Orthex  Group,  a  leading  manufacturer  of  household  products  in  the  Nordic, operates in a sector where the customers have high demands on short lead times and on-time delivery. When unexpected large orders are common and the company growth  increases Supply Chain complexity, it puts pressure on the production planning process and the planners involved.

The Challenge
For Orthex, unexpected large orders are very common and usually have a short delivery time between 48 hours and a week. Such short lead times require a production flexibility and an ability for quick adaption. To ensure customer satisfaction and product availability, a streamlined production is of most importance.  As Orthex has grown, also the production and factory planning has become more complex and time-consuming.

Prior  to  using  Compass,  Orthex  had  been  using  another  production  planning  application. Since  the  previous  software  was  implemented, the demand for a modern planning application had increased. Orthex now needed more functionality, a higher level of automation and the ability to plan the production for a multisite network on an operational, as well as a tactical level.

To secure sustainable growth, while keeping the same number of employees in the planning and purchasing department, Orthex took the decision to start looking for a more modern planning application. This would bring the ability to plan ahead instead of catching up on orders, and to find a partner and solution to grow together with rather than grow apart from.

Summing up we could say that:

  • Company growth and increasing Supply Chain complexity
  • Previous planning method was not sustainable with the resources at hand
  • A planning system that would not meet the future requirements  

The Journey
Orthex and Optilon have  a  long  relationship  that  has  consisted  of  several  previous application implementations. When Orthex started looking for a new planning application, Optilon  was  a  natural  partner  and  advisor.  This  gave  Optilon  the  opportunity  to demonstrate  the  competitive  advantage  a  modern  planning  tool  as  Compass  could  give. Orthex evaluated other applications as well, but in the end, the decision to choose Optilon and Compass was made based on two main aspects. Partially the fit Compass had to Orthex needs, but also the trust Orthex has towards Optilon from previous projects.

The project consisted of software implementation, training of end users, and validation and refining of the master data. The projects have had a smooth implementation, which  is  mostly  thanks  to  a  successful cooperation between Orthex and Optilon.

“It  is  fantastic  to  work  with  consultants  that are competent and committed to the project. The consultants of Optilon have shown a clear will to ensurethat the project outcome will reach or exceed the expectations. The consultants at Optilon understand how we operate our daily business and they have not been  afraid  to  question weaknesses in our production  planning process”  says  Peter Ottosson, Chief Operations Officer at Orthex Group. 

Peter Ottosson also sees the value in Optilon’s role as a holistic supply chain advisor,

“In my  experience, consultants tend  to focus solely on assuring that the application is properly implemented and that it runs smoothly. They are, for instance, forgetting about keeping  the  end-user  involved  in  the  process so that the  user  understands, why the system is implemented and how it will affect their work. This has not been the case with Optilon. This is important considering the total “switching cost”. It determines how long it will take until the end-users have gained a sufficient level of skill and feel comfortable using the system”.

The Results
Orthex  has identified many positive outcomes from the project. Working in Compass is faster and smoother. It also gives the planner more flexibility and new functionality that makes the planning easier.

“Using  Compass has  given  me  an  increased  sense  of  control,  which  is  important  for  a person in my role. I also feel like I use less time for planning than before. Now I can put more time on analyzing exceptional cases like delayed orders and backlogs” says Therese Dahl, Production Planner, Orthex Group

The planner’s freed up time has also led to a more versatile workday. They can now take part in smaller projects on top of their daily jobs, which has proven to be a real contribution for the planner’s job satisfaction. Before  implementing  Compass,  Orthex  used  an  application  that  was  slower  to  use  and that  was  more  dependent  on  manual  control.  Since  Orthex  receives  many  unexpected large orders, it was next to impossible to plan successfully. The planning process with Compass today is not depending as much on manual control and it is a lot more robust. 

With Compass, Orthex has been able to take a big step towards 100% planning control.

