Archive for December, 2005

As the year winds down, I wanted to wish everyone happy holidays and a healthy and happy new year. In the spirit of the holidays, here are two fun stories about the supply chain challenges Santa faces each year. Enjoy.

- CIO Magazine’s “A Q&A with Santa’s CIO”
- Supply Chain Digest’s “The North Pole’s Turbo Supply Chain”

I’ll be taking some time off heading into the holidays, so the posts will be few for the next couple of weeks. I look forward to starting up again in the new year.

IndustryWeek has an article talking about projected manufacturing growth in 2006. The research was done with the Institute for Supply Management.

The article states that In answer to a question concerning respondents’ use of technology with regard to supply management, 80% consider themselves less that three-fourths complete in realizing efficiency from technology.

AMR Research has just put out a new report (paid subscription required) entitled “DDSN will fail without R&D involvement”. DDSN stands for Demand Driven Supply Networks.

The study shows that new product introductions are a major influence on demand, yet R&D participation in supply chain strategy is minimal.

We’ve seen this challenge many times in the electronics industry. With such short product life cycles and highly volatile demand, new product introductions and engineering changes are a significant challenge. Trying to find the optimal effectivity date given this volatility is a complex problem when manufacturing is done internally, but takes on new complications (like inventory liability) when manufacturing is outsourced.

We’ve heard stories of companies facing substantial excess and obsolete inventory write-offs from poorly timed product or engineering change introductions and/or had to face angry customers as they were unable to meet volatile demand from poorly executed changes.

Key decision makers in R&D, marketing, the supply chain (internally and externally) need detailed visibility and tools to quickly simulate various alternative effectivity dates and to determine which date would align best with corporate objectives. These disparate participants must collaborate with a single version of the truth to ensure everyone is working from the same set of facts. And, collaboration needs to be iterative as various options are analyzed and weighed against the metrics.

AMR is correct, R&D must be involved in the process, but the process needs to be supported by the right information and tools in the hands of the key decision makers that allows them to quickly weigh various actions and determine the one that best meets the company’s objectives.

I was asked during the webcast this week if Response Management was similar to dynamic sales & operations planning. Its a good question.

Our Response Management software gets used frequently to support the sales & operations planning process. Most organizations we work with find that the pace of change and the volatility of demand in their business requires this process to be dynamic. Of course, every company has a slightly different process that they follow, but they all share the same need to make the process more responsive to frequent change.

This is where Response Management comes in. Because Response Management software like our RapidResponse are information rather than process-centric, they can support the process in different companies quite easily. And, because Response Management software focuses on visibility, what-if scenarios and scorecarding, its ideally suited to make this critical business process more responsive.

So, we have customers that utilize our software to quickly and accurately determine “what would happen if the demand went down by 10%?” or “what would happen if this customer dropped in this order?”, etc. The software is used by all the stakeholders in this process to evaluate the impact of a given change - or lots of changes. It can really turn this process from a static, regularly scheduled one to a dynamic, ad hoc one that provides immediate feedback to the key stakeholders and enables them to resolve discrepancies that may prevent the achievement of the desired result, quickly and accurately.

If you haven’t seen this yet, I’m speaking on a webcast tomorrow (go here to learn more and register) with Bill Swanton from AMR and David Rael from Benchmark Electronics.

One of the challenges that I see a lot is companies trying to strike a balance between their external performance (customer service) and their internal performance (ability to hit key internal metrics like inventory). This webcast will talk about trying to achieve both simultaneously and show how supply chain excellence can actually drive improvements in customer service.

Bill’s got some great insights from the work he’s done at AMR talking to OEM’s (brand owners) and contract manufacturers and David brings real world “in the trenches” experience in solving these problems.

Hope you can join us.

EDS has a blog called “EDS’ Next Big Thing Blog.” There’s an interesting article there by EDS Fellows talking about their views on the future of technology.

I found a couple of the comments particularly interesting and good parallels to our views on the need for Response Management. In particular, they say:

> “The problem is that most companies are not built for constant change. They are built for constant, with periods of change. That is not a good thing in a world of rapidly accelerating change.”

> “Applications migrate to end users, not to professional programmers.”

> “In an environment of rapid change much of what we “know