“As to methods there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble.”
- Ralph Waldo EmersonArthur Mesher is a supply chain legend and inductee into the Supply Chain Hall of Fame. He’s known for introducing the foundational “Three V’s” framework—Visibility, Variability, and Velocity—a widely adopted model for understanding and improving supply chain performance.
Art recently published a fantastic paper “The Supply Chain Awakens: A Call for Awareness in the Age of AI”. In it, he rails against solution providers, consultants, academics and others who use buzzwords and consultant/solution-speak. He wants people to get back to basics and fundamentals and believes, as do I, that this is needed in supply chain management.
In his paper he made, in my humble opinion, a very profound statement.
He said, “build on bedrock, not buzzwords”.
I love that and agree completely.
If you’re going to build and design something, you’d better make sure it’s built on a solid bedrock – much like a house or high-rise building. If the foundation is not solid, eventually it will collapse.
Course, this got me thinking about Flowcasting. In my opinion (and I believe it’s the opinion of the original four horsemen of Flowcasting), the concept of Flowcasting is architected on a few, timeless, enduring, bedrock principles:
Never forecast what you can calculate
Did you know that this fundamental principle that Flowcasting is architected on is over 50 years old? Dr. Joseph Orlicky (of MRP fame and a planning pioneer) made the profound statement in the 1970s. The entire retail supply chain (or any industrial supply chain) is driven only by a forecast of end consumption – for retail, this is the consumer sales forecast, by product, by selling location, in units, time-phased over a long planning horizon (52+ weeks). All supporting partners in the supply chain have their time-phased product requirements calculated – based on the forecast and inventory rules and policies/strategies amongst the various participants in the network.
A valid simulation of reality
A key principle of the process is that its underlying goal is to provide all partners with valid simulation of reality – that is, a valid view of the future, based on what’s currently happening and what’s planned. If you know something about the future that will affect consumer sales, it’s included in the forecast. If you want to change supply requirements sometime in the future, then it’s in the supply plan. At any moment, the projections that the extended business is using is the best view of the future – it may not come true, but it is the current plan.
Continuous replanning
Flowcasting re-forecasts and re-plans any product and their extended projections as often as something changes. That can be in real time, hourly or daily. At any time, Flowcasting provides all partners in the supply chain with valid, up-to-date, actionable projections.
A model of the business
Since the Flowcasting process continuously plans from consumption to supply at the most granular level (by product by location) over a long planning horizon (e.g., 52+ weeks) then the projections provide the retailer and their stakeholders with what we call a model of the business. That is, visibility of all projections, including sales/demand, inventory, receipts, purchases, resources and capacities in any language of the business (e.g., units, dollars, cube, etc.). This allows for continuous calibration of how well the operational plans are delivering to business objectives. It also dramatically improves collaboration between retailers and their trading partners and collaboration amongst internal teams.
Don’t commit until necessary
You don’t buy milk until you need to, right? The supply chain should operate on the same principle. Product is committed/ordered when the planned shipment has reached the time needed to pick, pack, deliver and receive from their origin to their destination. This is true for all planned shipments, regardless of volume – even promotional purchase orders are ordered at the same lead time as regular volume (that’s because everyone has extended visibility into future requirements to use for planning and would have already planned that volume).
Do I believe that the concept of Flowcasting will stand the test of time?
Yes, I do.
Because it’s architected on these fundamental, timeless, enduring principles.
Because it’s built on bedrock, not buzzwords.