Summing up on results:

  • Faster and smoother planning process
  • Time freed up for exception analysis
  • Increased sense of 100% control
  • Happier production planners with more versatile workdays

Purchasing teams handling inbound products and materials from suppliers often find themselves in a continuos loop of reactive, time-consuming and often manual tracking exercises when suppliers deliver late. Similarly, sales and customer service teams face the reality of handling dissatisfied customers when outbound orders, in turn, are delivered late to the final customer. Regardless if delay is in- or outbound, it is often a contributing factor in overall Supply Chain interruptions, increasing business risk, generating resource cost and increasing customer dissatisfaction.

Our Predictive Order Monitoring solution (or POM in short) uses AI models that can accurately predict which purchase or customer order will arrive late, this long before the order is dispatched. Through the Optilon Web Interface, team members can then view predictive statuses and taken proactive actions to course-correct delay.

90% precision in predicting order delay
We delivered a soluton for a global manufacturer who historically had experienced order delays from the suppliers. The AI model delivered a results close to 90% precision compared to the reality.

Summing up we could say that the solution:

  • Predicts supplier reliability and customer deliverability, order by order, day by day
  • The AI model continuously learns and predicts order delay and recommends proactive actions
  • The solution decreases order and production issues and creates a better customer satisfaction

It is time to say goodbye to manually corrected Supply Chain data
A vast majority of Supply Chain data correction is still today handled either manually in Excel or via static and manually-defined rule-based processes in SQL or other types of data applications. These ways of correcting data is typically very time-consuming, error-prone and do not handle changes in the data very well since it is by default static. Since clean and accurate data is the cornerstone of effective Supply Chain planning and optimization, we want to empower our clients with a data correction solution that quickly and automatically handles this process, reducing overall risk and cost in the process.

Robotic Data Correction utilizes Machine Learning
Robotic Data Correction (or RDC in short) uses Machine Learning models that automatically detect data inconsistencies without any human-defined rules and learns over time from user acceptance of corrections recommendations and new data values. it has not seen before, ultimately being able to quickly to correct any relational data values.

One of our valued customers utilized RDC to improve the quality of their addresses and achieved a 3% annual domestic cost improvement on their transportation costs, as they were able to consolidate their shipments. At the same time it reduced the data correction project time-to-completion with 95%. The accuracy of the model showed up to 90% data correction accuracy.

What data can RDC correct?
RDC can correct any type of Supply Chain data that has relations to other held data, including but not limited to:

  • Customer and supplier addresses
  • Item data such as lead time and cost
  • Network data such as routing codes
  • Material data such as status codes
  • Service data such as service class
  • Demand data such as incorrect peaks
  • Transport data such as delivery mode
Where is RDC data used?
RDC corrected data can be directly integrated with several line-of-business systems and business processes including:
 
  • ERP source systems such as SAP, Infor M3, Microsoft Dynamics and IFS
  • Planning processes such as demand forecasting and production planning
  • Operational TMS and MES systems
 
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Building a digitally enabled Supply Chain, where the customer is in focus, is for many companies a challenge. The business case for doing so has proven to be worth the challenge though.

According to a survey, which the Digital Supply Chain Institute (DSCI) did, the design of and transformation to a digital Supply Chain with the customer in mind, can reduce procurement costs for all purchases of goods and services by 20% and reduce supply chain process costs by 50%. In addition to decreased costs, the transformation to a digital Supply Chain can increase revenue 10% by creating a better customer experience and new routes to market.

In this blogpost we will provide you with some inspiration on how you can design and transform to a digital Supply Chain with the customer in mind and the role of the Supply Chain manager in doing so.

What does Supply Chain digitalization mean?
Before we dive into the how, let’s have a look at what transforming to a digital Supply Chain means. Real digital transformation is not about getting your company to use a specific set of new technologies. It is about your company’s ability to react and successfully utilize new technologies and processes. In a Supply Chain context, the approach to digitalization could happen at three different levels.

