Supply Chain Exam 5

Building risk-aware culture

- acknowledgement - transparency - responsiveness - respect

events with a track record. They occur fairly frequently. You can thus look at the data to assess the probability they will occur and the severity of their impact.

known knowns

what are the three types of risks?

known knowns, known unknowns, and unknown unknowns

Element 2 - Unique Value Proposal

- company's competitive position related to its SC (customer perspective) - order qualifiers (basic criteria for a firm's product/services to be considered for purchase - order winners (criteria that differentiate from one firm to another)

how do you improve SC Resilience?

!. Assess overall supply chain resilience and pinpoint critical vulnerabilities 2. Prioritize risks based on intensity, vulnerability, and criticality, aggregate key risks to quantify baseline exposure level 3. define the costs and benefits of potential resilience strategies and develop a business case for the best course of action 4. address supply chain resilience opportunities using a defined roadmap 5. develop a means to monitor supply chain resilience and manage emerging vulnerabilities

Michael E. Porter had Porter's Five Forces which basically said what?

- Do what everyone else is doing (but spend less money doing it) - Do something no one else can do

what are the 6 generic supply chain models?

- Models oriented to efficiency (efficient, fast, and continuous flow) - Models oriented to responsiveness (agile, custom-configured, and flexible)

Why is there risk in supply chain?

- lack of coordinated sourcing practices - rise of just-in-time and lean practices - increased outsourcing, multi-tier supply chains - supplier consolidation strategies - centralization of economies of scale - pressure to reduce costs and maintain/increase margins - geography - sourcing of ingredients in geographically dispersed regions

Element 4 - Internal Processes

- proper connection of supply chain activities - most important factors (asset utilization & decoupling point location)

what are risk issues in the supply chain?

- risk present factors of uncertainty and vulnerability in a business - common risk- errors, traffic delays, shortage of staff - potentially catastrophic risks- natural disasters, strikes, global conflict - risks that affect SC continuity hurt company image

Failure Modes & Effects Analysis (FMEA)

- score on a 1-10 scale, 10 as high (1. the probability of occurrence 2. the severity with occurrence 3. our ability to detect its occurrence) - multiply the three numbers for a total severity score - prioritize more severe items - with multiple raters, understand discrepancies in scoring

What are the SC Principles Identified?

- the seven principles basically survive the test of time. - we still have a long way to go on supply chain strategy implementation. - technology and data will be the major game changer going forward.

Which supply chain strategy fits my business?

- traditional SC strategy approaches have been inconsistent in their success - lack of attention to value chain connections, industry competition, & organizational value proposition - SC strategy defines the connection & combination of activities & functions throughout the value chain, in order to fulfill the business value proposal (competitive positioning) to customers in a marketplace (industry framework)

alignment

A prerequisite to creating alignment is the availability of information so that all the companies in a supply chain have equal access to forecasts, sales data, and plans. Next, partner roles and responsibilities must be carefully defined so that there is no scope for conflict.

7 principles of SCM

1. Adapt supply chain based on service needs of each customer segment 2. Customize logistics network for each segment 3. Align demand planning across the supply chain 4. Differentiate product closer to customer 5. Outsource strategically 6. Develop information technology that support multi-level decision making 7. Adopt both service and financial metrics

what is the omni-channel retail strategy for omni-channel retailers?

1. One view of the customer regardless of whether it is a store or internet purchase 2. Short-term forecasts based on understanding of what, where, and when customers buy 3. Seamless order entry and order management 4. One view of inventory for real-time inventory status availability at all stocking points 5. Flexible fulfillment network in terms of delivery options, meeting seasonal patterns, and handling returns 6. Store operations that replicate many of fulfillment center operations while maintaining the focus of being a retail store

The four types of entities and the data needed to define them are what?

1. Products —Name, cost, weight, and volume at pallet or shipping container level 2. Facilities —Location, size, operating costs, product production, and demand rates 3. Vehicles —Speed, cargo size, operating costs, and routes 4. Routes —Destinations, amounts and frequencies distances, and delivery and pickup

what are the five steps of the collaborative S&OP with Supply Chain Simulations?

1. Sales Forecasting 2. Demand Planning 3. Supply Planning 4. Reconcile Plans 5. Implement & Monitor

what are the top five disruption triggers?

1. natural disasters 2. extreme weather 3. conflict & political unrest 4. terrorism 5. sudden demand shocks

cost/benefit analysis

A decision-making process that weighs the pros and cons of different alternatives to see if the benefit outweigh the costs.

timeframes

An expedited logistics company will process this load at a specific time in a specific time frame, aligning the distribution operation with carrier schedules so that goods can get to market faster.

