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Supply Chain Acronyms: The “2020” Edition
Happy New Year! As we embark on 2021, we reflect on all that 2020 has brought to the table. Last year has been one for the books – figuratively and literally. Raise your hand if you baked some bread, added a new streaming service to your personal tech stack, and (if you didn’t already) realized teachers are 100% saints.
COVID-19 has created many hardships, challenges and unfortunate deaths around the world. Our hearts go out to all those affected and their families. What we all experienced is like no other year in our lifetime.
In the midst of the chaos and uncertainty, it’s important to reflect on the good and sprinkle in a little humor when you can. To that end, we thought it would be fun to create a list of 12 common acronyms in the supply chain industry. Not just any list though… our own alternative versions that better fit the chaos of 2020!
Enjoy this list, along with some predictions for what the supply chain industry will face in 2021. Ready???
Supply Chain Acronyms: The “2020” Edition
Actual Definition: Third-party logistics (3PL) in logistics and supply chain management is an organization’s use of third-party businesses to outsource elements of their distribution, warehousing and fulfillment services.
Our 2020/COVID Edition: 3 Ply Luxury
Definition: Milk, Bread, Eggs, Toilet Paper?
This new commodity added to the disaster checklist took everyone by surprise. If you were lucky to continuously not worry about toilet paper – we are looking at you bulk buyers — then you know how scary it was to see completely empty toilet-paper and paper-towel shelves. If you were able to get toilet paper, you were lucky if it was 2-ply – let alone being able to get 3-ply!
2021 Prediction: Supply problems including stockouts and variable lead times will continue to normalize, further complicating life for distributors and retailers.
The costly act of stockpiling – which has always been a defense against uncertainty – is now of epic standards. This could prompt more warehouse space and the need to connect warehouse management solutions to inventory data, and even plug in to advanced pricing intelligence.
An integrated, analytics-driven Planning + Pricing approach will build the most resilience going into what could be another year of guessing.
Actual Definition: Full Truck Load. Truckload shipping is the movement of large amounts of homogeneous cargo, generally the amount necessary to fill an entire semi-trailer or intermodal container.
Our 2020/ COVID Edition: First, The Lysol
Definition: Hand sanitizer, antibacterial soap, rubbing alcohol, disinfectant… We’ve all purchased and used them during this pandemic. You never even realized how many different surfaces you touch in a given day. So before you touch, don’t forget — first, the Lysol!
2021 Prediction: Rising transportation costs will continue to press the need to make every truckload count. Best-in-breed businesses will prioritize technologies that enable smarter inventory allocation and transfers between DCs and selling channels, to reverse margin loss from misaligned inventory. Related: 3 COVID-19 Hangover Cures for Supply Chain Executives.
Actual Definition: Artificial intelligence is intelligence demonstrated by machines, unlike the natural intelligence displayed by humans and animals. In terms of monitoring and analyzing data, AI can handle the heavy lifting of dozens of people, in just a few keystrokes. And continually get smarter over time to help people make far more accurate decisions about where they invest capital, much faster.
Our 2020/COVID Edition: Artificial Illumination
Definition: Due to the nature of COVID and the need to limit its exposure, many businesses switched to work-from-home mandates, schools turned to virtual learning, and the world went into quarantine. While going out for a stroll in the neighborhood was an option (depending on your state/nation’s guidelines), many people became surrounded mostly by the artificial lights of their home.
2021 Prediction: Artificial Intelligence (AI) will play a larger role in demand planning and pricing decisions. AI-based data science will integrate these two functions to eliminate overall risk and drive a continuous value stream for businesses dealing with rapid market fluctuations in how people live, shop and interact in their new ultra-digitalized world. Related: The Power of AI in Supply Chain Analytics.
Actual Definition: Machine Learning is the study of computer algorithms that improve automatically through experience. It is seen as a subset of AI.
Our 2020/COVID Edition: Mega Laundry
👈 How about this mom blogger’s “Laundry Christmas Tree” gone viral?
Definition: Who needs constantly clean clothes when you are working from home and the only ones seeing or smelling you are the people you live with?! We will not judge you on the size of your dirty laundry hamper… we might judge on the styling of your festive holiday tree made from laundry though.
2021 Prediction: Uncertainty will continue to push the volume of data that humans must analyze to make good decisions about inventory. Spreadsheets will (or at least they should) be laid to rest. There’s no longer time for demand planning on “hunches”. Insights from Machine Learning algorithms will pave the way for highly accurate forecasts and strategic pricing.
Actual Definition: Business Intelligence comprises the strategies and technologies used by enterprises for the data analysis of business information. BI technologies provide historical, current and predictive views of business operations.
Our 2020/COVID Edition: Before Isolation
Definition: Remember the good ‘ole days when you could leave your house and do the key, wallet, phone check? Linger the aisles of Target with not a care in the world. Go out to a concert, ballgame, party… Yeah, we miss it, too…
2021 Prediction: The pace at which businesses must react to supply chain volatility will pick up tremendously. Now with new stay-at-home mandates, consumer buying habits in digital channels will further drive the need for planning on insights, versus hunches. BI technologies that unite historically siloed business units will be paramount to improving business outcomes.
Actual Definition: Collaborative Planning, Forecasting & Replenishment is an approach which aims to enhance supply chain integration by supporting and assisting joint practices.
Our 2020/COVID Edition: Cancelled Plans From ‘Rona
Definition: Did you have to cancel a wedding, family reunion or dream vacation this year? Or perhaps a tradeshow, product launch, investment in new software tools, or yearly company gathering(s)? You are not alone. Blame it all on ‘Rona! (Coronavirus–19).
