“May you live in interesting times,” widely attributed as a Chinese curse, some claim this as a blessing; whichever side you take, this is exactly what’s happening in the supply chain world since 2020, and it looks like we will be living with this blessing/curse for a while longer.
Our lives became more interesting with the onset pandemic, followed by labor shortages, the Russian invasion of Ukraine, rising oil prices, and the oncoming recession. As a result, a wide range of businesses, from restaurants, and retail chains, to manufacturers, have been redesigning their business services and operations and re-engineering their supply chains. So, not surprisingly, when Gartner had its annual Supply Chain Symposium and Expo this year, more than 3000 supply chain professionals showed up looking for answers and experiences to offset all these challenging dynamics and come out stronger.
Along with Digital Transformation, leveraging AI/ML, autonomous decision-making, and going for Ecosystem collaboration, “Composability” was the other central theme that emerged from these sessions to embrace change and make the supply chain planning more agile. Based on all my conversations with colleagues, “Composability,” while a well-known concept of programming, is probably the least understood one by the supply chain community. In this blog, I’ll try to shed more light on it with examples from our work with our customers.
Composability as an Enabler of Agility & Resilience
As supply chain professionals, we can all agree that change, volatility, and ambiguity are not going away from our lives. We need planning platforms to keep up with all the changes. This means we need more agile, flexible, and scalable planning platforms to process and consolidate new data sources, drive insights using advanced analytics such as AI/ML to drive autonomous decisions and expand collaboration within and outside our organizations. Well, we also know that many legacy systems will not be able to support all these changes quickly and cost-effectively. While we might go and get the best of the solutions out there to meet today’s challenges and leverage today’s technology, that’s not going to come with a lifetime guarantee that it will meet all our needs in the years ahead.
So what to do?
Composability is the answer to that challenge.
What is Composability?
Think of the Lego as the ultimate example of a composable toy. It has some pre-built components of different shapes and sizes, and everyone can quickly build their toy. My two nieces love building cars! The 5-year-old one uses the same pieces to make her car, and her 10-year older sister uses the same pieces to make a different car. And sometimes the younger one likes her sister’s car top, and she takes it and sticks to her own car! This is how composable systems work.
They come with pre-built components and API interfaces that can be arranged differently and easily replaced with other pieces as needed. So, when you are not happy with a specific aspect of a system, you don’t have to rip it off entirely and start over with a new system.
Examples of Composability in Supply Chain Planning Platforms
Those of us who have lived through Digital Transformation initiatives know that it is not a project with an end date; it is a process, a combination of many projects, and it is best tackled in phases in an agile manner. This goes for Supply Chain Planning platforms as well. Therefore, when selecting a platform to support your digital future, it is essential to ensure the platform is flexible, modular, and easy to reconfigure in a few weeks as your supply chain planning capabilities progress through different phases of digital maturity.
Here are some real-life examples from the trenches to demonstrate what I mean by flexibility and modularity. In this blog, I’ll focus on the Q-commerce case. Q-commerce supply chain planning requires speed, automation, and precision due to the delivery expectations and limited storage space in the dark stores. Here’s how a composable platform enables transformation from Level 1 Maturity to Level 5 Maturity within months, not years!
Implementing Autonomous Planning
Step 1 – Going Digital and Creating Integrated Planning Backbone
In the first phase of the digital transformation journey, the focus is on getting the planning process and all the related data on a digital and integrated platform away from the spreadsheet. In the early days, the data was not all that clean and consistently maintained, so the Automated Data Diagnostics module is set up within days of building the data integrations and constantly updated as new issues are discovered.
The MVP (Minimum Viable Product) version, set up to go live in multiple countries within three months, involves Demand Planners, Supply Planners, and Inventory Controllers with different access rights to monitor system-generated results. They can adjust quantities and generate supplier replenishment orders in PDF or Excel as needed. In this version, there’s no automation around managing promotions, so demand planners need to get involved in adjusting the forecasts for promotions.
In parallel, the platform is launched with a smaller planning team and without demand planners reviewing forecasts. The platform serves the needs of different levels of resource availability. Even if there’s no demand planner involved, it works perfectly, which is the case for another Q-commerce company using the same platform.
Step 2 – Getting Smarter
In the following steps, which start within a few weeks, products on promotion are flagged and fed into the system. The forecast engine pre-processes reconfigured within days, sales data for the products on promotion are normalized, so the following week’s baseline sales are automatically adjusted, and the demand planners need to touch fewer items.
The next step will be to configure the forecast engine to start forecasting the impact of the upcoming promotions. This requires historical data to build up for ML algorithms to work effectively and the category managers to align on a systematic way of managing promotions.
Step 3 – Expanding Horizontal Integration
In parallel, on the same platform, again in a few days, there’s a new integration being set up with the financial system and the WMS. The system now can automatically receive all approved Purchase Orders so receipts can be reconciled against orders.
Step 4 – Closing the Loop and Getting Real-time Visibility
The next step was getting a feedback loop from the WMS system back to the planning system to create OTIF (on-time-in-full) metrics on supplier deliveries so the planning system can adjust recommendations based on the real-time receipt information. Now, the daily batch process for replenishment planning evolves into a dynamic one that can consider receipts coming in the morning before Purchase Orders for the next replenishment are sent out in the afternoon.
Considering a significant portion of the assortment is fresh and short-lifecycle products, this greatly impacts managing availability and waste. Again, the real-time recalculation is enabled within not weeks but days. The WMS system is being rolled out in phases across different countries, so this dynamic recalculation is only enabled for countries where this is available.
In the meantime, the inventory data quality has evolved, and the supply planning teams have been re-organized in some countries. The replenishment process requires the inventory controller’s blessing so that step can be skipped for some countries with reconfiguring in the digital workflow.
Step 5 – External Collaboration: Expanding Integrated Planning to the Suppliers
The next level of maturity is supplier collaboration. Again, there are different levels of maturity across the suppliers. Not all business partners are ready or capable of setting up EDI configurations. No worries, there is another alternative, which is enabling collaboration right on the cloud-based platform.
Any supplier with access to a browser can now participate in the viewing and confirming Purchase Orders and issuing advance shipping notices. Even the mom-and-pop bakery around the corner can do that without any technology investment. Another Lego piece is in place in a few weeks!
With flexible, modular, and easy to reconfigure platforms, you will have a lifetime guarantee that the system will ensure agility and resilience for your supply chain operations as you progress through different phases of digital maturity. Just like my younger niece never being afraid of building out different versions of cars and using her sister’s cartop and making hers fancier!