One of the best quotes I heard this year came from a young professional commenting on why she chose a career in supply chain management: “I wanted to work in a field where I knew I wouldn’t live the same day twice.”
Every day in supply chain management brings new challenges and opportunities. Or to echo Quintiq’s tagline, every day brings new puzzles to solve.
Last week, I spoke at Quintiq’s World Tour event in Philadelphia, which featured several customers talking about the supply chain puzzles they faced — in manufacturing, logistics, and workforce management — and how they are working to solve them. What struck me was how complex these puzzles are becoming, and how solving them is an ongoing journey because new puzzle pieces (goals and constraints) are always emerging.
“Transformation isn’t a ‘Big Bang’,” declared Victor Allis, CEO and co-founder of Quintiq (a Talking Logistics sponsor) in his opening keynote address. It’s a journey, and contrary to what you might expect, it doesn’t begin with optimization.
The first step is to Modernize, which is about moving away from manual tools and processes, such as whiteboards and spreadsheets, and using modern software to help you get the job done more quickly and efficiently. Important attributes to look for in a solution: highly configurable so that it models the way you want to work; intuitive user interface, which speeds training and adoption; and up-to-date visibility to key performance indicators, so that you can stay on track and achieve your desired outcomes.
Victor gave the example of Marquis Energy, which had been using Google Sheets to plan crude oil shipments across its rail, terminal, and marine logistics operations. Planners color-coded the spreadsheet cells to provide a quick visual on statuses, which was very helpful. However, whenever something changed in the plan, it would take planners more than 4.5 hours to rework the spreadsheet — a very labor-intensive and time-consuming process! After observing how the process worked and how planners executed their tasks, Quintiq developed a software solution that reflected the existing process and user interface — keeping the color coding, for example — but leveraged drag-and-drop capabilities and automated some of the tasks that planners had been doing manually before. So when a schedule change occurs now, the replan process takes just 10 minutes instead of hours.
The time to move from Modernize to Optimize is when a supply chain process/puzzle becomes so complex and dynamic that trying to solve it without an optimizer or within an executable timeframe is impossible. Routing and scheduling of same-day deliveries in an e-commerce environment is a perfect example.
I won’t go into the other steps in the journey, but it’s sufficient to say that each step is the foundation for the next. Trying to jump from Modernize to Reimagine without taking the steps in-between is like trying to jump across the Grand Canyon — you’ll likely fail. For related commentary, see Forget Innovation If You Can’t Execute the Small Stuff.
Later in the day, Victor spoke about the evolution of optimization technology — from batch optimization to interactive optimization to continuous optimization. The latter is particularly critical in solving the same-day delivery puzzle and turning delivery from a cost center to a profit center (see Delivery Demand Shaping: A Key Element in Enabling Profitable Same-day Delivery and the webcast I participated in earlier this year with Quintiq to see a demo of continuous optimization in action).
The key takeaway is that thanks to advancements in algorithms coupled with cloud computing capabilities, companies are able to solve more complex supply chain puzzles quicker and achieve greater benefits. To aid clients in this area, Quintiq is in the process of enabling Optimization-as-a-Service, where clients can tap into Quintiq’s computing power and resources — similar to how companies leverage Amazon Web Services (AWS) — to help them solve optimization problems faster.
In the afternoon, I attended the breakout sessions on workforce planning, an important component of supply chain management that doesn’t get enough attention from analysts and the press (including me, I admit, which is why I attended). The sessions featured speakers from Southwest Airlines and the Federal Aviation Administration, two entities with immensely complex workforce planning puzzles.
Southwest Airlines has more than 18,000 employees across 90+ airports. Needless to say, trying to do headcount planning, schedule development, and scenario evaluation manually — while taking into account regulations and labor agreements — was becoming a losing battle, which is what prompted Southwest Airlines to work with Quintiq to both modernize and optimize its workforce planning process.
Similarly, the FAA has more than 45,000 employees with a total operating budget of $9.5 billion and annual labor costs in excess of $7.3 billion ($2.4 billion related to Airspace and Air Traffic Management, which was the scope of the case study). Prior to working with Quintiq, the FAA was performing many of its workforce planning and scheduling functions manually, which was very time consuming and labor intensive. It also lacked a common application to develop optimized schedules by facility for a day, pay period, or a year, and it didn’t have long-term planning capabilities either.
I don’t have the space today to dive into the details of both case studies, but they opened my eyes to how critical and complex workforce planning is for many companies, and how it’s arguably the weakest link in the transformation journey. Take a look at the retail industry, for example, which will hire more than 750,000 workers between October and December to support the holiday season. As the Wall Street Journal reported recently, “retailers have come under fire for low pay and a practice known as on-call scheduling that changes workers’ hours with little notice [emphasis mine]. Gap Inc., Abercrombie & Fitch Inc. and L Brands Inc.’s Victoria’s Secret chain are doing away with the erratic scheduling.” To me, the practice of on-call scheduling is a symptom of poor workforce planning capabilities. Therefore, let me make an early prediction for 2016: workforce planning will move out of the shadows and into the spotlight for companies looking to move forward in their transformation journey.
As I flew back home from the conference, I reflected on the young professional’s words and how wise she was in choosing a career in supply chain management — where you truly don’t live the same day twice, and where there is always another puzzle to solve.
P.S. I’ll be speaking at Quintiq’s World Tour event in Amsterdam next Thursday, November 12. If you plan to attend, I look forward to learning and networking with you there!