According to PWC’s Global Supply Chain Survey (2013), the next generation of supply chains will be ‘efficient, fast and tailored’. What the survey failed to mention was that these supply chains are also going to seem chaotic – at least from the inside.

I think we can all agree that the world has speeded up. As that PWC survey noted, ‘… customers are tightening their requirements in terms of throughput time and perfect-order delivery while demanding continuous reductions in supply chain costs.’

There used to be a time when consumers were happy to have their orders delivered a couple of days later. Today same-day delivery is the new norm. A decade or so ago, customers accepted delivery dates that seemed reasonable. Now they expect ever shorter lead times and just-in-time deliveries.

Where yesterday’s fast is today’s slow

In some industries the need for speed has been critical. To take just one example, airports have been under intense pressure to improve turnaround times for airlines. And as that PWC survey indicated, customers expect these service improvements to be accompanied by lower costs.

As we all know, it’s easy enough to deliver exceptional service at a price, for example by maintaining large buffers of personnel, resources and stock to cope with fluctuations in demand. But how do you maintain high levels of service in the face of inevitable disruptions (a fact of life in most industries, and particularly in aviation) while also keeping costs low? 

In a complex operating environment, managing disruptions swiftly and cost-efficiently can seem impossible. It’s the butterfly effect all over again. Due to the huge number of interdependencies, solving one problem can cause massive unintended effects elsewhere. To take an obvious example from aviation, redeploying personnel to minimize the turn-around time for a delayed flight isn’t necessarily going to help if it has a knock-on effect on service levels for many other flights.

In the case of same-day deliveries, ‘disruptions’ are simply the constant stream of new orders. To cope with incoming requests in real-time, you need to be able to capture these requests and create dynamic schedules that are constantly being optimized, even at the point of execution. For example, a driver may need to make a detour for a pick-up on the way back, or respond to an opportunity to rendezvous with another vehicle so a parcel can be transferred from one vehicle to the other.

 Why coping with chaos means more (apparent) chaos

Next generation supply chains need next generation supply chain systems that can cope, in real time, with all the complexities of your operations. These systems calculate the effects of any disruptions instantly, and re-plan in ways that enable you to achieve your business goals. They will also disrupt entrenched ways of working.

For example, many delivery companies allocate deliveries to truck drivers based on fixed postal codes. Each driver makes deliveries within his or her fixed postal code zone. They are familiar with the routes and know what to expect when they show up for work. The problem of course is that this may not be the most efficient way of allocating those parcels. On some days there may not be enough parcels to fill a working day. On others, the driver may have to work overtime.

A smart planning and optimization system will create the most efficient routes based on all operational constraints and required service levels to ensure that resources are used as efficiently as possible. This of course means that drivers will no longer be wedded to particular routes. Will they be happy with this change? Probably not. In fact, it’s more than likely that they will complain about the ‘chaos’ the new system is causing.

This feeling of ‘chaos’ is the inevitable result of implementing an intelligent planning and optimization system that is capable of re-planning and re-optimizing on the fly. A manufacturer may discover that it no longer makes sense to produce certain fixed product families on certain fixed days. An airport may find that its service levels shoot up when it is able to re-deploy personnel immediately in response to changing circumstances. In all these cases, the personnel involved may feel that their working lives have become unbearably chaotic.

Reaping the rewards of next generation supply chains – without provoking resistance

The first thing to note is that this ‘chaos’ isn’t really chaotic at all. It’s managed chaos. Intelligent planning and optimization can slash operational costs by up to 20% and enable significant improvements in customer service levels.

However the human factor cannot be ignored either. In my experience, this is best tackled with patience and effective communication.

Let’s look at the need for patience first. The optimal schedule may not be so optimal if it causes staff to dig their heels in. So here’s a suggestion: Instead of implementing your new, more flexible way of working all at once, consider introducing it step by step. For example, a delivery company could instruct the optimizer to schedule within the fixed postal codes as much as possible. This constraint could gradually be relaxed as drivers adapt to the idea of more flexible schedules.

Similarly, a factory might instruct its intelligent planning system to keep to its old batch schedules (where certain product families are produced on certain days), while also providing for flexibility around the edges. If product family A has always been produced on Monday, this pattern could be retained – while also ensuring that there are periods at the beginning and end of the day for scheduling other product families. Once again, more and more flexibility can be introduced into the schedules as personnel adapt to the new way of working.

The second requirement – effective communication – is a powerful antidote to frustration. If, say, airport personnel can look at a mobile device and see that their redeployment is due to a sudden peak in air traffic caused by flight delays, they are much more likely to feel part of the solution.

The fear that personnel will find it difficult to adapt to an intelligent planning system is a real one. However any reluctance is easily overcome if people are allowed to grow into a situation where there’s a more optimal use of resources. In my experience, 90% of your optimization potential can be realised by taking the right steps at the right time, and informing the people who will be affected in the right way.