What is Supply Chain Orchestration and Why You Need It: The Comprehensive Guide
Supply chains are like massive ships that have a lot of inertia and need a lot of energy to steer in the right direction. The inertia is present whether the ship is steering toward the right direction (toward business objectives efficiently and sustainably) or the wrong direction (weak link to business objectives and taking short-term shortcuts).
Supply chain orchestration is aimed at keeping all stakeholders across the end-to-end value chain in sync and in rhythm against agreed business processes, KPIs, and Service Level Agreement (SLA). Supply chain orchestration is the missing link in supply chain management.
Many technological improvements happened over the last decade in Supply Chain. Most of these efforts were biased toward analytics. These technologies, spanning from advanced planning systems to RPA, are frequently used in isolation to solve local pain points. Today, Supply Chain practitioners are not better off with these technologies when it comes to managing work processes and synchronization across the ecosystem.
In this comprehensive guide, we will discuss what supply chain orchestration is, and why you need it in your business. We will share how to easily identify whether you will benefit from an orchestrator. We will explore in this article the top 3 technological ingredients required to orchestrate your supply chain and finally 5 Supply Chain use cases where you can get a return on investment fast.
- What is Supply Chain Orchestration?
- What Supply Chain Orchestration is not?
- Why do you need a Supply Chain Orchestration solution in your organization?
- What are the top 3 technologies required for Supply Chain Organization?
- 4 Supply Chain Use Cases for fast ROI
What is Supply Chain Orchestration And What It Is Not?
What it is?
- Supply chain orchestration is the synchronization of supply chain business processes to achieve results without over-optimizing silos
- It is about keeping people in sync and in rhythm across all nodes of the supply chain. This means between colleagues and functions as well as with external partners, suppliers, and customers
- It is about avoiding relying on a few key individuals to make sure your key work processes are executed
- It is about helping individuals and teams to work efficiently
- It is about making sure key work processes are executed on time in full and in the right way
- It is about mirroring ways or working digitally with the ability to handle the real-life complexity of the different stakeholders' roles and responsibilities
- It is about creating a drumbeat to cadence every entity across the supply chain avoiding process decay making sure results get compounded over time
What it is not?
- It is not about replacing people, it is about equipping them to work smarter
- It is not the application of business process management (BPM) to supply chains albeit it is an element of it
- It is not about exchanging data between systems, albeit this can be something useful as the supply chain orchestration maturity increase
- It is not supply chain automation, which is the use of information technology (IT) to improve supply chain performance by automating processes
- It is not about redesigning your ways of working
- It is not about digitalizing your business processes, albeit it happens
- Finally, it is not about adding a new method, tool, or solution it is about orchestrating what you already have
Why do you need a Supply Chain Orchestration solution in your organization?
Supply Chain orchestration is aimed at keeping all stakeholders across the end-to-end value chain in sync and in rhythm against agreed business processes, KPIs and Service Level Agreement (SLA).
Most businesses will find their own rhythm through implicit repeatable and scalable patterns of work activities. These are often unwritten.
Using the analogy of an orchestra, the challenge at play is that if only one instrument gets out of sync the whole team does not sound good. And often, it is actually terrible.
Supply Chain Orchestration is helping companies to turn the unwritten and implicit way of working into a digital sequence involving the right people at the right time to do the right things.
It is allowing any practitioner to turn his standard PowerPoint into a digital machine syncing everyone against an agreed cadence. Simply using the supply chain orchestrator make sure you are in sync with the overall business.
If you recognize one or more of the following 17 challenges, a Supply Chain Orchestrator may be right for you:
- Someone leaves the business and take with her both knowledge and unwritten ways of working (eg who to speak to when x, when to hold the meeting for y, who to invite for z, lead time for a...)
- Processes are either not documented or when they are no one has time to look at the process documentation on the cloud
- Your processes have clear roles and responsibilities but the execution is not very different to the agreed standards
- You have good practices but they rely on a few key individuals to muscle up these processes and make it happen. When they remove their energy the process starts deviating rapidly
- You have great local processes and you are not able to roll it out in the rest of the organization as you lack resources
- You have a lack of standardization within your organization, you are struggle to find the right balance between a one size fits all process (giving you scaling benefits but very rigid) and a entirely decentralized ways of working (giving too much flexibility for little benefits)
- Processes left alone will progressively decay until people do not understand anymore the rationale of doing it in the first place
- You have no visibility as to what is going on process-wise, you only hear about things when issues and complaints occur
- You best talent, are busier than ever and you are worried about their work-life balance and long term motivation with less than fulfilling work activities
- You have a layer of middle managers whose spend time chasing and policing people to make things happen; not an easy job for them, neither for the people they manage
- People forget important (yet not urgent) things and create more work down the line for you and others
- You spend hours sending emails and reminders about simple things
- You spend hours browsing through emails to find what happened a few months back
- Your and your teams have a lot of business process improvements ideas yet they get forgotten before being implemented
- Some activities requires some level of certification and training and you are unable to control who is doing what
- You have metrics and analytics available but unable to manage work by exception
- You are consistently pulled in meetings firefighting to make things happen without having time to really focus and improved your ways of working
What are the top 3 technologies required for Supply Chain Organization?