_____________________ makes it possible for a wide audience of people from different companies and from different areas within a company (finance, sales, operations, procurement) to actively participate in supply chain collaboration projects. This application is delivered via cloud-based software-as-a-service so people only need a laptop, Internet connection, and a password to log on. And once simulations are turned into actual operating plans, it also enables ongoing collaboration activities. By displaying real-time operations data and using simulation results as a baseline for comparison, people can monitor and manage their common supply chains so as to quickly and effectively respond to changing business conditions and customer demands.

An intuitive, map-based user interface and the ease of use

_______________________ call for better ways to manage supply chains. As more and more products follow a trajectory similar to the mobile phone there's a need for online collaboration platforms where all parties in a supply chain come together and get better and better at doing what they do to create and deliver new products. There's an opportunity to reinvent supply chains by supplementing traditional supply chain practices with collaboration and coordination practices.

Continuous volatility and uncertainty in global markets plus rapid rates of technology innovation

__________________________ are used by many large companies, but those systems are expensive and complicated. In some instances EDI has been replaced by XML, yet those systems too are often expensive and complicated. The cost and complexity involved in implementing electronic data connections become barriers that prevent significant supply chain operating improvements.

Electronic data interchange (EDI) systems

What is the only way to dampen the effects of the bullwhip and improve demand forecasting?

For each party in the supply chain to get accurate data from those closest to actual customer demand. Then all can participate in creating more accurate demand plans and supply plans. And operating activities can be more closely adjusted to meeting actual supply chain needs.

Element 1 - Industry Framework

Interaction of all that affect competition in an industry 1. demand variation (demand profile) 2. market mediation costs 3. product lifecycle 4. relevance of the costs of assets to total cost

Consider what happened to that once-simple product called the mobile phone. In the late 1990s Motorola owned the market and their StarTac phone was a popular low-cost and high quality product. But Motorola focused too much on a low-cost approach and optimized itself and its supply chain to make low-cost, high-quality mobile phones that, after a while, nobody wanted to buy anymore even if they were low cost. Customers moved on to other mobile phones that responded to their changing desires. First Nokia came out with colorful and stylish phones and customers bought them even though they cost more and had some quality problems. Then BlackBerry came along and combined e-mail with a mobile phone and every business executive wanted one even though they cost more and had some quality problems. And now everybody wants a smartphone like an iPhone or a Samsung, and BlackBerry is forgotten. Customers are paying more and even accepting some quality problems in order to get what they want when they want it. ___________ is not always the deciding factor in how customers select products.

Low price

Examples of enablers of good governance include:

Processes - policies and level of control and monitoring People - culture, roles and responsibilities and awareness IT - risk databases and analytics, modeling and simulation and reporting dashboards

What is supply chain strategy?

The connection and combination of activities and functions throughout the value chain, in order to fulfill the business value proposal to customers in a marketplace.

___________ is now created by supply chains that enable companies to better collaborate and coordinate their activities so as to keep up with changing markets and keep delivering new products that customers want and will pay profitable prices to acquire. Successful and profitable companies understand that customers want a good price but that doesn't mean they want the lowest price as long as they get other features they want. People want products that keep responding to their changing desires and circumstances.

Wealth

Simulations provide:

a clear and understandable framework to support collaboration between people and companies working in high-change supply chains. When and see for themselves what works best it drives consensus within the group. This is a powerful self-correcting feedback loop in action.

ROI

a performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment's cost.

system design

a process which creates the plan, or blueprint, for how the iSC should run, including how all of the components of the supply chain system (financial requirements, program requirements, physical network, transport routes, storage, human resources, asset management, planning, monitoring, data, etc.) fit together and interact. System design is critical for the required transition to and sustainment of new supply chain models which can better meet the rapidly changing needs of current immunization programs.

Listen carefully when senior executives and their advisors begin saying things such as, "Our new system will eliminate cost and increase efficiency in our supply chain." They often announce they are employing a system described as "an integrated extension of our multichannel, global supply chains aimed at improving global operating efficiency and time to market while reducing cost through rigorous review and increases in productivity." These phrases are code words for what?

a system designed to assist big companies in implementing traditional efficiency-oriented low-cost strategies as a way to increase sales and profits

time boxing

allocates a fixed time period, called a time-box, within which planned activity takes place. It is used by several project management approaches and for personal time management.

