The Quantitative Supply Chain

Historically, programming has often been seen as an intimidating task reserved for computer whizzes and IT practitioners. Nowadays, however, with the rise of tools such as Python, programming has become that much more accessible. For this episode of LokadTV, we're joined, once more, by Nicolas Vandeput to discuss just how simple programming can actually be.

Despite many companies currently investing huge amounts of resources into establishing data science capabilities, the hard truth is that the majority of these projects fail to impact upon daily business operations. As such, we look beyond classic statistical modelling and explain why the impact of a proper data science department must run far deeper than just collecting data, manipulating it and getting an output.

When investing in a piece of supply chain software, there is the expectation that it will last a company decades, rather than just a few years. However, with a rapidly changing tech landscape, this becomes a complicated endeavour. For this episode of LokadTV, we discuss this challenge of maintainability and how it can be impacted by good design.

We've previously discussed the importance of a supply chain specialist over someone with more classic data science capabilities. At Lokad, we call them "Supply Chain Scientists". We're joined by one of our Supply Chain Scientists, Maximilian Barth, to learn more about what their role entails.

Mahatma Gandhi famously said that “The future depends on what you do today.” ― and for the organizations of tomorrow to be successful they already need to start establishing the right set up and supply chain operating model. We're delighted to welcome Markus Leopoldseder and Knut Alicke from McKinsey to discuss with us which capabilities organizations should be focusing on, and what the future of work in supply chains may look like.

Much like a great chef in a Michelin star kitchen, the best data scientists have to craft statistical solutions that adapt and evolve to every scenario. As such, we investigate what it takes to create these numerical recipes and what characterizes the solutions built for our supply chains.

Dollars of profits and losses are the only metric that matter in the long run for any company. At Lokad, we emphasize a strict financial optimization of the supply chain. This approach should not be confused with short-sightedness and other kinds of pseudo-rational methods which are prevalent when finance gets in charge of the strategy. This approach goes against the idea of service levels, and most of the other KPIs similarly defined through percentages.

Historically, pricing and planning have been dealt with by separate divisions within companies. This has resulted in inconsistent strategic thinking and data silos. For this episode of LokadTV, we discuss why these two challenges should be dealt with in tandem and how they are actually, in reality, two sides of the same coin.

Mainstream statistics are all about the law of large numbers. Yet, supply chains are the opposite. It's the law of small numbers that prevails. For decades, this mistunderstanding has generated problems for practitioners due to misdesigned tools, methods and processes. In this episode, we discuss the challenges and the appropriate perspectives when it comes to small numbers.

As coronavirus swept the world, numerous organisations quickly transitioned towards remote working. However, with so many employees working from home, these less secure environments created new security vulnerabilities. As such, for this episode of LokadTV, we are joined by Professor Richard Wilding who tackles with us this complex topic of cyber risk in supply chains.

When starting Lokad back in 2008, we thought we had the solution already all worked out. However, since those early days, there have been many twists and turns along the road, and we have had to change the entire strategy of the company on a large number of occasions.

Here we're joined by the host of IBF's On Demand Podcast, Eric Wilson, to discuss the role of analytics in modern day organisations and in particular, what we can learn from Eric's new book titled ‘Predictive Analytics for Business Forecasting'.

Better quantitative results in supply chains are frequently obtained through better qualitative, if not highly subjective, perspectives rather than from better numerical methods. Most the breakthroughs, that ultimately lead to quantitative improvements, of Lokad were of a qualitative nature.

Scenario planning was first pioneered by Shell in the 1970's and since then has been promoted by consultancies worldwide as a powerful tool to help companies prepare for every eventuality. Here, we discuss the effectiveness of this approach and whether it can be replaced by alternative methods, such as probabilistic forecasting.

Despite the rise of automation, modern day warehouses still rely heavily on manpower, which can lead to diseconomies of scale in periods of heavy demand. As such, we learn more about how decisions can be prioritized and why smoothing warehouse operations is so important when it comes to managing fluctuations in activity.

From exorbitant one-time licenses to hidden maintenance fees, it seems like navigating the range of approaches to pricing software can often be somewhat of a minefield. Here, we explore some of the main approaches and learn more about the bad practices to look out for.

From a company perspective, while dealing with flows of goods, supply chain is the mastery of optionality when facing variability. This episode focuses on what the term ‘Supply Chain' means, and what are the organisational implications of this definition.

