When former New York Mayor, Rudi Giuliani spoke at the JDA FOCUS Conference in Orlando last May and explained how the Office of Emergency Management prepares to respond to a wide range of anticipated and un-anticipated disasters, some of us leaned across from our chairs and exchanged knowing glances. We could immediately make the connections to process playbooks that we have been advocating and deploying for JDA customers for almost a decade now. Mr. Giuliani spoke about how the Office of Emergency Management developed detailed response plans for a wide range of anticipated disasters and threats. City teams repeatedly conducted mock exercises playing out every step of their response plans for each anticipated event and then refined these plans based on lessons learned. Then, even when an actual event was not one that had been anticipated, they could still assemble an effective response plan quickly from elements of those that they had already practiced and perfected. JDA’s integrated planning and execution approach using Process Playbooks enables resilience in very much the same way.
We begin with a team activity where we enumerate as many risks and disruptions to the supply chain as possible. Then, we organize the list of anticipated disruption on a risk map based on likelihood of occurrence and severity of business impact.
Risks that are high impact and high likelihood are unacceptable and their root causes must be eliminated. I worked with a high tech manufacturer where we identified a high risk in continuity of supply of a critical component that was sourced from a single supplier. Once the risk and impact was quantified, the company identified a startup competitor and qualified them as a second source –even at the cost of securing a partial equity stake into the company. For high likelihood risks with moderate to low impact that cannot be eliminated, it is most effective to build contingencies into the plans themselves. Safety stocks to guard against uncertain forecasts and allocations reserving some supply in order promising for last minute high margin or priority demands are good examples of such situations. For moderate likelihood events with moderate to high impact we manage the outcomes via carefully planned process playbooks optimizing cost-benefit trade-offs in line with the company’s business priorities.
A process playbook is a step-by-step guide prescribing activities, priorities, owners, business rules, specific set of alternatives, analysis methods and clear decision criteria for the anticipated situation. It is clearly identified ahead of time who needs to do what and when. Sophisticated optimization algorithms have been designed up-front to suggest the most optimal resolution actions. Thus, smart and efficient decisions can be made very quickly during execution, based on the details of the actual situation.
The relentless preparation pays off in execution. Playbooks capture institutional expertise and enable efficient decision making consistently across the entire organization. In another session at the same JDA FOCUS Conference, Gurshaman Baweja of Texas Instruments described how his company achieved greater flexibility and agility by deploying its own supply chain playbooks to standardize response to various common scenarios. In JDA solutions, we strive to capture such knowledge into solution templates that include models, segmented configurations, algorithms, and carefully designed workflows. As an example, the recently released Agile Workbench with JDA Supply Chain Planner enables planners to respond to unanticipated events during execution by choosing from a library of pre-packaged resolution levers. The solution suggests the most effective levers based on built-in cost-benefit analysis. Planners can simulate the impact of selected levers immediately via an in-memory engine and then take final actions. When we designed these levers, we identified them through a systematic analysis of the most likely disruptions. However, just like Mr. Giuliani’s approach to emergency response, planners can use the same levers to make smart decisions fast –even for un-anticipated events.
We view planning and execution as parts of an integrated and closed loop Plan-Do-Check-Act (PDCA) process. Regular post-mortems known as “PDCA-Reviews” are a pivotal part of our process playbooks. We are building automated diagnostics within JDA solutions to identify root causes why results from execution deviated from plans so supply chain managers can validate assumptions, refine processes and improve planning policies. Results have been very promising. At one consumer electronics manufacturer, process innovations resulting from PDCA reviews helped unleash over 5 times the value projected in our original business case that only quantified benefits from optimizing decisions within the old as-is process.
Of course, we refine and update our playbooks after each customer implementation experience.
Discover how Sanitarium Health and Wellbeing is using JDA Supply Chain Planning to improve service levels and enable increase their business agility.
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