Creation of collaboration platforms like what is described here can be readily done without having to write enormous amounts of new software or purchase enormous amounts of computing power and data storage. This kind of technology used to be the exclusive domain of governments, the military, and large corporations. Now it is available to:

almost any company or group of companies that want to improve their supply chain operating capabilities.

Simulations find out at what facility and on what day the mismatches between demand and supply will occur. And the simulations provide operating data needed to analyze the mismatches and make adjustments to one or the other of the plans in order to fix those problems and reconcile the two plans. Plans can be fine-tuned so as to lower operating costs and amounts of inventory on-hand at different facilities while still meeting product demand across the supply chain. The supply chain model that shows the best results in simulations:

becomes the operating plan for the next 30 days or whatever planning period the S&OP process is focused on.

how do you identify risk sources and severity?

brainstorm possible issues & use past events, experts to assess probability and severity

One of the biggest problems in accurate demand forecasting is caused by the effects of a supply chain dynamic called the _______________.

bullwhip effect

risk

caused by any interruptions to the flow of product, whether raw material or parts, within your supply chain. environmental risks — from outside the supply chain; usually related to economic, social, governmental, and climate factors, including the threat of terrorism.

The consumer electronics industry is one where product life cycles are measured in months (not years) and where prices and demand forecasts fluctuate from week to week. Nobody wants to get locked into long-term contracts because of the risks involved with this market uncertainty. Most products use similar combinations of electrical components so component manufacturers can sell their output to whichever product company shows the greatest demand and best prices. Nobody anywhere in the supply chain from manufacturers to distributors and retailers wants to get stuck with excess inventory because the short product life cycles cause excess inventory to rapidly loose its value. This means:

close cooperation between all parties in the supply chain to accurately forecast demand and make and move products effectively to meet demand.

Their systems architecture is __________________________. Uber connects with other providers to get the hardware and software capabilities they need to support their main effort, which is to become a collaboration and coordination platform for transportation providers and customers. Uber is a mass collaboration platform that enables riders and drivers to interact. People needing transportation can quickly find people who provide transportation and the platform enables them to contact each other through a common data connection and do business.

cloud-based, and they use APIs to connect with other software-as-a-service providers as needed

The ability to develop symbiotic and trust-based relationships with supply chain partners and other key strategic networks: Collaborative planning with suppliers and customers Collaborative design in products - incorporating customer demands and supplier capabilities Access to end-to-end supply chain inventory data and supplier capacity constraints

collaboration

Supply chains can be reinvented by employing collaboration techniques to involve all participants in developing innovative new products and supply chain operations. Effective collaboration is dependent on common understanding among participating companies. Supply chain simulations can provide that common understanding because they enable all companies to see what works best to respond to new supply chain demands. So all companies:

come to consensus faster and their collective actions become more effective.

infrastructure

consists of both the physical and informational assets required to run a supply chain. This includes the buildings in which a company manufactures and distributes its products; the fixed and mobile equipment inside those buildings; the transportation fleet that moves product within the manufacturing and distribution network; and the information technology needed to plan, execute, and track supply chain activities.

Once electronic data connections are in place then the _______________________ between parties will provide accurate and meaningful statistics and information to guide the conversation about all the other questions that companies in any retail supply chain must address.

continuous flow of data

Once electronic connections are in place and data starts flowing between all companies in a supply chain then cloud-based supply chain collaboration platforms can enable effective collaboration between companies at all tiers in a supply chain. Because all can see what is happening as it happens, self-correcting feedback loops come into play. Companies and entire supply chains can make:

continuous responses and adjustments to their operations to respond to changing conditions.

The ability to implement policies and execute processes to prevent disruptions: Ability to develop products with appropriate levels of quality and safety Ability to protect end-to-end product flow (e.g. tampering, theft, counterfeiting) Adequate regulatory, legal and social compliance policies and controls

control

The relentless price-driven pursuit of cost savings alone doesn't produce the profits it once did because this focus causes companies to optimize efficient production of existing products at the expense of their ability to deliver good service and create new products as customers and markets evolve. Companies optimized for efficiency alone are like cars optimized for speed. They go fast and win races as long as the road is straight and flat; but when the road twists and turns they cannot handle the corners and go flying off the road and crash. Winding roads need cars that are responsive, not just fast. And that is why _____________________ are so important in modern supply chains.

coordination and collaboration

People develop accurate intuitions about how best to respond to changing business conditions. They are able to constantly adjust their supply chain operations to maintain the highest service levels at the lowest costs. Companies using supply chain simulations continuously learn and adjust their supply chains as the world unfolds. And they do so while incurring less risk and less cost than companies that learn in the real world by trial-and-error alone. Mistakes discovered in simulations:

cost much less to fix than mistakes discovered in the real world.

