In my last post, I wrote about being an agilist and a new KPI that measures one’s ability to be agile. I explained how one gains access to high-fidelity data that can, in the proper context, be turned into information and ultimately knowledge about a business topic. Okay. You now have information, so what’s next?
Nothing happens or changes until an action is taken or occurs with that information. Unless your operational staff and the business processes they execute every day leverage this new information–and most importantly act on it–then all that data collection turned into information and investment is for naught. Your company starts to lag behind the competition. It is as if a gold nugget is mined and uncovered, but never picked up and refined into a fine piece of jewelry. Companies must act on the new information to maximize competitive agility; exercise their agilibility and fine-tune this decision-making cycle periodically for continued ongoing improvements. In the current market need for high levels of agilibility, it’s imperative that companies change the way they make operational decisions. To do that, they need an enterprise decision support system. In other words, a platform to enable agilibility.
Addressing the Time Lag
There is always a lag between the time the data, now turned to information through context, is used to trigger an action such as making a decision based on that newfound information. Comparing the duration and cost of that lag is comparing one’s agility to a known baseline. The quicker an action occurs and the lesser the cost of the action when a decision is made, the more agile a business unit or department. Shortening this lag increases their agilibility. So how does agilibility work in a business context? If Agility is a measure of the time and cost to translate contextualize data into an action taken, then agilibility is the relative speed of the actions taken. Work by business experts James Taylor and Neil Raden in Smart (Enough) Systems categorize decision making on a scale with operational decisions. This includes a range of those executed more often than daily or less frequent than annually. While strategic decision making is not usually referred to as being agile, there are times when the action taken raises agilibility for operational decisions. Operational decisions can represent the building blocks of agility. In the context of Production Control, Logistics Planning and Optimization and Supply Chain Optimization, what characteristics should we look for in operational decision making?
The decision must be accurate and that demands accurate and precise data in context. Fully contextualized data results from a single source of truth and information models. A single platform with synchronized data in a single data repository ensures the likelihood of accurate data. Silo systems of data being used for optimization of material usage and efficient production operations demands an overabundance of data cleansing and validation. This inefficiency surrounding data quality is eliminated in a single data model used for optimal production output.
Minimal time lag equates to an agile decision. Each segment of time lagging from information awareness to action has a real financial cost and impact. Shrinking the lag in the time to shift production or supply from one source to another minimizes this cost and serves to reduce waste at many levels and ultimately improves customer satisfaction with highly responsive deliveries.
The speed at which the impact occurs once the decision has been made also determines one’s agilibility. The faster a supplier or the entire supply chain is informed to shift from one component or ingredient to another based on new data, dictates a manufacturer’s or producer’s ability to shift production from one product to a variant. This form of agility is based on new information and market demand.
The Cost of Agilibility
Finally, the decision must be made on the cost since we should start measuring the cost of agility in comparison to the outcome of the decisions made. If the cost of the decision overwhelms your organization or creates disruption to the workforce, then one must reassess and figure out if an alternative structure or process is needed. Staying with the supplier, if the cost to find a new supplier who can deliver in a more agile manner is higher than the new opportunity loss of less agility then a reassessment might be prudent.
This blog is the second of four in a series on Planning and Optimization. Read this first one here: “Agilibility– Are you an Agilist?”
Are you looking to become an Agilist or increase your supply chain velocity and agility? Reach out the DELMIA Operations Consulting Team at Dassault Systems to see how we have changed company’s ability to respond to disruptions and change.