The very design of a supply chain network has a huge impact on inventory optimization. For this episode, we're delighted to welcome Pinak Dutta, Head of Network Optimization at Spreetail, to discuss what constitutes good design and how organisations can exploit this to improve their inventory allocation.

When relational databases emerged in the 70's they provided a breakthrough for companies to turn their supply chain digital, decades before the 'digitalization' buzzword. However, event sourcing has now emerged as a more manageable, more reliable and more scalable way to design supply chain systems compared to the relational design. At the core of this revolution, a perspective on reality itself which is too frequently under appreciated by supply chain practitioners.

A forecasting competition based on Walmart store data ended June 2020. Lokad ranked 6th out of 909 teams. In this episode, we have a closer look at this unusual sporting event, and what it takes to win such a competition. We are joined by Rafael de Rezende who was leading the Lokad team in this competition.

Arthur Conan Doyle's iconic character Sherlock Holmes famously said ‘it is a capital mistake to theorize before one has data'. We certainly agree, as data is the foundation of any optimization process. Here, we discuss what companies that collect data can do and tackle the myth that data has to be "perfect" for a machine to be able to work with it.

Open-to-Buy is a budgeting and planning process that is commonly used in the fashion industry to drive purchasing decisions. In this episode, we discuss why this approach is so popular and discuss whether modern technology can provide alternative approaches to keep up with the ‘fast fashion' culture.

With a product's success so often relying upon the latest trends, the ability to capture initial demand and detect new crazes is becoming increasingly sought after. Here we discover whether the rise of social media means that forecasting these trends is now possible and what companies can do to react based on early signals.

Market analysts and consultants can be a useful aid in assessing the multitude of different supply chain software. However, too frequently, those 'experts' hide behind weak and irrational methodologies, instead of providing opinionated insights which would require a lot work from them. Far from being irrational, high-quality subjective reviews nearly always outperform cheap and naive methodologies.

Supply chains have historically been built with forecasting at their centre, with the actual decision making process left to the intuition and experience of senior staff. We explore the alternative approach of putting ‘decisions first', and how this philosophy vastly improves the supply chain performance.

ERPs are misnomed. It should have been ERM standing for Enterprise Resource Management. It's a class of enterprise software that support many routine operations of a company. When it comes to choose an ERP, one must first understand the design and driving forces behind those products.

Covid19 has unleashed havoc for supply chains worldwide. Supply chains have recovered fast, but most realize they could have done better. In this episode, we are joined by Cédric Hervet (Kardinal) and Stefan Gstettner (BCG), to discuss how supply chains can fair better during a pandemic crisis.

A competent and capable network of suppliers is a critical ingredient of the supply chain performance. In this episode, we are joined by Muddassir Ahmed (Regional Planning & Operations Manager at Bridgestone) to discuss how both parties can extract maximum value from these relationships and what companies can do to maintain and build solid relationships with their suppliers.

The nature of the hard luxury market means that despite a growing online presence, the vast majority of purchases are still made in store. With sales reaching as low as one or two units per year, it can often be challenging to know what to display in stores and how best to capitalize upon a demand that is so sporadic. For this episode of LokadTV, we discuss this dilemma and learn what hard luxury stores can do to optimize their assortment.

As supply chains have never been so dependent on technology and, in particular, on software technologies, hiring talent is more pressing than ever. The working world is changing and it seems like candidates are now asking more and more of businesses. We're joined by Radu Palamariu, Managing Director of Alcott Global to discuss what modern companies can do to find and retain talent and how supply chains can recruit experts with the right skills.

Inventory optimization matters for small and medium companies (SMBs). The choice ranges between investing in costly enterprise software to taking on the challenge of doing it manually in-house. For this episode of LokadTV, we explore this dilemma and try to understand what SMBs can do to get the best out of their, sometimes limited, resources.

As humans, trust is a complex emotion that can often take years to build. It's also a highly important factor in business, which can impact on everything from speed of innovation to the perceived wealth of a nation. For this episode of LokadTV, we discuss this topic with Sheri Hinish the 'Supply Chain Queen'.

Tail risks are sudden, unexpected events and they often kill companies. Brexit, the Covid-19 outbreak and Iceland's volcanic eruption are a few recent examples. Classic supply chain practices leave companies wholly unprepared for those events. This does not have to be the case.

