MHD SUPPLY CHAIN
AUTOMATION AND SUPPLY CHAIN REVOLUTION Internationally acclaimed supply chain consultant and author, Suman Sarkar, talks to MHD about his perspective on supply chain thinking and the proper role of automation.
“I
n supply chain, most things are relatively simple,” says Suman Sarkar, internationally renowned supply chain consultant, Founder and Partner at Three S Consulting, and author of the much-acclaimed 2017 book The Supply Chain Revolution. “We make it complex. And the same goes for automation – when it helps it can be useful, but if it doesn’t help the world will still go around.” Suman says that his training as an engineer has informed his perspective as a supply chain consultant – namely to distrust “assumptions” and to search for the “root cause” of problems before contemplating solutions. This carries over into his views on automation. “Everybody likes to hear about automation because there’s always a shiny new object that will get everybody’s attention,” he says. “But it isn’t always necessary.” This is because automation only addresses one of Suman’s two fundamental supply chain elements: effectiveness and efficiency. “People tend to confuse the two. Effectiveness is all about how well you’re doing your job – how well a supply chain can address customer needs. You can’t automate that. That depends on what unique customers you have, what the demand is, what unique supply situations you have, and how you plan to address it. Once a company or a business figures out how to be effective – how they can address customer needs – then efficiency comes into play. Automation has a role to play in efficiency – warehouse automation, finding in real time where your inventory is. But people tend to think that by doing automation in one place they will solve all their problems. It won’t. The fundamentals of supply
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The Supply Chain Revolution, by Suman Sarkar. chain must first be sorted, otherwise you’ll only be attempting to make an ineffective system more efficient. And it’s important to remember that automation doesn’t pay for itself when it’s not effective.”
THE SUPPLY CHAIN REVOLUTION Suman’s book The Supply Chain Revolution was written, he says, out of a sense of frustration. “We are not heading in the right direction with supply chain,” he says. “The book was a call for people to turn things around. That’s why I chose the word ‘revolution’. Were we heading in the right direction I might instead have used ‘evolution’.” The revolution Suman calls for is about getting back to fundamentals:
better connecting with and delivering service to customers. He says that a lot of supply chain thinking has been driven by complexity and a tendency to go for shiny add-ons while ignoring how companies can be more effective in getting goods and services to customers. In the upper ranks of companies, supply chain has often been “topdown” by catering to novel ideas for potential investors, at the expense of “bottom-up” consideration of what the actual customer is demanding. And imposing “solutions” from the top can lead to unnecessary use of automation technology. “Because automation is a tool for improving efficiency, not underlying effectiveness, it’s implementation is akin to using a hammer,” he says. “If you use the hammer for the right purposes, it will do good. If you use it for the wrong purposes, it can do a lot of damage.” He illustrates his point with reference to a client-discussion he once had around using Enterprise Resource Planning (ERP) systems. “In the late 1990s and 2000s all companies implemented ERP – it was a big deal,” he says. “ERPs were implemented to simplify the process, but mostly for financial controls. They lay down certain rules by which supply chain sourcing and procurement organisations should do things. But in the world of COVID – when we have significant problems with supplies – what we were finding is that all the rules and processes with the ERP were stopping the company from doing an effective job with their suppliers and building supply assurance. “We were saying, ‘Hey, you need to build up some inventory because you have no inventory in these areas,’ and the reply was, ‘But the ERP