Step 2:

creates a demand plan. Market sales forecasts are turned into product demand estimates for each of the facilities in the supply chain. Demand is calculated for raw materials and finished goods at each facility. This information is summarized in a demand plan.

Based on the demand plan, Step 3:

creates a supply plan that shows how vehicles in the supply chain move products on delivery routes from one facility to another to meet forecasted demand.

business processes

customer relationship management, supplier relationship management, customer service management, demand management, the order fulfillment, manufacturing flow management, product development and commercialization, and returns management

In Step 4:

data from the two plans is used to create a model of the proposed supply chain. Data from the demand plan defines the products and facilities in the supply chain, and data from the supply plan defines the vehicles and routes. Once these entities are placed on the map, simulations can be run to identify where there are mismatches between the demand plan and the supply plan.

Most supply chains still do not have the accurate and timely data they need because they lack what?

effective electronic data connections between companies

There is an inescapable tension between _____________________. They're at opposite ends of a spectrum; companies need to position themselves at a point on the continuum between those two that best meets their present circumstances. And as circumstances change, they need to keep repositioning themselves. Failure to do this has been the downfall of many fine industrial-age companies in this modern economy; they stayed focused on the efficiency end of the continuum for too long while their markets evolved and customers went elsewhere.

efficiency and responsiveness

Virtuous cycle starts with what?

electronic connections

A huge opportunity exists right now in global and local supply chains to ________________ companies from the largest to the smallest. And since simple solutions are the only ones that will work for the small and medium companies, they are the only ones that will work at all.

electronically connect

This _______________ supply chain visibility created by universal data connections is the basis for all effective supply chain strategy and management. Simple data connectivity solutions and the systems they support are better than complex solutions because simple systems using good data always deliver better results than complex systems using bad data.

end-to-end

Big companies can become complacent with their profits, and suppliers lose their motivation to do anything new because they aren't making any money, anyway. So then when the market changes, what happens?

everybody (the whole supply chain) flies off the road and crashes as demand for existing products drops and no new products have been developed to take their place

In most supply chains the large "Tier 1" brand-name companies have implemented ________________________ with other companies their size, but Tier 1 companies are a minority; most of the companies in a given supply chain are smaller Tier 2 and Tier 3 companies. And those companies often still use e-mail, faxes, and spreadsheets to move data between each other because they can't use the complex and expensive systems used by Tier 1 companies.

expensive and complex data connections

The ability to quickly adapt to disruptions without significantly increasing operational costs: Identification of alternate suppliers that can manufacture core products in the event of a disruption Ability of a single manufacturing line to produce multiple products Ability to re-route materials to meet changing demands

flexibility

In complex and high-change environments like our real-time global economy, it is hard for a single company to ________________________________. In this environment coordination is more powerful than control. Profits come from being able to plug into supply chain networks and then develop a reputation in those networks for having great service and great products at good prices. With great service and great products you do not need to have the lowest prices; they just need to be in the ballpark or within a few percentage points of the market average. Most customers really are looking for something in addition to low prices.

forecast demand and act effectively in isolation

In Step 1:

forecasts are made of anticipated demand for the products the supply chain handles. Aggregate product demand numbers are forecast for the different markets served by a supply chain, and prices for those products and the raw materials to make those products are also forecasted.

Only a small amount of data is required to define any of the ____________, and this data can easily be obtained from company ERP or other systems. Cloud-based mapping applications such as Google Maps, Apple Maps, Bing Maps, or OpenStreetMap can be used to create the game board on which to place these entities. People can zoom in on any of these maps and place products and facilities in very specific and accurate locations.Vehicles and routes can also be carefully placed on the map so as to follow actual roads, railways, or shipping routes.

four entities

This self-correcting feedback loop comes about through effective combinations of people, process, and technology. Complex technology and rigid procedures can cripple people. Relatively simple technology and more decentralized and flexible procedures can deliver effective means of managing supply chain operations in the:

high-change and hard-to-predict environments that supply chains operate in today.

supply chain innovation

improvements in the way that supply chains operate, and more specifically, in the way that products, information, work, and funds flow (and are temporarily stored) throughout supply chains