Orchestrating Supply Chains needs a few technological building blocks. Here we outline only a few important ones in the context of running Supply Chain work processes through an Orchestrator:
Business Process Orchestrator:
It can be seen as an evolution of the BPM (or IBPMs) technology. Instead of focusing on linear flows and highly data-driven business processes. A Business Process Orchestrator focuses on streams of work processes highly dependent on people. If your business needs to process hundreds of invoices every day, it may be rather the realm of BPMs. If your process needs to involve many dozens of employees across geography in a timely fashion, it needs an orchestrator.
Dynamic Work Generator:
Most businesses will find their own rhythm through implicit repeatable patterns of work activities. If you have several recurring processes with many stakeholders involved, a dynamic work generator will be very useful. It will form a smart digital workplace with all the contextual information. It will automatically generate contextualized reports, checklists, forms, and meeting invites. This avoids inefficient work and entropy. It relieves employees from mundane tasks. With a Dynamic Work Generator, any business process improvements can be rolled out now or anytime in the future without solely relying on "champion employees" to make it happen.
Digital Twin Organization (DTO):
Organizations of any size are in constant flux. Internal staff movements, staff turnover, and internally driven reorganization are the tip of the iceberg when it comes to structural business changes. The Digital Twin Organization technology allows businesses to form a digital replica of the current structure of their company (e.g. accounts, countries, factories, roles, RACI, ...). This replica is dynamic and must be accessible to any "superuser" practitioners (not IT developers!). Connecting your DTO to your Business Process Orchestrator will create morphable business processes that can evolve and be always in sync with your company's structure and needs. Essentially, a DTO decorrelates your business processes from physical persons.
Digital Twin Organization (DTO) Benefits
- Example 1 (easy): You have a process for each of your European factories. Now, you have a new factory being commissioned and you use the opportunity to improve your process so that it is done for every production line. You will connect your business process orchestrator to the DTO at the production lines level and also add the lines in that soon commissioned factory. Responsible people for the respective production lines will be pulled in automatically.
- Example 2 (advanced): You have a country P&L-driven organization moving toward a category P&L-driven. You identified all the relevant business processes that need to be deployed by categories instead of countries. Reflecting this in the DTO will pull the relevant employees in the new way of working based on their roles and appropriate RACI level of authority. This allows organizations to make the change happen in weeks (and not in months and years!) by concentrating on change management and training by exception.
4 Supply Chain Use Cases for fast ROI
Warehouse & Factory Routines
- Why? Routines in industrial sites need to occur every single day, no exception.
- Ensuring the right shopfloor checklist, and other order-related activities are performed by the right person in a similar way in every corner of every site worldwide is the realm of an orchestrator. Without an orchestrator, making sure the work happens as well as reporting and communicating about it is very intensive in human resources. Also, deploying new standards from one day to the next is impossible at scale.
S&OP and IBP
- Why? Sales and Operations Planning (S&OP) and Integrated Business Planning (IBP) cycles are well known for decades. They are in place in many companies, often relying on a few individuals muscling up the process to make them happen. Benefits are rarely hitting targets.
- Ensuring the process runs on time in full every day with every function every month is critical. The challenge with S&OP is that most people are only involved once a month against artifacts of the overall cycle. It makes it challenging to be anchored sustainably in an organization. With an orchestrator every S&OP and IBP stakeholder can contribute at the right time of the month with contextualized information. Communication is fluid and you do not need an S&OP manager who is both good at Supply Chain and good at influencing and chasing people to make it happen! You do not have to worry when your S&OP manager changes jobs.
New Product Introduction
- Why? Because supply chains are becoming more and more complex, with a higher number of products and SKUs. The introduction of new products can disrupt the flow of goods and create chaos if not properly managed.
- Ensuring every step of any new product introduction is happening on time is challenging. Having the right master data, forecast, artwork, ..., progressing in parallel considering their dependencies is challenging. It can be daunting especially in businesses with either ETO (Engineer To Order) offerings or businesses launching many and regularly new products. A supply chain orchestrator can help you manage this complexity and ensure that your new product is seamlessly integrated into your supply chain to launch them on time either in physical stores or online.
Material Shortages & Replenishment
- Why? Inventory is a critical part of supply chain management. The goal of every business should be to have just enough inventory on-hand so that they do not miss out on potential sales, but also don't incur excessive costs by storing too much product. Unfortunately, it's not always easy to strike this balance.
- Ensuring shortages (or at-risk items!) are resolved promptly every day to keep factories running is essential. Considering the fact that the average companies have thousands of items across hundreds of suppliers, keeping in sync all players is a daunting task when using manual tools even for experienced staff. An orchestrator can support the resolution of this challenge promptly within tight lead times helping collaborating customers and suppliers together without relying on phone calls, emails, and other non-replicable shortcuts. When no resolution is found, the production plans are amended, yet, the full traceability of the resolution can be reviewed at a later stage for continuous improvements.
Julien Broucke is the founder and CEO of Process Metronome.
He has almost 10 years of experience across the Value Chain. His focus is in end-to-end Planning, especially S&OP / IBP from design to implementation, Supply Chain Strategy and Operational Excellence with a strong interest around people engagement.
Julien works mainly in industrial sectors with the perspective of progression programs and global performance improvement and has proven expertise in the Consumer Goods, Pharmaceuticals.
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