2021 Prediction: Becoming more collaborative, nimble and responsive will require companies to fundamentally shift away from the old school way of buying software. Rather than a 24 month-long implementation of the motherlode enterprise suite, look for more configurable applications that leverage a “platform of platforms” approach… Meaning the vendor is dialed in tightly to other tech partners to enable rapid connectivity without a huge IT project. Enter the implementation journey at any point to reduce risk and accelerate time-to-value. Add the components you need when they make sense, versus when the roadmap says so. This is how software buying looks in 2021 and beyond.
Actual Definition: Intermittent Demand Forecasting is forecasting that comes about when a product experiences several periods of zero demand.
Our 2020/COVID Edition: I Definitely Forgot.
Definition: Forgot what day of the week it is? What’s the actual date? Is it still 2020? Left your mask in the car when trying to make a quick stop for the impossible-to-find toilet paper? Yeah, it’ ok; you just had an IDF Moment – we’ve all been there a few times.
2021 Prediction: Just when you thought it was hard to forecast demand for slow-moving or intermittent-demand products, 2021 will bring more of the same. We saw some good examples of intermittent demand last spring when the bottom fell out, such as an explosion in sales of home gym equipment, which was historically a slow or seasonal mover. Also, auto parts… With fewer people on the road, demand for certain items went down, while other parts necessary for repair saw higher demand due to more people losing their jobs and not being able to buy a new car.
IDF is a forecasting tool that uses machine learning for demand sensing to predict these trends and make intelligent recommendations for stocking, fulfilling and pricing inventory with intermittent demand (profitably). These technologies are designed to separate demand hits and varying spaces, providing a robust/stable forecast, a more consistent safety stock and less overreaction to zero-demand forecasts.
Actual Definition: Minimax (sometimes MinMax, MM or saddle point) is a decision rule used in artificial intelligence, decision theory, game theory, statistics and philosophy for minimizing the possible loss for a worst-case (maximum-loss) scenario. When dealing with gains, IMM is referred to as “maximin”—to maximize the minimum gain.
Our 2020/COVID Edition: I Miss My…
Definition: Friends? Family? Students? Adventurous tendencies? What would we have done if there were not things like Zoom, Skype, FaceTime and Social Media? We would all have gone mad without our villages of support!
2021 Prediction: Intelligent Min/Max (IMM) Replenishment is a fundamentally different approach to dealing with intermittent and slow-moving SKUs. Instead of forecast approach, IMM approaches the problem from the service and inventory levels to support your customer experience perspective, while making it easier to auto-manage long-tail items for better in-stock and customer service levels.
Actual Definition: Supply Chain Management is the management of the flow of goods and services and includes all processes that transform raw materials into final products.
Our 2020/COVID Edition: Sorry, Constantly Muted
Definition: There are two types of Zoom users… those who mute and those who do not. We will not judge. But at one point or another, you were unknowingly muted and sitting there talking to yourself. 😂
2021 Prediction: For profitable supply chain management in 2021, data between a manufacturer and the end-consumer will need to flow more freely. Traditionally there has been very little visibility into consumer demand signals at the manufacturing level. We are now seeing the emergence of fully managed data collection platforms that integrate with Planning, Pricing and S&OP processes to make this happen.
This connection delivers seamless sales data collection and demand planning to fully optimize the supply chain management picture. An integration such as the one Blue Ridge and ReSight have created facilitates the entire process, including retail and distribution sell-through data collection; precise demand forecasting by item, customer and channel; demand planning collaboration; consensus planning and market trend analysis.
Actual Definition: Suggested Order Quantity is the suggested order up to level set by a supplier. Often the SOQ complicates inventory planning because the supplier sets a specific minimum order quantity that the distributor must adhere to. They may not need to replenish at the frequency or quantity required, resulting in unwanted overstocks which eventually get marked down to get rid of.
Our 2020/COVID Edition: So Over Quarantining
Definition: We get it. You are ready for things to go back to “normal”. However, it is unlikely that it will happen at the snap of your fingers. Life as we know it will be forever changed. So in the meantime, wear your mask, wash your hands and think about the future world you want to live in.
2021 Prediction: Technology that incorporates cost-of-service analysis will play a key role in determining buying quantities and replenishment schedules, so that companies can maintain a healthy balance of safety stock, without losing sales to stockouts.
Actual Definition: A Warehouse Management System/Solution is a software solution that offers visibility into a business’ entire inventory investment and manages supply chain fulfillment operations from the distribution center to the store shelf.
Our 2020/COVID Edition: Whoa, More Space
Definition: We have all been in a store and had someone get way too close (definitely less than 6 feet), and don’t want to be rude but… WHOA! MORE SPACE (WMS) PLEASE.
2021 Prediction: WMS, demand planning and even order management systems (OMS) will become more integrated to provide visibility and quick decisions. This will increase in importance as companies adjust to pandemic-related fluctuations in what, where and how customers buy.
Actual Definition: State of the (Wholesale Distribution) Industry Report outlines top challenges and trends in supply chain management each year. You can watch a video of the learnings from the 2020 report here.
Our 2020/COVID Edition: So Over Technical Issues!
Who has had tech trouble, Zoom stopped working, Internet is in and out, computer broken and so on? I think we can all agree, the world on the whole has become way more tech savvy than we ever wanted to.
2021 Prediction: Nobody knows! 2020 was full of surprises and adjustments, technology reprioritization and the realization that businesses need to focus 2021 on resiliency.
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