Procter & Gamble (P&G) has one of the best supply chains in the world. But when their top supply chain executives talk about supply chain management, it can be hard to understand what they are talking about. P&G has rather forgone talking about supply chain systems and instead talks about their investments in analytics. They believe their supply chain systems are too siloed and they are missing global optimization opportunities. They are looking for a “fully interconnected platform” that delivers “holistic optimization.” If they can get to a “real-time instrumented supply chain,” P&G believes the upside is a 1-2% sales increase, 2-5% margin improvement, and 5-10% improvements in asset utilization. (See Procter & Gamble Speaks at the 3PL Summit).
But what could a real-time instrumented supply chain actually be? Some hints are starting to emerge. One thing it appears to mean is a cross functional control tower that exists in a “visually immersive data environment.” P&G does not call it a control tower, they call it a Business Sphere. But if you read the description, and look at some pictures, it sure looks like a control tower environment.
One of the partners they list that helped them build this “patent-pending integration of technology, visualization, and information” is BOI Solutions. The BOI technology is really cool. In science fiction movies we see users manipulating computer images with their hands, stretching some images, swatting other images off the screen. That is pretty close to what BOI’s technology allows users to do.
Another partner for the P&G Business Sphere solution is SAP. Perhaps not entirely coincidentally, SAP begun talking about their new supply chain control tower solution last year. Their control tower incorporates the idea of reacting to alerts with prebuilt playbooks that allow an organization to react quickly and with agility to unexpected situations. (See The New SAP Supply Chain Control Tower for a description of playbooks and their control tower solution stack).
One thing I like about the SAP control solution set is that SAP understands that the best end-to-end visibility solutions are built upon a many-to-many, public cloud architecture that is built with common network master data. SAP intends to leverage the Ariba Network to build out the visibility portion of this solution. Point to point connectivity is just not going to work in a future where my control tower is interacting with my key supply chain partners’ control towers.
P&G, being P&G, appears to be using a more difficult to understand vocabulary to describe the playbook concept. They talk about “business sufficiency analytic models that focus the business on exceptions and provide forwardlooking projections and scenarios.” You say tomatos (to-may-toes) and I say tomatos (to-mah-toes).
P&G says they were able to leverage “supply chain sufficiency models to bring together multiple data points, analytics, and visualizations” in a manner that resulted in an inventory savings of tens of millions of dollars.
Finally, I’ve begun to understand why P&G and other supply chain leaders are beginning to talk about supply chain analytics rather than optimization. An optimization solution starts with certain policies and network flows in place. The optimization is based upon those flows and policies. Optimization is great, but optimizing an inefficient network and nonoptimal policies is itself not optimal. (See An Innovator’s Journey to a Segmented Supply Chain).
