“Three things cannot be long hidden: the sun, the moon, and the truth.” — Buddha

I asked my longtime colleague, Andre Martin, to send me a list of what he’d consider “truth” when it came to supply chain planning. He didn’t hold back:

TRUTH: If you work in manufacturing, wholesale or retail, you are not alone as you represent roughly one third of the world economy. It is huge and It’s called the consumer goods industry. If you don’t believe me, Google it.

TRUTH: Every industrial company that exists is a member of a product flow network. There are millions of product flow networks and each network is unique.

TRUTH: product flow networks are created by people for economic reasons; they do not just fall out of the sky. Industrial product flow networks are product roadmaps. They act as conduits for products to find their way into the hands of consumers.

TRUTH: economies of scale amplify product flows. What is a container of Tide on a store shelf is a truckload leaving the factory.

TRUTH: If you are a wholesaler or a retailer, you buy products from manufacturers, and these products reach you via several product networks.

TRUTH: the industrial world is a world of millions and millions of product networks.

TRUTH: to work properly a given consumer goods network must be connected. Otherwise, the information flow is broken. And broken information flows, inflate inventories and reduces response time.

TRUTH: a disconnected product flow network hides the natural product amplification that takes place from the factory to the consumer. Therefore, one does not see that demand for a container of Tide at the store has become a truckload at the factory.

TRUTH: People who do not understand how industrial supply chains really work have called this natural product amplification the bullwhip effect. This is a dead giveaway for their ignorance.

TRUTH: Material Requirements Planning (MRP) was created in the early 1960´s by Dr. Joseph Orlicky of IBM.

TRUTH: Oliver Wight, my mentor, introduced me to him at the APICS conference in San Diego in 1975.

TRUTH: MRP was a breakthrough for manufacturers at the time. It enabled them to calculate, as opposed forecast, what was needed in terms of materials to support a Master Production Schedule (MPS).

TRUTH: My meeting with Joe Orlicky completely changed the course of my career. It opened my eyes to the fact that a retail supply chain is simply an upside-down bill of material from the store or internet to the factory. You forecast at the store/internet level, and you calculate the rest all the way to the factory thus eliminating all other forecasts across the entire retail supply chain.

TRUTH: little did I know it would take me 30 years to connect a complete retail supply chain from the store to the factory. The challenge was to have the technology that provides the ability to scale economically at store level. What was a 50,000 SKU/location planning combination at Abbott Labs in Montreal in 1975 became a 450 million SKU/location planning combination at Walmart.

TRUTH: My first attempt to integrate a complete retail supply chain was in 1978. Two more failures followed in 1990 and 1994.

TRUTH: Finally, Sam’s Club and Kraft, in 2008, became the first fully integrated retail supply chain which was then followed by Walmart and Kraft in 2012.

TRUTH: the reason it took 30 years was uniquely technological: we knew how to integrate a supply chain way back in 1975 at Abbott Montreal. We had acquired the knowledge and became very successful at it. However, we did not know how to plan a 450 million SKU/location combination inside a two-hour window.

TRUTH: today the code has been cracked, the technological barrier has been broken. We have known for a long time how to integrate and manage a retail supply chain. We do not need the help of AI to do it. We do not need to jump through hoops to get there. Finally, we do not need to have so-called experts speak in languages that people do not understand either. We just need to do it.

TRUTH: Never forecast what you can calculate. A retail supply chain only needs one sales forecast. Forecast at the final point of consumption then calculate the rest. All other sales forecasts are a total waste of time.