The Missing Data Problem in Supply Chain Design
Why does the supply chain that served you so well yesterday seem designed to end your company today? Don’t be surprised; that’s how nature works. Yesterday’s design is optimized for yesterday. Tomorrow it’s a whole new ball game.
That’s why, as a supply chain executive, you must update your user’s manual about the term “optimization.” It’s a moving target and must be because the future is always changing.
Adapt or die, baby.
You know this already, but in business, it means you can never get too comfortable. Optimize, improve, observe, adjust, and repeat. Survive, thrive, and then break it again. Anything else and you’re just a dinosaur waiting for the next asteroid. How do you secure a future for your dino babies and dino tribe?
What is supply chain design?
Supply chain design is the emerging discipline of constantly remaking your current supply chain (the one you have) into a better one (the one you need—all praise to Herbert Simon). This is done by pulling all the data together about your supply chain’s configuration and operations and creating a digital “model” of the current system. You can then test changes, small, medium, and big, and measure the key metrics: service, financial, and risk—and just about anything else you care to observe.
Design the future supply chain you’ll need and go make it happen.
This supply chain design paradigm is always about the future, which hasn’t happened yet. That means doing things you haven’t done before, operating in ways you haven’t operated, and using strategies and tactics you haven’t attempted before. And yes, sometimes you move the freakin’ warehouse location.
But if you’re doing something new…
- Where do you find the data?
- Where are the lane rates when you have no shipment history?
- What’s the capacity utilization on lines making mixes you’ve never put together before?
Since you are modeling the future, if the changes are truly new, you won’t have data or history to rely on. This is called the “missing data problem.”
I wouldn’t say I’ve been missing it, Bob.
Engineering and design always rely on assumptions. We do the best we can with what we’ve got to work with. You’d like to have great data for everything, but if you’re talking about the future—and you are, in design—you must accept the reality that you are ALWAYS going to be missing data.
Not having data about costs, demand, line rates, inventory levels, lead times—that’s not a temporary situation. It’s the heart of the craft. Missing data doesn’t mean you don’t know anything at all about the future. It means you must make a good estimate and you know it won’t be precise. But that doesn’t mean it’s inaccurate.
Supply chain design is a people business. I’d take the good estimate of a smart, informed supply chain practitioner over the precise and complete spreadsheet excretions of a miserable team of low-wage robotic data grinders any day of the week and twice on Sunday.
There is real skill and art in making good estimates to drop into the missing data gaps. The most skilled and experienced pros don’t just make estimates; they develop the sense of their own fallibility: “How accurate do I think this guesstimate is? Is it plus or minus 5% or 50%?” You do the best you can, but a sense of humility and self-knowledge is what separates the best from the rest.
As a side note, that’s why you should mistrust the know-it-all jargon-filled self-important morons that derive their confidence from their roles as “experts.” Real experts don’t tell you to trust them because they are experts. If a super-smart expert can’t explain something clearly to you, in a way you understand, then they’re not an expert, nor are they smart or super.