From demand to supply, and almost everything in between, there is a huge amount of uncertainty within supply chains. Traditionally, this can be managed using buffer stock, but there are often events that occur which can trip up even the most experienced of practitioners. For this episode of LokadTV, we're joined by Stefan de Kok to discuss why this uncertainty is not necessarily a hindrance but something that should be embraced.

Compared to other industries, most fashion brands have been lagging behind in technology, resulting in overstocks and large discounts. Jan Wilmking, ex-Zalando and ex-McKinsey, sheds light on the fashion industry, and how tech investments do improve the supply chain performance.

Excellency in Supply Chain Management is a journey. Digital technologies have redefined the meaning of 'excellency'. While excellency used to be dominantly about discipline and rigor, excellency increasingly depends on the capacity to challenge the status quo and redefine what is considered as state-of-art.

Drones can be used in supply chains for deliveries but also for monitoring facilities, and providing assistance for tasks like inventorying. Interview with Emmanual de Maistre, pioneer of the drone industry.

Forecasting demand and optimizing stocks are both usually done in Excel, even in large companies. Many CIOs have tried to move away from spreadsheets to no avail.

The bionic supply chain outlines an approach where the human supply chain expertise is supplemented by machine compute power rather than being replaced by it.

Demand Sensing is yet another buzzword in supply chain that does not live up to the community's expectations.

Finding the equilibrium between costs and the amount of cash coming in is a constant battle for any modern day company that provides goods or services. This daily struggle can be captured with a concept called ‘The Supply Chain Triangle'. In today's episode of LokadTV, we meet The Supply Chain Triangle's creator, Bram Desmet, to learn more.

Here at Lokad, our commitment is to deliver the best forecasts that technology can provide. As a result, potential clients often ask if we can provide forecasts alone instead of a full managed solution. In this episode of LokadTV, we explain why these "naked forecasts" invariably introduce a whole host of different problems and how, even with better forecasts, a practitioner usually end up degrading the performance of a supply chain.

With the latest advances in crowdsourced data, we are now able to forecast the impact of traffic congestion and optimize our routes more accurately than ever before. For this episode of LokadTV, we are joined by Cédric Hervet to discuss how real-time route optimization has changed the way delivery companies operate.

Lean Supply Chain Management (Lean SCM) starts with a lean applicative landscape to support the supply chain. However, 'lean' in software is primarily a matter of architectural choices. Those choices define the class of problems where the chosen software design is a good fit, and where it isn't. Many supply chain problems stem from broken-by-design situations where core design choices conflict with real-world requirements.

Waste reduction has been the long standing goal of Lean SCM. During the 2000's and 2010's, the focus shifted from 'lean' to 'sustainable supply chains', but there are many points of convergence between these two visions. In particular, both require end-to-end supply chain analysis, as 'local' improvements (e.g. waste reduction) do not necessarily translate into 'global' improvements if inefficiencies are introduced in the process.

The proper preparation of data is critical to achieve success with difficult undertakings such as accurate demand forecasting. Bad data is usually the scapegoat of failed supply chain initiatives. Yet bad data usually reflects poorly understood software and processes rather than erroneous data entries.

The ERP (Enterprise Resource Planning) is a misnomer, as it should have been ERM (Enterprise Resource Management). ERPs became prevalent back in the 80's to operate supply chains and remain the 'transactional core' of most larger companies. However, ERPs are now undergoing deep changes to cope with newer supply chain practices as well as newer IT practices that have emerged during the last two decades.

The supply chain optimization of the fresh food industry presents specific challenges, most notably the precise control of expiration dates that are very short and complex seasonalities that are typically more erratic than what 'non-fresh' supply chain practitioners would expect.

Willingness to pay is a basic economic concept that determines the maximum amount an individual is willing to pay for a specific good or service. This can be affected by many factors such as marketing and trends, and can often vary massively from consumer to consumer. While this notion is essential to understand market demand, it is too frequently ignored by supply chain practitioners.

Accurate demand forecasts for automotive spare parts is important to ensure high service levels that minimize disruptions for customers when their vehicles are in need of mechanical repair. However, the number of distinct parts and the number of distinct vehicles are high, which both complicate the forecasting process.

Like most complex systems, supply chains are difficult to comprehend. Most naive measurements, such as the forecasting accuracy, only give a partial view of the problem. As a result, during the 90's and 2010's, multiple methods like ABC analysis or safety stocks have persisted while they had neither theoretical grounding nor empirical results to support them.