plan survives contact with the enemy”. We believe this applies well to supply chains with a little change - “No plan survives contact with reality”.

The fundamental problem is that all plans are based on some prediction of what will happen in the future – and no one gets that right all of the time. Supply chains are a complex network of business partners that are constantly responding to competitive challenges and reacting to shifting customer demands. The result is that reality rarely conforms to plan and we need to make adjustments. Complicating matters is that there isn’t just one plan, but many plans that need to be synchronized across multiple partners to achieve a coordinated response.

So do we conclude that planning is a useless exercise? – Absolutely not! However we need to be smart about what we are trying to achieve with a plan. A plan should create a framework and budget that allows us to address specific tactical and strategic initiatives and profitably respond to near term change. A plan should focus on resolving (or buffering) the key constraints in the supply chain. A plan should be generated with a clear understanding of who are the "customers" of the plan, what objectives you are trying to achieve and be developed at a level where the plan can survive a certain level of change.

We also need to be able to realize when a plan is good enough. The most valuable and constrained resource in a company is typically its people. It’s often difficult, but nevertheless important to understand when you have reached a diminishing return on efforts to create a better plan, and time is better spent improving the company’s ability to respond faster, cheaper and better than competitors.

Possibly the single most important variable in a company’s ability to execute and respond to change is time to react. Speed can provide a company with a devastating competitive advantage (countless examples in business, sports, politics & war). Assuming that the planning process has provided the framework to execute – the job of responding to change can be broken down to three basic tasks; identify that a change has occurred, figure out the right response and communicate the change.

Technology is playing an ever increasing role in a company’s ability to handle these tasks and respond to change. It is now possible for supply chains to be monitored 24/7 for change, for routine problems to be handled automatically, for exceptional problems to “find” people capable of solving them, for decision support tools to provide people with the alternatives and tradeoffs, for partners to collaborate and synchronize activity and new plans to be communicated instantly across a global supply chain.

Change the Game!

Global flattening and exponential advances in technology are revolutionizing the way we live and do business. This is an era where mind-boggling advances in a new digital infrastructure, changes in public policy and the effects of globalization are changing the rules and enabling unknown companies to emerge overnight and dominate industries using information and time as competitive weapons. Thomas Friedman writes about this in his best-selling book, "The World is Flat," as do countless others in leading publications such as the Harvard Business Review and the Economist.

This new global economy works across borders, languages, currencies and cultures. However, for most firms, getting their business to adapt to the changing global reality does not come easily: for them, the dynamics of existing supply chain processes, legacy IT infrastructures and incumbent business relationships make it difficult to adapt to these international realities and new competitive landscape.

How does your company respond to globalization? How can you operate effectively in the volatility of this 'new normal'? How can you transform your business to not only adapt to these challenges, but use it as an opportunity to change the game? For too long, we have focused on traditional performance improvement areas, those "within the four walls," with continually diminishing returns. What we need now is order of magnitude, "game-changing" improvement, not percentage point gains. A company's success in the 'new normal' economy is increasingly less dependent on individual performance and more dependent on the overall success of the supply chains in which they participate. The value chain that satisfies the needs of the customer better and faster – wins. The real winners will transform themselves through customer intimacy; being entirely customer focused and demand-driven. But how do we do this, given the inescapable fact that the existing business models and infrastructures of many firms impede their ability to adapt to these new realities?

Companies must look outside their four walls, embrace and manage change, adopt new relationships, leverage new technologies, and eliminate the barriers throughout their extended supply chains that impede the flow of information and decisions. This requires a fundamental shift, to view your business from your customers' perspective as well as a radical, top-down edict to rethink your value proposition and transform your business in terms of the entire value chain in which you compete.

Through strong leadership, effectively managing change and leveraging new supply chain collaboration platforms that can translate strategic plans into integrated, dynamically orchestrated business execution, you can dramatically increase your agility and responsiveness and achieve the business transformation needed to dominate in today's extremely competitive markets. Your entire value chain must become a highly customer-responsive business network in order to address the volatility of the new normal and compete against time. Time is a company's most valuable asset, and those who produce the greatest return on time can respond quicker to the customer, out-thinking and out-maneuvering the competition. Speed is a devastating competitive advantage in sports, politics, war and business. In this flattened new world where supply chains compete with supply chains, time-based competitive advantage that comes with speed and agility is the "game-changer."

At the very time when many firms are seeking to cut costs and consolidate market position, now may be the time to take a contrarian view; achieve order of magnitude improvements by employing the new mindsets, relationships and collaborative technologies that can create the game-changing competitive advantage you need … one that will truly transform your business.

Jonathan Kall
CEO, Vecco International

Gartner Gives the Healthcare Supply Chain a Checkup

Gartner has released its second annual review of the Top 25 Healthcare Supply Chains.  Like good health, there exists a litany of best practices that contribute to overall wellness.  Gartner examines what brings the greatest “value” to healthcare supply chains in terms of patient and financial health.  Like patient health, building an efficient supply chain is best achieved with regular maintenance, a team of providers working towards a unified goal, and a heavy dose of preventative medicine.

