Archive for February, 2006

I spent the day at the Smart Manufacturing for Electronics event in San Francisco today (which, by the way, has MUCH better weather than the midwest this time of year). This is an electronics focused event, so key themes were on flexibility, supply chain agility, responsiveness, etc.

One session in particular caught my attention. A large semiconductor manufacturer was talking about the volatility in their market and the need to be able to simulate the impact of forecast changes and such within their Sales & Operations Planning (S&OP) process. They are using a traditional supply chain planning application to do this.

A single simulation takes anywhere from 16-20 hours to run! They are able to do one simulation per day. Is this responsive?

What we find is that two fundamental truths exist: 1.) there are so many moving variables and such velocity of change throughout large businesses that lots of simulations need to take place (what would happen if demand went up by 10%? what would happen if it went down 5%? etc.) in rapid fire succession. These need to provide immediate results so people can then evaluate other scenarios. 2.) simulations require collaborative input. Traditional supply chain planning applications are built on optimization logic that generally requires some PhD’s to fully understand. In other words, they are not applications designed for collaboration around various action alternatives. They are intended to be setup with a set of variables, then run….and run…..and run.

These solutions are fine if you’re doing long-term planning, but they don’t enable the type of “sense and response” that is critical to survive and thrive today. Responsiveness is achieved by empower the right people in the organization with the information and tools they need to quickly collaborate and choose the right action to take with confidence.

I had the opportunity to present on a webcast yesterday with Charlie Barnhart, Senior Consultant at Technology Forecasters Inc. and Dianne Sforza, Global Kinaxis Program Manager at Lucent Technologies. I’ve done a lot of webcasts in the past, but this one was really good (in my humble opinion).

I thought Charlie did a great job in setting up the issue in terms of describing the industry changes that have happened and the unique challenges this creates for both OEMs (brand owners) and contract manufacturers (CMs). He had some thought provoking questions on conventional wisdom for solving some of these problems.

Dianne followed with a very detailed explanation of how Lucent is tackling these issues. Lucent has had an interesting ride the last few years - having gone through the down-turn that hit the telecom market so hard. But, they’ve got a lot of smart people and have really worked hard to create a collaborative relationship with their contract manufacturers to drive great results. They really focus on coordinating efforts across all parties to ensure that common goals and objectives are achieved. They’ve discovered that supply chain agility and supply chain responsiveness are enhanced through these efforts.

There are some really good insights in this session. If you missed it you can watch it on-demand here.

If you’re heading out to the 4th Annual Smart Manufacturing for Electronics event, “Capitalizing on the Full Value of Your Supply Chain”, next week look me up. I’m presenting with Devin Taylor, director of purchasing, of Jabil in a session called “A Case Study: Real-Time S&OP“.

As anyone in the electronics marketplace knows, the pace of change and increasing volatility has made aligning demand and supply a tough challenge. Jabil is at the forefront in their ability to respond to change and Devin will be sharing his thoughts on how they are able to deal with these trends.

Michael Bittner has written another good article over at Technology Evaluation Centers entitled “Globalization Has a Profound Impact on the Supply Chain and Supporting Information Technology.”

We’re fortunate enough to work with many global operations and have seen the impact directly. One of the biggest challenges we see from this trend towards globalization is that companies feel like they’ve lost visibility and the ability to coordinate operations to meet customer and internal operating expectations.

To address this, companies (this applies to all companies in the “virtual enterprise” - from brand owners to contract manufacturers, suppliers, etc.) need to really focus on empowering their people to act. Doing so requires them to have the right information and tools to collaborate and quickly reach the the conclusions. Centralized, batch-type decision making just doesn’t scale in such a distributed environment. And, as noted above, global organizations today are virtual - they include other companies that specialize in various aspects of the value and supply chain.

Since many people asks for case studies, real world examples of how customers benefit from Response Management solutions like our RapidResponse, I wanted to share this recent article highlighting Lucent. Bill Roberts has written a story at Electronic Business entitled “Rapid improvement: OEMs find a tool for more efficient inventory management.”

While this article focuses mainly on the inventory and materials side of the value of RapidResponse, it does provide a nice look into how it helps OEMs deal with the unique challenges associated with outsourcing their manufacturing.

I get asked a lot for case studies on our customers and how they are using our Response Management software to solve their business problems. We’ve worked with Teradyne for some time. Like many of our OEM/brand owner customers, Teradyne has outsourced a significant portion of their manufacturing to contract manufacturers. This, of course, creates unique challenges in terms of coordinating the activities of the various parties involved to achieve the desired result. Poor coordination can lead to customer satisfaction (and brand) problems, compliance issues and quality troubles.

Teradyne has a smart group of people managing these processes and has leveraged Response Management software as one key tool in their strategy for managing these challenges. Jim Carbone at purchasing.com wrote a piece last year about Teradyne entitled “Teradyne: Controlling outside costs” that sheds light on Teradyne and their approach.