- March 2, 2022
- Posted by: T Kuramoto
- Category: Blogs
This is part three of a four part series on Microsoft Dynamics 365 embedded Insights.
Part 1 covered: Why Dynamics 365 Insights are a Big Deal – Part I
- ERP Systems have been focused on entering transactions, process improvement and controls, database , and rudimentary reporting and drill down
- Data transformation deals with ways in which data can be used to take advantage of internal and external information and the journey will help answers questions around – what/why/what will happen and what should your company do to both respond, anticipate and optimize changes (top and bottom line results).
- Microsoft’s Dynamics 365 solutions are embedding visualizations and analytical services in several key areas where accurate forecasting can make a significant impact
Part 2 covered: Why Dynamics 365 Insights are a Big Deal – Part II, Financials
- Financial Management
- Delved into Customer Payments and the waterfall impact on Cash Flow Forecasting
In Part III, we’re going to Supply Chain Insights with a focus on:
- Digital Twins – why this is so integral to help generate Supply Chain insights
- Collaborating with Suppliers… and their supplier networks
- Shortages – (Houston), we’ve got a problem
- Surfacing Risk Graphically
- Curating other risk impacting external data
- Boiling it all down
Why Supply Chains are made for Insights…
Digitizing and providing Analytics Tools to a complex network of interrelated elements in a Supply Chain enables visibility, testing/simulations, saving/comparing/baselining, retesting (to improve AI models), and surfacing risk. Creating Digital Twins is what enables the Microsoft AI & ML Insights Platform to modernize Supply Chain Networks to help companies manage risk by better understanding dependencies and vulnerabilities while trying to make a profit and keep customers happy.
Supply Chain Insights considers both internal and external variables and dependencies that begin with a sales order all the way to a finished goods receipt by your customer. In the past, Supply Chains have been more stable and predictable and much easier to optimize with a degree of accuracy that allowed confidence in providing “Promise Dates.” Next day or second day delivery expectations in retail have placed pressure on any latency in the Supply Chain process. Microsoft’s Insights platform works by ingesting, simulating and forecasting outcomes but goes deeper by including other external factors – suppliers’ supplier networks and truly unpredictable factors like weather or news feeds (e.g., raw material parts shortages for your suppliers). Figure 1 below assesses weather impact. It’s a mixture of forecasting, probabilities, dependencies, risk and both structured and unstructured data analysis.
Figure 1 – Possible Weather Impact on Logistics
We’ve marveled as retail consumers at the simplicity and ridiculously fast delivery of items – same day, next day or heaven forbid a few business days from the order time as we sit comfortably in our homes to order these items using our phones. And, with updates and tracking, we see the progress of our item delivery, sometimes seeing the geo-tracking of items as they approach our front porch.
In the past, on the procurement side, clients relied heavily on Single Sourcing strategies as they attempted to garner favorable pricing by guaranteeing volumes to one vendor. We assumed that this intricate mosaic of inter-related pieces would always work seamlessly and our assumptions of near-faultless delivery and performance were rewarded. Then, the pandemic arrived.
And, relying on Just-In-Time models and attention to critical path activities, pushed down re-order points to minimize inventory levels – why on earth would we carry more than what was absolutely necessary (and carry all those unnecessary inventory related costs??!!). Then, the pandemic arrived.
Manufacturing companies have attempted to optimize production and often use a KPI like OEE (Overall Equipment Effectiveness) as a measure of their manufacturing facilities productivity. It’s a percentage that considers Quality, Unplanned Downtime, and Cycle rates where 85% is still considered world class OEE. For the most part, your company controlled these factors. Supply chains introduce external factors with degrees of variability unheard of before. The word resilience denotes more of a “good enough” sentiment than optimization. Because of the supply chain problems that have been introduced over the past two years, I’m certain that other resiliency metrics will emerge that assess the health of your supply chain.
All of this preamble to basically tell everyone what we’ve seen in the past two years. Supply chain disruptions cause delays, incur costs, and really, really upset customers (and, Upper Management!). Talk about stating the obvious. The use of Artificial Intelligence, Machine Learning and Insights driven forecasting can and will make a significant impact on those organizations using these systems because of the intricate dependency on internal and external factors. Plus, the external factors have their own supply complexity as well which amplifies these dependencies and underscores the importance of collaboration and transparency.