Building from the first annual publication, Gartner has updated their model for “value” in healthcare.  “The premise remains unchanged,” they note, adding, “Value in healthcare is still high-quality patient care at optimal cost.”  They go on to list the refined core capabilities of the value chain model:

·   Collaboration — Trading partners must enter into sustainable, collaborative relationships with a shared vision and transparent set of mutual goals to create win-win situations.

·   Network visibility — Trading partners must create bidirectional visibility to key information, such as inventory, demand, compliance and outcomes.

·   Dynamic supply — Because high-quality outcomes aren't static targets, all organizations must create agile, value-added supply chain responses tailored to multiple customer and channel segments.

The inclusion of these capabilities to Gartner’s updated model comes as no surprise: collaboration, network visibility, and dynamic supply are all hot issues in the supply chain industry.  Realizing the importance of these components is of great significance, especially to the healthcare field.  As the Gartner report notes, “Excellent supply chain capabilities reduce the time required to sense and respond to patient demand, and then produce a profitable, right-first-time supply response to that demand.”

At Vecco, we couldn’t agree more with Gartner’s message.  Allegro, Vecco’s suite of collaborative supply chain execution solutions, addresses the core capabilities endorsed by Gartner.  Solutions, like Allegro, that provide true business process collaboration will be key as businesses improve their healthcare supply chains.  “The importance and impact of collaboration in our value chain cannot be overstated,” Gartner claims, adding, “Collaboration is the wave, and its tide will flood the value chain with best practices for efficient development and delivery of patient-centric therapies and services.”

Efficient healthcare supply chains provide exceptional patient care, and optimal returns for business.  And that’s an easy pill for everyone to swallow.

Deloitte and the 7% Solution

In today’s global marketplace, everything is moving faster.  Businesses are living in an era of shorter product life cycles and turnaround times.  In a landscape that’s expanding exponentially and becoming increasingly more complex, effective supply chain management is not only advantageous…it’s critical.

Don't take our word for it:  here's what consulting powerhouse Deloitte said in its newest study.  The study shows that only 7% of the manufacturers surveyed effectively manage their supply chain, yet they are 73% more profitable than their peers.  It’s hard to argue with numbers like that.

That small percentage of manufacturers represents businesses with a clear advantage.  They’re operating more efficiently as they collaborate with their outside suppliers and customers.  As manufacturers continue to globalize, they need a complete picture of what’s going on inside and out.

At Vecco, we understand just how essential it is to build and maintain collaborative business networks.  Using an advanced solutions suite, like Allegro, businesses are able to dynamically orchestrate internal and external supply chains.  When you can simultaneously interact with your vendors and customers in a coordinated fashion, you can better manage the entire process more efficiently.  And, as Deloitte’s study points out, a diligently optimized global supply chain network directly contributes to significantly better bottom-line results.

The Rx for the Pharma Supply Chain

When one of the world’s largest consulting firms says that an entire industry’s supply chain infrastructure is “under-utilized, inefficient and ill-equipped to cope with the sort of products coming down the pipeline,” you sit up and take notice.

That’s exactly what PricewaterhouseCoopers (PwC) has written in a review of the pharmaceutical industry.  In its new report, “Pharma 2020: Supplying the Future,” PwC’s authors write that the industry will require a “radical overhaul” in order to meet both the changing requirements of the industry, as well as the larger change in outlook from patient-based to outcome-based approach.

The report predicts that collaboration will have to increase among healthcare partners, making the entire process more efficient.  We couldn’t agree more.  The supply chain environment has exploded into multiple dimensions; today’s supply chain can no longer be run in a linear manner – by the time problems are communicated sequentially through the supply chain, the original conditions and problem have changed. In an environment where any disruption among any of the partners at any level runs the risk of causing disruption at every point, information needs to be communicated simultaneously and decisions need to be made in parallel and often collaboratively. Synchronized, collaborative demand-supply networks are what is required.

PwC writes that “the supply chains for designing, manufacturing and distributing pharmaceuticals and medical devices plus those providing healthcare services will integrate so that all partners can see the full picture and help them plan ahead more accurately and cost-effective.”  In short, we believe they’re saying that pharmaceutical companies’ supply chains will evolve into what we at Vecco refer to as a business network.

The business network is collaborative.  The business network enables companies to create real-time, synchronized multi-partner approaches that solve their global supply and fulfillment challenges. 

Other vertical industries may not need the “radical overhaul” that PwC says pharmaceutical firms require.  But they clearly need to think ahead; what’s worked in the past…what works today…will almost certainly fall behind as the global economy becomes increasingly more inter-connected, and definitely more competitive.   PwC’s spokesman is quoted in the company’s news release as saying, “Companies that recognize information as the currency of the future, will be those that go the final mile and stand out by 2020.”  He’s talking about pharmaceutical firms, of course, but his words clearly apply to virtually every firm out there today.