The first level is strategic focusing on having a strategic approach to digitalization as part of the Supply Chain strategy. This level is at the overall business level and is concerned with how digital strategies can improve existing business models or develop new business models.

The second level is about business processes to identify, which processes are influenced the most by digitalization and what projects are needed to be implemented. Business processes and technologies must go hand in hand.

The third level is the enabling level, focusing on the concrete technologies and systems to be implemented in supporting the requirements of business process outcomes.

The human factor is of course of vital importance and is too big a subject to cover here.

Regardless of the size of your company or the sector it is involved in, real digital transformation includes using new devices, platforms, systems, and networks to create:

  • More profitable business models
  • More efficient operating processes
  • Greater access to markets
  • Enhanced offerings to users
  • New sources of revenue

The challenges
Transformation in any part of a business has always been difficult. It requires organizations to juggle multiple moving parts, including people, processes, and organizational infrastructure. And it requires them to overcome all the usual technical, organizational, and cultural obstacles to change.

Digitally-enabled transformations add two extra challenges into the mix. First, there is the extra technology component, which must be handled alongside changes to processes, organizational infrastructure, and mind-sets and behaviors. The second, and more significant, challenge for companies, introducing digital technologies, into their supply chains today is the lack of a single, clear destination.

Digital technologies are evolving so rapidly, that there hasn’t been time for many of them to prove themselves at scale. Supply Chains are so specific to each company’s product range, operating footprint, and customer needs that there is no archetype.

All that extra complexity and uncertainty means, that companies can no longer follow the traditional linear transformation path: they need an iterative approach. New digital technologies must integrate with people, processes, and organizational infrastructure—but those technologies will also influence how each of the other elements should be redesigned.

It is all about market responsiveness
Most Supply Chain executives used to be expected to deal with working capital, operating costs, and customer service. In many companies Supply Chain worked in the background, trying to keep operations smooth and all the stakeholders happy.

Supply Chains are still the central nervous system of the economy, and it is supporting the advanced lifestyle that we enjoy. We see the Supply Chain in action, so to say, each and every day, as we see transportation on our roads, rail, sea and in the air. Most consumers do not even realize to what extent they depend on Supply Chains in sustaining their everyday way of life.

Also, as more and more sales happen through digital channels, the Supply Chain is now a key player in the definition of the go-to-market model. Customers going online have become increasingly demanding and the operating environment has become more complex.

The continued, and quick, growth of e-commerce are giving air to the idea, that consumers can interact with retailers and brands through multiple devices, order products through these devices, choose from multiple delivery options and expect a seamless experience throughout is now coming to the fore even more rapidly.

This also means, that the traditional “inside out” approach does not work any more and many companies are on the road to transform themselves, so they become more agile and market responsive. In doing so digitalization plays a key role.

Supply Chain Managers must become more business facing
With the above in mind, Supply Chain professionals must take on more business-facing activities, particularly in the areas of planning and customer relations. Also, companies have begun thinking about end-to-end planning, become serious about demand planning, and aligning different actors in the company such as sales and finance.

From a Supply Chain digitalization perspective this is putting pressure on traditional Supply Chains to improve their master data management, develop new data models and manage a magnitude of orders and product availability complexities.

Supply Chain Managers should look for enabling technologies
Hearing and thinking about Supply Chain digitalization also means hearing about many technologies and buzzwords, and unfortunately very few cases and concrete examples. It can be challenging to find out where to start. For Supply Chain managers balancing the “day to day” imperatives of service, cost and working capital management, as well as navigating internal stakeholders, it can be difficult to know how to approach the topic.

The Supply Chain manager can look at the Gartner Supply Chain Strategy Hype cycle, which represents the maturity, adoption, and social application of specific technologies. Though, when reviewing those it is equally important to separate the hype from reality and identify those that have a best fit for the organization. This could mean engaging critically with new revolutions, benchmarking against others, understanding the right fit and developing the internal business case.