Apple isn't trying to create all the innovation by itself; everybody in the supply chain is ____________________ because iPhone is more than a mobile phone; it's a growing ecosystem of products and services that is taking on a life of its own. The phone is actually just one of many applications that run on the iPhone platform.

innovating and coordinating with each other to keep the ball rolling

events that you know can happen, but they have no consistent pattern or history. Assessment is thus speculative. As you evaluate likelihood and potential impact, you ask a lot of "what-if" questions.

known unknowns

Element 3 - Managerial Focus

linkage between an organization's competitive position and its supply chain processes

Many successful new businesses create the systems they need to support their operations by combining already-available cloud computing services and software applications, and only writing new software for their own unique functions that make their business valuable to customers. For instance, Uber uses the cloud computing services of Amazon Web Services to host its applications. It uses Google Maps to provide the mapping functions for its application. It connects to Braintree to handle:

mobile customer payments and uses Twillo to provide the mobile communications capability it needs to connect customers and drivers with its own customer service staff.

Once a supply chain is put into operation, simple data interfaces with facilities and vehicles in the supply chain enable collection of relevant operating data on a continuous basis. This actual operating data is then displayed online in the same manner as the simulation data. In this way the same platform that people use to do simulations is also used to _____________________.

monitor and manage real operations for the supply chain

The same technology that brings us online video games can also bring us online supply chain modeling and simulation capabilities. Individuals, companies, and other organizations can collaborate in a game-like online setting to discuss problems and opportunities and explore ways to create supply chains for _____________.

mutual benefit

The supply chain model contains all the logistics information needed to operate the supply chain and the simulations check the math— the production and delivery schedules and the vehicle capacities— and find the problems. When people get a design that works well, then it literally becomes the ______________________.

operating plan for the supply chain

By using the four entities we have an effective way to:

organize essential information about supply chains, and it also helps us avoid being overwhelmed by a mass of other details. This makes the model useful because it is understandable by a large audience of business and technical people while still being quite accurate and mathematically rigorous.

In my experience, I find that effective collaboration happens between______________________. People cannot do all the calculations on their own; they need computers to do the massive amounts of calculating and they need computers to display the resulting simulations and performance data.At the same time, computers cannot do the planning and running of supply chains all on their own. The notion that computerized technology and powerful AI software can operate supply chains in the real world without human participation is a naive and misplaced idea that works better in science fiction novels than in real life.

people and also between people and computers

Peter Drucker said companies compete on _________.

price

When single large companies exercise too much control they tend to shift profits in the supply chain to themselves. This makes them complacent in their existing business models and robs the smaller companies of their initiative to do anything other than what they are told to do by larger companies. And this tends to blind all companies to changes taking place in their markets.This blindness leaves companies unable to respond to new customer demands and their collective supply chains suffer when the products they make and deliver are no longer desired by customers. An example of this can be seen over the years in supply chains that supply products to the mobile-phone market. Once large companies such Motorola focused almost exclusively on efficiency and productivity in the production of existing products such as the flip-phone. They organized their supply chains to efficiently:

produce products that customers no longer wanted even if they were high quality and low priced.

The smartphone and mobile technology and the software and cloud-computing platforms that make social media possible can also be used to ______________________. This collaboration makes those supply chains more responsive to changing situations and more profitable.

promote collaboration and coordination between participants in any supply chain

As demand for products fluctuates, and as operating costs for factories, warehouses, and transportation modes change, companies and their supply chain partners can constantly test out different ways to meet demand while minimizing cost. If inventory planners and supply chain operations people can literally draw supply chain designs on an electronic map and then run simulations of those designs over some time period, they quickly learn what designs produce the best results. The map provides a clear organizing context for the entire supply chain, and visual data displays provide readouts of key supply chain performance indicators. This environment enables people to:

quickly understand what is happening and become deeply involved in monitoring operations and exploring different supply chain options.

