I think just about everyone would agree that the pace of business is accelerating, and that supply chain organizations are expected to be more nimble and responsive; yet, most of the things that we do, collectively, in the supply chain appear to be at odds with this expectation. Many years ago, I started thinking about the cadence, or clock-speed, of different parts of the supply chain (a concept that was popularized in Professor Charles Fine's excellent book, Clock-Speed: Winning Industry Control in
This is not necessarily a new concept, as manufacturers have long recognized that fundamentally the demand side of their supply chain operates at a much faster rate than the supply side, thus the use of buffer inventory to synchronize these rate mismatches. This mismatch can drive a multitude of problems. As demand cycles continue to accelerate, and supply lines get longer and longer, the ability to use inventory as an effective buffer diminishes. Indeed, I have had more than a few conversations with manufacturers this year who lament the 'quality' of their inventory. They have the right absolute level – so the CFO is happy – but have a much more difficult time getting the quality right given the growing demand volatility across many business segments.
Certainly there are newer tools in the marketplace that work very well to help manufacturers optimize their inventory, but at the end of the day any 'plan' is going run afoul of market volatility and fall victim to 'forecast error'. Beyond a certain point, the only practical way to better meet demand side service level obligations is to find ways to be more responsive to both predictable and unpredictable variability.
Paradoxically, while IT tools can help to manage these clock-speed mismatches, they also have an inherent mismatch themselves. Namely, the acquisition of these capabilities, whether measured in months or years, is unable to keep up with the rapid requirements of the business.
I would like to hear your views on thsi topic.