Supply Chain Managers must look for gamechangers
New technologies is not the only thing that Supply Chain managers should look for. Running a competitive Supply Chain in a volatile world demands a constant outlook for gamechangers. The impact of political instability around the world is impeding the efforts of global companies to efficiently drive cross border trade. It will also disrupt global sourcing strategies designed to make in-bound Supply Chains leaner through accessibility to a greater diversity of sources.

Adding to that, we have the “Uberization” and the climate change which challenges the designs of the Supply Chain. With Uberization we mean asset sharing, pushing utilization rates up and accompanying transaction down. We are just at the bottom of the learning curve, so there is a long way to go.

In other words, because the likelihood is that centre-of-gravity of a Supply Chain is going to change frequently in the future, given the volatility of the business environment, the need for flexibility in the supply/demand network increases. Resilience comes with a cost so a conscious decision about what level of flexibility the company should provide is key. In other words, all this uncertainty is the enemy of efficient Supply Chains.

The vulnerabilities of the changing Supply Chain were also visible long before the crisis hit. Developments were driven by a need to make the Supply Chain more sustainable, become more digital, adapt to new business models and become more efficient. Simultaneously, the capabilities to respond and adapt to rapid and big changes in volumes and customer behavior. The crisis has just highlighted these vulnerabilities.

Creating an “outside in” approach
The only way you can claim to be truly “people/customer-centric” is to find a way to interpret customers’ expectations, organize these into a small number of groupings or segments, and then directly link these back to the organizations challenges. In other words, mapping the market in this way becomes a frame-of-reference for re-engineering inside the organization.

Designing a supply chain that will function for 5 to 10 years is a big investment. Doing this successfully means understanding the individual values that shape buying behaviors. The first thing to understand is buying behaviors. According to John Gattorna, author of the book: Transforming Supply Chains, you should expect to uncover four or five dominant buying behaviors for any given product/service category in each target market—and that, combined, these will give you about an 80 percent fit to a given market.

Once you’ve done the research to understand the buying behaviors, associated with a particular industry and company and products, it’s a fairly straightforward task to work backward to engineer an equivalent number of suitably structured supply chains. In other words, once you understand the structure of your market, you can replicate that structure inside your business and within the supply chains that are hard-wired into your business.

Buying behaviors will change. The changes, however, tend to involve short-term shifts between the behaviors already identified. This is a process, however, that demands the ability to understand, observe, and connect with customers.

What Gattorna is arguing for is an “outside-in” approach. It’s consistent with the Design Thinking that Roger Martin introduced about 10 years ago— the idea of looking back at your own company through the eyes of your customers, and trying to understand what’s in the customer’s mind.

The digital Supply Chain must be designed
High performance Supply Chain’s do not just evolve over time; they must be consciously designed to fit specific product-market combinations. The design or redesign process must work from “outside in”, supported by design thinking. It is necessary to see the patterns in the market and the demand data and respond with precision.

John Gattorna’s framework Dynamic AlignmentTM is a perfect example of a tool worthwhile looking into. Tailored Supply Chains will help you create the market responsiveness you are looking for, as it provides flexibility. Without flexibility and the right technologies, it is difficult to claim that you have the customer in mind. So first you must understand your business landscape and then you should design the Supply Chain of the future.

As you might recall, according to a survey, which the Digital Supply Chain Institute did, the design of a digital Supply Chain with the customer in mind, can reduce procurement costs for all purchases of goods and services by 20% and reduce supply chain process costs by 50%. In addition to decreased costs, the transformation to a digital Supply Chain can increase revenue 10% by creating a better customer experience and new routes to market.

Summing up we could say that:
1. Look for gamechangers
2. Assess the technologies
3. Segment the customers
4. Understand buying behaviors
5. Build the transformation plan

Supply Chain organizations must rapidly assess new digital strategies and Supply Chain planning technology solutions to accelerate digital business. At the same time, they need to assess and identify automation opportunities, while supporting organizational change. How do they stretch their organizations current way of thinking and operating while at the same time delivering on speed and flexibility? Get some fruitful advice in this blogpost.

