A Crisis Is a Terrible Thing to Waste

Introduction

Attending the DisruptionRX Supply Chain Summit, virtually, of course, Allan Dow, CEO of American Software,¹ asked one of the key questions customers were thinking, “How do I transform while I am in the midst of managing the crisis?”

As Stanford economist Paul Romer once stated, “A crisis is a terrible thing to waste.” And this crisis, for many companies, is a matter of survival. The issue surely is, will companies just be chasing, fighting fires, or will they make real sustaining change?

An RX was provided in a variety of ways at this conference, from dramatic changes to the business process; product offering; massive improvements in channels and customer fulfillment; of course, technology; and importantly, the role of women in the supply chain profession. No attendee has missed what is happening outside the door of their home, business, and their channel to the world—the Internet. Major forces seem to be converging all at once: the pandemic, trade wars, race and gender debates, global warming (natural disasters, the fires in California are only one example); the role of government and our partnerships with other nations; and, in general, the economic future of the planet.

To get help and new perspectives, many companies have turned to their solution providers to either provide them with some basic education so they can better use what they already have, or to upgrade with smarter math and more far-reaching data.

At one level, this is what the vendors have been preparing for, for decades. If you think about it, what is planning all about? It was never the humdrum of non-variability, but providing methods to deal with change. Of course, this one is really BIG. However, many of us have been on this economic and social roller coaster for 20 years, and have seen its cycles impact various industries and professions differently. So, this is the new normal. And many of the companies spoke just to that. Their expectation of the future is continual change and many of the Rx they implemented were toward that end.

A New Normal

We heard this phrase from several of the customer speakers as they described what they’re doing about the disruptive forces they are confronting. Most seem to be of a mindset that these kinds of events are here to stay. Events affect companies differently and the pandemic is no exception, as it has catalyzed a lot of businesses to grow.

COVID-19 has affected all industries. Here a few examples and interesting challenges we heard about across different industries:

• LaCrosse Footwear. LaCrosse is the parent of several boot/shoe companies such as LaCrosse, Danner and White’s Boots.² They were confronting a dramatic change in consumer lifestyle (we hope only temporarily), which, of course, has changed what customers will be buying. That, in turn, has impacted the product lifecycle plans and all the upstream activities from manufacturing, suppliers, and raw materials. A key issue in this is how to continue to work with suppliers when you upend plans and on-order inventory. B2C companies, like LaCrosse, have end-to-end challenges in continuing to maintain customer credibility, manage their channel partners, as well as be as supportive as they can to suppliers. Thus, end-to-end supply-chain platforms with smarter predictive elements—lifecycle planning in a volatile environment—become a focus.
• Blue Bird. This company makes the ubiquitous yellow school buses. Well, if kids aren’t going to school, bus companies aren’t buying buses. Blue Bird also had the challenge of a 15-year guaranteed commitment to service the vehicles, and had sustained a better than 95% service/fill rate. A key challenge was to ensure their sustained presence in a market where they have giant conglomerate competitors (who probably have long-term capital sources to sustain themselves over this downturn). Blue Bird was able to right the ship with more focus on demand planning to rationalize inventory and order commitments.
• DENSO. When people are not driving, they are not buying cars. Hence, firms such as DENSO that have long-term designs with firm orders with suppliers have challenges on both sides—slowing sales and incoming inventory. One of the interesting elements in this case was the backup in the warehouse. So many containers of inventory had arrived from overseas, yet companies were on lockdown. Once they re-opened, practicing social distancing slowed down work. (One doesn’t think about these things unless they are living through them.) The solution involved getting all the functions involved (sales, supply, and logistics) in rationalizing demand for each region, facility, and at the item level; and re-prioritizing container handling and inbound inventory using AI/ML embedded within the demand planning solution. Inter-company, cross-functional dialogue was new to DENSO, but was embraced by participants. To ready themselves for all eventualities, DENSO conducted various scenario plans based on hypothetical speed and the nature of the COVID-19 re-opening/resolution to help them think through their next moves.

The food industry has surely had some dramatic shifts! One of the presentations was by an international supplier of food products. This was one of my favorite sessions. Their challenges included dealing with global sales challenges—sporadic demand, driven by government shut-downs and local restrictions on the dining experience; existing inventory with expiration dates; and providing fresh and new product to customers with a lot of back-end restrictions on warehouse operations and variable supply. They had to change the tires while the car was running at 60 mph, so to speak, since they had an “antiquated” solution (in their words), and, yet, they decided to purchase and implement two supply chain models in 2020 which allowed them to successfully confront all these and more challenges in this roller-coaster environment. This is the very challenge Allan Dow was talking about: transforming while managing the crisis. Here was an example of not just firefighting, but doing real change.
Most companies focused on these key strategies:

• Scenario planning exercises cross-functionally. For many companies, this was a new experience. This internal collaboration appears to be here to stay, we are happy to report.
• Standardizing the data/system across the company so everyone was using the same data for planning. Often, this included a shift from a dual planning strategy—ERP and their supply chain suite or reliance on spreadsheets—to, mostly, the supply chain suite. Many noted the limitations of their ERP in dealing with the broader demand challenges, modern supply-chain data, as well as the flexibility for scenario planning exercises.
• Rationalizing current and on-order inventory
• Re-imagining the channel with a focus on ecommerce. This changes what inventory is being sold and the allocation of inventory. To note: ecommerce sales are expected to jump another 30% for this holiday season, putting more stress on warehouses and logistics operations.
• Implementing AI/ML with a focus on variable demand.

For many companies, rethinking their product offering or re-emphasizing what was already in the lineup to help with the pandemic became a focus. For example, APEX, owner of Cherokee Brand, who makes nurses’ garments (uniforms, scrubs, etc.), updated their mask line, as well as an anti-microbial rinse to put in the wash cycle when washing work clothes. Some food companies now focus on offering immune boosting products as well as products packaged for convenient home-cooked dishes.

Conclusion—What’s Tech Doing to Help?

Of course, these companies turned to their tech providers who could get the job done quickly and effectively and carry them into the future. Logility, Demand Solutions, and NGC have been focusing on their next generation of product platforms that gives customers planning from design through post-sale service. AI/ML has been in the Logility solution for many years, but post acquisition of Halo, they have blended these smarts right into the solution, allowing a full range of predictive capabilities that include new ways of looking at markets and consumer trends, as well as the environmental impacts that supply chains are heir to.

In addition, tech companies like American Software continue to invest—especially in these times—to enrich their products and hire really sharp people who can assist customers through the ups and downs of market cycles. American Software has been a stable presence in volatile markets and demonstrated consistent growth and customer successes for decades, supporting all-sized companies with their family of companies.

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¹ An internal conglomerate of shoe and apparel companies owned by ABC-Mart — Return to article text above
² Known to their customers as Logility, Demand Solutions, and NGC Software. — Return to article text above

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