Once upon a time, there was a customer vision in the supply chain world that became reality

Once upon a time, there was a customer vision in the supply chain world that became reality. People still wonder today how this could happen. All the technology was already in place, but oh, how difficult the supply chain world found it to succeed. Then, one day, a management team in a Nordic industrial group found the key to the realisation of the supply chain vision.

This key opened the eyes to the visionary leadership and a very strong will to succeed. Furthermore, leadership was inclusive inasmuch as both suppliers and customers were engaged in the supply chain vision. Together, they became aware that change is realised via maximally digitised information sharing, which creates shared insights for improved supply chain flows and immediate profits.

When our company, PipeChain, was founded in 1999, the vision was based on the fact that automated stock replenishment via so-called vendor managed inventory (VMI), based on in-formation sharing of inventory balances, gross requirements, actual deliveries and a number of other critical parameters, would revolutionise the world’s supply chains. Our own insights have since led us to the point where we now rather see an evolution ahead of us. This evolution is driven by an increasing degree of digitised flows within supply chains, an increasing sharing of qualitative flow data and increasingly better conditions for building good decision supporting, cloud-based system support. And success is created together with our customers and their suppliers and customers.

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This is a true story

 The opening tale about the customer vision in the supply chain world that became reality is completely true, and it’s about one of our customers who, in five years, largely realised their supply chain vision. Here we describe the basis of the success story. In an upcoming article we will reveal which customer it is, but let’s leave that on one side for now, so as not to lose sight of the purpose of today’s article. The purpose is to share which methods you can use to create supply chain profits together with your suppliers and customers by:

• 1. Gradually increasing digitisation.
• 2. Varying the scope and breadth of your information sharing for immediate gains.
• 3. Segmentally introducing new, smarter supply concepts in which the degree of maturity for this is high, with the aim of increasing profits.

It all started in 2017 when, together with the customer – a multi-billion dollar company with several factories in Europe and the USA – we established a common picture of where we were in terms of maturity for our supply chain work. Based on the classic Gartner model “Reacting – Anticipating – Collaborating – Orchestrating“, we could ascertain that the customer mainly worked reactively. In Gartner’s model, the stages of maturity are defined as follows:

• 1. Reacting – Can I cover tomorrow’s order(s)?
• 2. Anticipating – Can I produce to the existing demand plan?
• 3. Collaborating – Can my suppliers meet my business opportunities?
• 4. Orchestrating – How do I maximize revenue and profitability through an orchestrated demand response?

Moving from Reacting to Anticipating

Based on the customer’s vision to digitise their entire supply chain and the goal of gradually working towards that vision, our software solution PipeChain was first set up for a single factory for the forecast-order-delivery flow with five suppliers. Material and production plans were also entered for the products in the flow, with balances and gross requirements.

The aim was to verify that Stage 2 in the maturity stages could be successfully reached in a wider rollout towards the supplier base. After that, around 20 subsidiaries with factories were added (the customer thus also ran PipeChain-to-PipeChain flows within the group, as they worked with three different business systems) and gradually connected the entire supplier base, consisting of 250 suppliers in total.

PipeChain had been used so far for process automation to effectively control the entire forecast-order-delivery flow, for visibility of material availability and balance control (so-called “shadow VMI” or “shadow planning”) and in some flows for automatically calculated replenishment via pure VMI (vendor managed inventory).

Moving from Anticipating to Collaborating

With the aim of also capturing more business opportunities through the now highly efficient setup for their own factories and suppliers, work was started to connect as many customers as possible based on a “Step 2” perspective. Classic EDI, web portal and automatic interpretation of PDF order flows were all used here. EDI was, of course, used for those customers who were both mature and interested.

The web portal was used for customers in specific segments, where the customer’s products would also be presented for increased value creation. Automatic PDF interpretation was added to ensure maximum automatic loading of customer orders directly into our customer’s business system.

The customer thus had three solutions to achieve maximum digitisation with their customer base. In the slightly longer term, the ambition is, for parts of the customer flow, to also capture material and production plans, inventory balances and gross requirements for the products in order to also achieve visibility on the customer side of needs and material availability (“shadow VMI”, based on “does supply meet demand?”).

The vision: To orchestrate your supply chain

At present, the customer is using our solution to plan, control and create increased competitiveness for flows that affect more than 20 own subsidiaries, including more than 250 suppliers and 60 customers and with a global supply chain perspective. The entire solution is set up in an end-to-end flow that can be monitored and, in relevant parts, controlled via PipeChain, regardless of which business systems are used in the customer’s business areas and subsidiaries. The customer is now in the very advantageous position of being able to effectively orchestrate their supply chain based on market needs. The customer vision is within reach.

To be continued…