What does digital mean?
Supply Chain leaders of today struggle with defining what “digital” means for the Supply Chain. Supply Chain are living in a time where there is a lot of complexity and volatility but also enormous opportunity, significant risk, and lots of uncertainty. Supply Chain leaders are driven to redesign their operating models to better meet the needs of new and existing (digital) business models and incorporate digital technologies.

So, the business case is clear. New business offerings are driving revenue growth and the Supply Chain must adjust accordingly. The good news is, that there is a willingness to invest in digital technologies, especially within Supply Chain planning.

Digitalizing Supply Chain planning
Though many Supply Chain leaders struggle with translating a digital vision into the critical Supply Chain planning capabilities needed, to deliver a digital experience to customers. They also struggle assessing emerging digital technologies and current Supply Chain planning technologies, to operate the Supply Chain in new ways.

Digital planning is not about digital technology. Rather it is about appropriate and effective use of digital technology being applied to planning. As a company moves forward in its journey, and applying these technologies across the business, they are looking to make higher quality decisions in planning.

These trends are bringing new requirements that often obviate those traditional architectures. Organizations are more frequently seeking ways to capture data from external data streams, to provide input for future planning activities. As a result, data and processing of this data require increasingly extensive use of in-memory computing to help with planning speed, granularity, and model adaptability.

In parallel, as higher volume, velocity and veracity of data is brought into Supply Chain planning, this increases the need of organizations to use advanced analytics to drive process automation and get insights from all this newfound data.

Why is there a need to be more agile in the assessment?
The accelerating digital business means organizations must rapidly assess new digital strategies and technologies. As digital planning becomes a top priority, Supply Chain leaders need a way to assess and identify automation opportunities, while at the same time supporting organizational change as planning decisions move from people-centric to decision-centric. It is time to rethink the way assessment is done when it comes to the assessment of Supply Chain planning technologies. It is time to seek and embrace agility.

How to rethink the way assessment is done
Supply Chain organizations should place a greater emphasis on testing, experimentation and learning when evaluating Supply Chain planning technology. They should adapt an agile mindset when considering new Supply Chain planning technologies. They should avoid risky and costly projects with long cycle times. They should build pilots and proof of concept into the Supply Chain technology assessment process, in order to gain speed to value and flexibility while mitigating risk and uncertainty. If they do not, they risk that the business looses out on their business potential.

Before the assessment is started, some essential questions
There are some questions which the organization could consider before starting the assessment of the technology – and perhaps start or continue a conversation with a Supply Chain technology partner:

  • Where are you today in terms of Supply Chain planning maturity?
  • What type of business are you and what kind of complexity do you have in your Supply Chain? What needs to be catered for?
    Larger companies tend to have more complexity in their Supply Chain
  • What are you trying to achieve? What challenges are you trying to solve?
    Make a list of operational challenges that you are facing and goals that you would like to achieve. Spell out the performance you are looking to achieve with the technology. If today you have decentralized organization – will that change in the future?
  • What are your must have features?
    The type of business you are running will determine the exact tools and features you require to operate effectively. Make sure that the software technology has the right functionality to meet your specific requirements.
  • How much are you willing to pay?
    Costs can vary significantly – keep in mind that paying for essential functionality can end up increasing your profitability and decreasing costs over time. What if you could pay more but get a higher guarantee of business results – would that make a difference? There could potentially be a risk of missing out on business results which can be hard to quantify.
  • What integrations do you need?
    Most but not all cloud-based technologies offer a suite of integrations with other key application.
  • What kind of organization/training/support do you need?
    Most providers offer varying levels and types of support as well as training resources, although costs can vary. What you need to consider is how resources will be organized including key role. What key competences, people and skills are needed for the project team and how will they be provided/acquired.
  • Which change will your planners and other employees see and feel?
    Have an idea about the communication around the change. What is the story?

All things supply chain.

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