Recently, our SCLA Executive Think Tank group hosted Dr. Ted Stank, Bruce Chair of Excellence at Global Supply Chain Institute at the University of Tennessee and collaborator with our colleague Dr. Thomas Goldsby, Dee & Jimmy Haslam Chair in Logistics at Haslam College of Business at the University of Tennessee.
Dr. Stank presented his fascinating—and extremely transformative—research into using cognitive tools to drive supply chain agility.
But it’s not just theoretical research in a lab setting. Dr. Stank and his team have put theory into action for several industry partners to improve their real-world performance.
Sharing results from agility-focused experiments from the last several years conducted with a consumer food products company (one of five different organizations that participated in this particular project), Dr. Stank showed how changing the way our leadership teams think and plan can accomplish the ultimate goal of improving inventory and service levels—even during a global pandemic!
But, first things first…
What are cognitive tools?
Cognitive tools are really about using how we think to influence changing behaviors. In Dr. Stank’s experimentation, this meant specifically increasing planning cadence and shortening time horizons operationally to drive better agility and resilience.
Why agility matters in the supply chain
The reason that agility is such a big deal is that it makes the supply chain better able to react to stressors. It mitigates risk, which I discussed in detail in an earlier article on LinkedIn.
Dr. Stank’s simple definition of agility is the ability to see, think, and respond much more quickly to changes in the environment than our traditional supply chains are accustomed to doing.
Obviously, the COVID-19 pandemic created an environment that was nothing but changes—coming a mile a minute! Though, Dr. Stank, Dr. Goldsby, and team began working on their project before COVID—already looking at how companies can respond to disruptions, react to demand changes, and ultimately align their supply chains to be more flexible and agile.
Dr. Goldsby noted, “We started working on this in summer 2019 (pre-pandemic), when agility was something of a nicety, maybe even a luxury. In the course of the pandemic, it became a necessity to look for sources of agility. Everything that could happen to us in our supply chains happened to us, and we were left to figure out how to deal with it.”
Changing “the way we’ve always done it” thinking
Unfortunately, most of the supply chain still operates with really long planning cycles that tend to be anathema to agility and resilience. Dr. Stank and his team wanted to shorten up those planning cycles and get people thinking differently as a first step toward making fundamental operational changes.
For instance, the organization at the center of Dr. Stank’s presentation ran their planning cadence monthly with four-month lookaheads (pre-COVID). He noted, “during COVID, we worked with them to shorten their cadence to weekly with a one-month lookahead.” With that change in place, experimentation with different possible physical operations changes helped everyone learn what was needed to get a grip on service levels without wild swings in variation.
There’s also the physical side of things, of course, which is the ability to make structural changes in the organization, but it starts with the cognitive dimension. Dr. Stank showed that we have to think differently to act differently.
Luckily, there is so much more data readily available within organizations that planning processes can realistically be shortened because there’s not the need to spend a lot of time drawing together information—it’s usually right there waiting for us.
We have the data—we just need to make the cognitive changes
Dr. Stank has shared that some of our supply chain organizations are still thinking with a mid- to late 20th-century mindset regarding planning. This is somewhat shocking simply because we have such incredible access to data compared to the “old days.”
He said, “Comparing our information capabilities from that timeframe to today, it’s almost criminal that we’re not really thinking about dramatically changing our planning processes to better capture the information that’s available to us now and churn through that with different kinds of analytics packages to find the gold.”
So, this cognitive tool of changing the way planning works—using readily available data—ended up allowing the company to achieve great results during a time of unprecedented real-world stress.
Dr. Stank shared the key findings of his experimentation, which were quite significant. He showed that increasing planning process cadence and shortening the time horizon during COVID:
· Resulted in higher service levels with less variability than making no changes.
· Helped make and sell more of the “right things” that consumers were seeking.
· Efficiently created and sold inventory to keep service levels high.
· Allowed the company to see the impact of planning function on their performance before making actual changes.
· Quantified improvement in inventory and service levels with enhanced planning strategies.
For years we’ve indeed focused so much on the operational ways to improve our supply chains, with planning almost as an afterthought. This is a bit mind-boggling based on what Dr. Stank’s team found. Making intentional changes to planning processes can be a game-changer—and a lever many organizations have yet to pull.
Dr. Stank noted that we’ve made a lot of progress in integrated business planning in terms of collaboration and the ability to get insights from across the organization and cross-functionally. However, from an operational planning standpoint, we have a lot of room for improvement.
What’s your experience with planning?
Has your organization overhauled its planning functions and seen excellent results? Or perhaps Dr. Stank’s findings are inspiring you to consider making changes now?