Over the coming weeks, working teams within global retailers and consumer goods producers will continue their assessments of the 2017 holiday fulfillment surge period to flag what went well, and not so-well. As we noted in a prior Supply Chain Matters commentary, learning from the 2016 holiday surge period was very evident in more meaningful retailer and supplier product strategy, merchandising, inventory, and online fulfillment initiatives this year. The axiom of better planning brings better results remains timeless, but the concepts of planning are reflected in a synchronized response capability.
In today’s new dimensions of digital-based business, where business is a continuum of around-the-clock developments, actions and required market response, the scope of planning takes on different dimensions spanning strategic, tactical, and operational windows. Tactical and operational planning become far more pertinent in the ability to ingest and evaluate streams of information and in the ability to make the most informed decisions in a continuous cadence. No longer can there exist parallel product, supply, production planning and customer execution processes, but rather the integration of all streams of information and required decision-making.
As we declared in our ninth of our 2018 Predictions for Industry and global Supply Chains, the multi-year path is toward Digitally-Enabled Customer Response Networks. Over time, we move away from the notions of supply chain to that of an integrated response to customer needs and requirements.
As we move into 2018, this blog will strive to provide our readers pertinent examples or sign posts of capabilities that are important to charting the decision-making capabilities of such response networks.
We submit that two such multi-industry sign posts in 2017 stemmed from what is occurring at both Apple and Tesla.
From our Supply Chain Matters blog perspective, we declared in September that the current Apple iPhone ramp-up for the holiday quarter would present significant supply chain challenges, and that Apple’s cross-functional supply chain teams have in the past risen to take-on many such challenges.
Apple’s product strategy for the all-important 2017 holiday period called for the offering of four different models of iPhones with the tenth anniversary edition iPhone X serving as the premium edition with a $999 price tag, two newly introduced iPhone 8 models as mass market options, and the former iPhone 7 as a lower-cost entry option.
Already, there are various reports circulating as to whether the globe’s most visible consumer electronics provider may have missed its sales and product volume commitments for the holiday quarter. The original production plans for the tenth anniversary model had to be dramatically cut-back due to missed milestones in final product design release, placing contractor manufacturer Foxconn in a rather difficult challenge to be able to make-up the loss of upwards of 4-6 weeks of planned production time ramp-up while dealing with early production yield challenges. In October and November, production planning was adjusted to allow for more capacity to produce the premium model, yet at the same time, initial sales numbers seemed to reflect more muted demand of both iPhone 8 models. In December, reports circulated on social media among new iPhone 8 customers complaining of some software and phone functionality bugs. That was followed by a couple of buggy iOS OS updates that prompted more customer consternation and the attention of Apple senior management in organizational changes.
Of course, all of this is symptomatic, and the ultimate yardstick is whether Apple meets investor and customer expectations for the holiday quarter, and whether learning from the quarter is transformed into more integrated response capabilities.
In the case of Tesla, the ongoing challenge is the production ramp-up of the critical mass market Model 3 sedan which disappointed the company’s investors and senior management team in Q3.
Here again, initial reports from some select analysts this week are indicating more disappointing news in terms of overall Model 3 production output in the quarter. CEO Elon Musk had described the ongoing challenge as not being specifically supply chain related, but rather execution of a production-volume plan. The challenge may well boil down to the plus and minuses of distributed team-based vs. more centralized and coordinated milestone planning. Some with years of military and seasoned operational experience would describe this as the “war-room” management model, a central focal-point for required decision-making.
Meanwhile, hundreds of thousands of consumers who placed their deposits for delivery of a new Model 3 will likely remain concerned as to the ultimate timing of delivery. In the case of the Model 3, the learning is likely the gap of a strategy to produce a high-volume mass-market automobile with the tactical and operational detailed planning and execution decisions cadence needed to produce and sustain such volumes.
Certainly, we do not imply that our two noted examples are the only. There will surely be many others in the months to come, but they collectively provide the signposts of what each industry’s integrated customer response network capability will manifest into over the next five-year cycle.
In the coming days, readers will hopefully be taking time to celebrate the entry of 2018, along with personal and professional resolutions for the coming months. We submit that the latter for supply chain leaders is a different form of thinking and management approach, one grounded in continuous information loops and integrated planning and execution capabilities.
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