You should no longer be looking for problems in the supply chain — they should be finding you, says Richard Sherman, senior vice-president for supply chain software specialists Numetrix.
US-based Sherman was in New Zealand recently, talking about going “beyond the supply chain”.
He says current supply chain thinking is that finite capacities can be calculated and plans developed.
However, he says they’re “always wrong”, and there is a tremendous cost in responding to changes.
The answer is to facilitate collaborative decision-making among all the participants in the supply chain.
“What you need is a system that identifies when an event occurs and determines whether or not that event requires action and then communicates to whoever needs to take action. It’s no longer looking for the problem — the problem will find you.”
He says Numetrix offers the capability to look at the supply chain as a network of enterprises that work together based on real-time information about events that cause changes in the system.
Companies can develop plans, determine all the possible sources of change and then determine when to be notified of certain events. It involves agreeing with your supplier or customer that you can find out about information pertaining to your company, in their system.
“I would say I’m interested in looking at the inventory levels of my products and my products only. I would like your system, whenever inventory falls below this point, to send us a message that says our inventory at your location needs action. I don’t have to tap into your system, and you don’t have to worry about security issues. I put the software on your system and it just looks at that data which you’ve given me permission to look at.”
The same can work in reverse, with your customer receiving information from you on things like shipment delivery. It makes the system responsive, not reactive.
“It changes the game from being just a planner, reacter, scheduler to you being a customer-relationship manager. You’re building collaborative relationships.”
Sherman says Numetrix’s technology includes an integration enabler which enables data to be shared between applications; a messaging architecture, which allows people to create dynamic messages and alerts; and an optimisation enabler, a library of mathematical algorithms which solves complex supply chain problems.
“A typical model that we build considers two to three million decision variables and two to three million constraints. I don’t think people understand the complexity of managing the supply chain”
Numetrix is releasing Numetrix 3.
“What we’ve done is taken all these previous products and have architected them into a single application where you can configure the different functional objects, create the dynamic messages. That’s live and operational in two sites and being implemented in eight others.”
Sherman says companies not managing their supply chain are literally using profits to light up cigars.
“The real culprit in the system is the customer. If customers always did what we planned for them to do, it would be a really nice world.”