The Quantitative Supply Chain in a nutshell - Lecture 1.2

The Quantitative Supply Chain’s manifesto emphasizes a short series of salient points to grasp how this alternative theory, proposed and pioneered by Lokad, diverges from the mainstream supply chain theory. It could be summarized with: every single decision is scored against all the possible futures according to the economic drivers. This perspective gradually emerged at Lokad as the mainstream supply chain theory, and its implementation by (nearly?) all software vendors, remains challenging.

Joannès Vermorel, Lokad’s CEO, explains how Lokad’s own Quantitative Supply Chain theory came into being and how it differs from the classical “time series” forecast, which is profoundly flawed in our eyes. We go into more detail about why it is so flawed, one notable reason being that this approach completely disregards the concept of uncertainty. However, in our opinion, uncertainty is completely irreducible, no future can be forecast “perfectly”. Uncertainty must always be taken into account. This is the interest of probabilistic forecasts.

However, it’s important that these forecasts create feasible decisions. These decisions need to take into account all the various supply chain constraints: MOQ’s, shelving space, expiration dates… etc. Each supply chain, from aerospace to fresh food, to fashion, has its own series of limitations that will ultimately shape the decisions that can be made.

We go into more detail about why it isn’t percentages of error that really count and why it is a grand illusion to think so. What really matters are economic drivers - putting a monetary figure on potential error. If there is no unified financial framework to drive your supply chain, optimization hasn’t even started yet.

To conclude the lecture, we talk more about robotization within supply chain and how, contrary to what one could believe, it actually allows us as humans to have more control over our supply chains. This is due to supply chains' immense complexity. In addition, we discuss the role of what we call a “Supply Chain Scientist” at Lokad. As usual, Joannès answers various thought-provoking questions from the viewers, notably on the role of Excel and ERP systems.

Timestamps

00:16 Introduction

02:30 How to? Supply chain lectures

04:27 The Quantitative Supply Chain Manifesto

06:51 All possible futures

17:18 All feasible decisions

22:05 Economic drivers

30:48 Robotization

35:34 Supply Chain Scientists

40:28 From vision to reality

42:04 The myth of the supply chain maturity

45:37 In conclusion

46:18 Questions from the audience