Supply Chain Design: Growing Scope, Community, and Collaboration

One of my predictions for 2015 was that more companies will start treating Supply Chain Design as a continuous business process instead of a standalone project or a once-a-year exercise. This trend was clearly evident at the recent LLamasoft SummerCon 2015 Conference in Park City, Utah, where more than 400 attendees — including executives from Land O’Lakes, Kellogg’s, Nike, Ryder, Hewlett Packard, SABMiller, DSW, Cardinal Health, and Wayfair — shared great case studies on their journey and experience with supply chain design.

I moderated a panel discussion titled “Supply Chain Design Perspectives on Today’s Transportation Logistics Challenges” with representatives from Ryder, Wayfair, and LLamasoft (a Talking Logistics sponsor). For Ryder’s story, check out my conversation with Gary Allen, Vice President of Supply Chain Excellence at Ryder in a recent Talking Logistics episode. In the episode, Gary shares some use cases and makes the following comment which underscores how supply chain design is becoming an ongoing business process, especially in transportation: “In the automotive industry, for example, we’re finding the need for more frequent route analysis and route re-design…It used to be a weekly thing, where we planned on a 5-day or weekly time horizon; what’s happening now is that we’re shifting toward more dynamic, daily planning and optimization.” And the trend is to compress the time horizon even further!

I don’t have the time or space to summarize every session that I attended (check out the summaries published by LLamasoft on its blog, here and here), but here are my three high-level takeaways from the conference:

1. The line between Supply Chain Design and Supply Chain Planning is fading. Simply put, as time horizons continue to shrink and the frequency of supply chain design exercises increase, the distinction between supply chain design and supply chain planning starts to blur. The end result, I believe, is a melding of the two solution types into a single platform, with a broader spectrum of capabilities. A similar melding will ultimately occur organizationally between supply chain designers and supply chain planners, which today are typically separate functions and roles.

2. Supply Chain Design is so much more than technology — it is a vibrant community of people who all share a common interest in learning, teaching, and growing the discipline. Maybe it was the mountain setting of the conference, or the quirky (yet interesting) keynote presentations, but there was a strong feeling of community at the conference, a feeling that everyone there was part of a something bigger than their own companies or LLamasoft. I was reminded of what LLamasoft CEO and President Don Hicks said following the company’s acquisition of LogicTools back in April:

“Supply chain design is a people business, pure and simple. The answers will never be automated. As a designer, you need to have access to other companies, other teams, and other people tackling similar problems. In short, supply chain designers absolutely need a community to support their continued growth and development.”

The fostering of this community is certainly a key differentiator for LLamasoft, and the SummerCon conference was a great example of peer-to-peer learning and teaching in action.

3. The next frontier for Supply Chain Design is Collaborative Supply Chain Design. Today, supply chain design is done in silo’d fashion, with each company doing its own analysis, which leaves a lot of money and other benefits on the table. A smarter, more effective approach is for multiple companies within a supply chain (suppliers, customers, logistics service providers) to work together on supply chain design. Of course, this is easier said than done, with the usual challenges involved, such as data sharing and balancing risks and rewards. But the opportunity to reach higher levels of savings and performance are there for those brave enough to pursue it.

While at the conference, I had the chance to interview several LLamasoft customers, including Scott Finley at Cardinal Health, Laura Henry at Wayfair, and Mark Zahuranec at DSW. Below are some highlights and video clips from my conversation with Scott Finley at Cardinal Health (I’ll share my takeaways from the other interviews in future posts, so stay tuned).

Cardinal Health Case Study

I asked Scott to share some of the the challenges or opportunities that led Cardinal Health to look for a supply chain design solution. As he shares in the clip below, prior to implementing LLamasoft, the company had been investing in other supply chain design software (which were, basically, programming languages) and hiring talent, but the analysis process was very labor intensive and time consuming (sometimes it took months to build a model and complete the analysis). In a nutshell, “we could hire more PhDs and more analytics people to churn through more work, but we needed answers faster.”

So, what capabilities did Cardinal Health look for in a supply chain design solution? A key requirement was a solution that was able to take a holistic and integrated view of transportation, inventory, and labor versus optimizing each one separately, which was how the company had been doing it. The solution also had to be easy to use and learn.

What have been the benefits to date? In addition to a $10 million reduction in inventory carrying costs, Cardinal Health is now able to make faster and smarter data-driven decisions, getting answers in a day that used to take up to two weeks in the past.

I encourage you to watch the full interview with Scott for additional insights on Cardinal Health’s approach and experience with supply chain design.

In short, Supply Chain Design continues to grow in scope and importance, both from a technology and community perspective, and if companies start to collaborate on supply chain design down the road, the more opportunities for breakthrough performance will emerge.