Supply Chain Management is a massive Project Management Schedule. The Critical Path has been disrupted by events, tasks and dependencies that have largely been dependable and static. Virtually all steps/tasks have had to be re-evaluated to determine, analyze and simulate changes to assumptions. Non Critical Path processes, due to disruptions, can now find itself on the Critical Path because of disruptions.
Supplier Collaboration – Understanding and accounting for Supplier Risk
Resiliency extends to your suppliers and their network of dependencies and locations. Figure 2 below shows how the Insights Platform can curate this information to help understand sub-networks risk.
Figure 2 – Partner Collaboration Request
Surfacing Parts Shortages Graphically
Figure 3 below showcases parts shortages over a specified time period. The table and visualization below provides details by week to help understand when shortages will need to be fulfilled.
Figure 3 – Shortage by Part, by Week
Supplier Collaboration Advantage
Figure 2 above showed how the Supply Chain Insights platform can curate external Supplier data. In Figure 4 below, this shows an external supplier’s ability to fulfill the shortage seen above for a specific part.
Figure 4 – Collaboration with Suppliers Solves Shortage
Sometimes a Picture is worth a 1000 words
Figure 5 below illustrates why Visualizations are such an important element of an Insights Platform. It helps to show product makeup (Items) and the realities of geography (distances, time zones…).
Figure 5 – Product/Items/Physical Warehouse Location & Dependencies
In reviewing Supply Chain Resiliency, I’ve seen the term “Stress Testing” pretty repeatedly. This makes sense when trying to identify bottlenecks and as importantly, the impact of disruptions. This requires the creation of a Digital Twin of any of those possible influencers to your Supply Chain.
It’s also interesting that external factors include understanding Suppliers’ Supply Chain networks. Curating data about weather and supplier news not only involves time-based studies to understand probabilities (performance) but also real-time feeds with sometimes sentiment analysis of this unstructured data.
Boiling it Down:
- Supply Chain networks are complex, multi-tiered and combine internal and external data and partner collaboration to help forecast and assess probability, risk and financial impact.
- Microsoft’s platform enables an iterative approach that surfaces outages and visualizations to help make decisions. I believe that what makes this possibly troubling is that remote possibilities might lead you to the best decision only to find out in your sample of 1, a rarely occurring event just happened. “Stuff” happens and while you can mitigate risk, you won’t eliminate risk (and, make a profit).
- There are some similarities to Disaster Recovery Planning and Testing. I recall some customers getting incredibly angry when (Disaster Recovery) testing went badly… only to be reminded that testing and finding problems was the purpose of the exercise. This is really the purpose of an Insight Platform like this for Supply Chains. Surface the risk, bottlenecks and possibly most detrimental impact areas and then plan (reasonably) to ensure that at least it’s been accounted for and considered.
- Key Thoughts:
- Supply Chain Insights enables an organization to understand and anticipate scenarios with appropriate action.
- You can’t manage what you can’t see. It may be a slight exaggeration to use this word, but always reacting versus planning for disruptions generates better outcomes.
- Simulation breeds possible outcomes, especially unforeseen ones. Showcasing agility has more to do with anticipating with a thoughtful response than a seemingly dynamic response (some are more gifted than others at ad hoc decisions. or, just plain lucky)
- Your company has a choice here. Using Digital Twins and an Insight Platform, builds out a solution which surfaces all the elements to manage your supply chain better. Or, you can continue to do what you’ve done in the past and expect better results (what did Einstein say about this??).
BrightPoint InfoTech wants to make an impact on your business. We are in the process of creating a new group that will be dedicated to Advanced Analytics, Artificial Intelligence (AI), Machine Learning and Application Solutions (e.g., IoT solutions). We will be announcing more in the first quarter of 2022 but we are “all-in.”
Part 4 of this series will take a closer look at how Insights can impact Sales performance.
Images by Microsoft Corporation