A smartphone like the iPhone is a __________________________ delivered via a mix of hardware and software that is responsive to evolving desires of its growing customer base. There are profits to be made by everybody in the iPhone supply chain because customers will pay more for the product. The iPhone is a like a symphony orchestra; Apple is the conductor of the orchestra but it's only one party in the process that creates the popularity and success the product is enjoying. Companies in the iPhone orchestra pay attention to Apple and coordinate their actions with each other to keep up with the fast pace of change because they are all making money (or at least believe they soon will be).

rapidly changing mix of tangible and intangible values and features

Using supply chain models built from real-time data and run in simulations to show everyone how those supply chains will operate is a powerful way to spark discussion, generate creative problem-solving ideas, and bring about group consensus. Instead of only using online technology to deliver entertainment, the same technology can deliver what?

real-time collaboration and coordination services between different members of a supply chain

What is the risk management process?

risk identification -> risk assessment -> risk prioritization -> risk mitigation

As data begins to flow continuously between companies in a supply chain it becomes possible to do comparisons between different datasets and display continuously updated ____________ that show performance of the supply chain overall and performance of each of the companies in that supply chain.

scorecards

The use of APIs (application program interfaces) on new cloud-based software-as-service applications is making electronic data connections easier. As more companies use this software and employ APIs for data connectivity it will introduce a transformative force into supply chain operations. It will introduce what is known as a ______________________.

self-correcting feedback loop

Supply chain performance depends on timely and accurate data continuously shared among the participants in a supply chain. Big companies (Tier 1 companies) have implemented electronic data connections with other big companies but these connections are often complicated and expensive and out of the reach and the budget of smaller companies. But in most supply chains the big companies are only a minority of the participants. There is an urgent need for:

simple, robust, and affordable electronic data connections that can be used by all companies, big and small, in supply chains.

Once products, facilities, vehicles, and routes are defined and placed on the map, ___________ can be run to assess the capabilities and operating costs of that supply chain. People can experiment with different designs and run more simulations to see how well they work. Simulations will show which ones are the best and those designs can then be put into action in the real world.

simulations

what is the bullwhip effect?

small changes in demand for products at the front of a supply chain create increasing distortion in the perceived demand for those products as you move toward the back of the supply chain

Strategy models

strategic, tactical, and operational; At the strategic level, company management makes high-level strategic supply chain decisions that are relevant to whole organizations. These high-level decisions can be refined, as required, to the specific needs of the company at the lower levels which allow for tactical and operational supply chain decisions to be made.

Because accurate and timely information is such an important supply chain driver, good __________ starts with improving the accuracy and flow of data between and among companies working together in a supply chain.

strategy

a framework for making decisions about how you will play the game of business, this framework establishes what the organization will do to deliver value to customers and how it expects to hit revenue and profit goals.

strategy

the supply chain's ability to be prepared for unexpected risk events, responding and recovering quickly to potential disruptions to return to its original situation or grow by moving to a new, more desirable state in order to increase customer service, market share and financial performance

supply chain resilience

what do scorecards provide?

the feedback people need to continuously correct their actions and performance. When everybody can see those scorecards every day, they have the information they need to start and maintain a virtuous cycle of continuous improvement. When people can see their own performance slipping below agreed standards, and they also know everybody else in the supply chain can see their performance, they fix their problems quickly. They do not wait to be told what to do. They know what to do and do it. This is the self-correcting feedback loop in action.

risk management

the process of taking strategic steps to identify, assess and mitigate the risk in your end-to-end supply chain. A comprehensive approach to SCRM involves the management of all types of risk, for all tiers of supply and for all risk objects (suppliers, locations, ports and more).

resilience

the time it takes supply chains to predict and avoid risk, as well as respond and recover from costly disruptions

collaboration

two or more autonomous firms working jointly to plan and execute supply chain operations. It can deliver substantial benefits and advantages to its partners.

conceivable but unusual and unexpected events (think: the break up of the Soviet Union or 9/11 attacks). Because they are very rare—even surprising—they are sometimes called black swan events. Black swans have a major effect on operations. Although you can't predict them with any accuracy, you can build a resilient supply chain.

unknown unknowns

A streamlined five-step S&OP process provides an effective framework to guide collaboration and help companies work through the continuous process of responding to change. Collaboration is also enhanced by the right combination of people and computers. Instead of attempting to automate all supply chain activities and turn over the operation of supply chains to complex computer systems and AI machines, it is best to employ people and computers so that each are used for what they do best. People are better than AI machines at creative thinking and problem solving; computers are best at performing the mass of calculations needed to monitor operations and to simulate different possible responses to new challenges. Powerful online collaboration platforms can be created by use of cloud computing and combinations of existing software applications. These collaboration platforms are then readily available for:

use by all companies in a supply chain.

Effective collaboration strategies support creation of a _____________ of continuous improvement, and good information is what makes that possible.

virtuous cycle

The ability to track and monitor supply chain events and patterns, enabling proactive actions: Monitoring of supplier performance and compliance Ability to monitor flow of material from tier three suppliers to end-users Line of sight into end-user consumption and usage patterns

visibility