Archive for October, 2006

SupplyChainer.com has an article that references research by Accenture and an article by InformationWeek regarding supply chain risk. The post talks about the increasing risk caused by globalization.

According to the article, “seventy-three percent of those surveyed experienced supply chain disruptions in the past five years. Of those, 94% said the disruption impacted profitability and affected their company’s ability to meet customer expectations.”

Brand owners and contract manufacturers alike should build plans to proactively manage probable disruptions to their supply chain. But, more importantly, organizations need to empower people to respond to unexpected disruptions and changes, since there is no way to possibly plan for every potentional scenario.

At our just completed Kinexions conference, we did an informal survey asking the brand owners and contract manufacturers in attendance some questions about the supply chain challenges they are facing. Below is a summary of the findings:

• Ensuring reliable supply; Managing customer demand; and Improving service to the customer were the three most highly ranked business drivers for participating organizations. Also ranked as notable business drivers were Supply chain cost attainment and Reducing supply chain risk. Improving ECO and product launch, Driving market opportunity or Compliance were not ranked.

• 83% of the survey participants cited supply chain responsiveness as “business critical

Doug Bartholomew has written an article at IndustryWeek entitled “Manufacturers finding business intelligence elusive.”

The article talks about the growing need for real-time information to make better decisions. According to the article, “ultimately, the goal of manufacturers is to be able to combine real-time information on the supply chain, operations and business information such as cost data to enable better decision-making.”

As I’ve talked about many times here, there is a tremendous amount of interest in this area. The key to realizing benefits though is to not just focus on visibility alone - but to think about the employees and business processes that need to leverage the visibility and how they need to do that. It is only by empowering people with the information and tools they need to improve responsiveness that companies will realize true business benefits.

This is not just a function of reporting. You need to be able to act on the information to solve business problems - and reporting alone is insufficient to do this. You need tools that facilitate multi-enterprise collaboration and rapid, accurate decision-making that is aligned with business objectives.

We just completed our Kinexions ‘06 conference and had in attendance some of the world’s leading brand owners and contract manufacturers. We talked about a wide variety of themes - challenges in dealing with new product introductions amidst ever shortening product lifecycles, the challenges of managing increasingly outsourced supply chains, etc. But the number one theme that we continued to hear from all parties were the challenges associated with demand management.

I can’t think of a single company I talked to that wasn’t dealing with challenges in this area. Companies are challenged by increasing competition, shorter product lifecycles, outsourced supply chain and broad geographic market reach that make the dynamic aligment of demand and supply an increasing difficult challenge. The concensus is that planning has become less successful and the key is how to empower people with the right information and tools to respond to these ever present changes.

Leaders are increasingly moving to tigher relationships across their supply networks that promote collaboration through shared information and user empowerment. There was a great deal of energy around this issue. While brand owners and contract manufacturers are clearly distinct businesses with varying challenges, they are also completely “tied at the hip” in terms of dealing with these challenges. And, the key to solving them requires collaboration at a personal level, enabled by the appropriate sharing of information.

Technology Forecasters, Inc. (TFI) is predicting continued growth in outsourcing via their updated five year forecast. According to a release they just put out, TFI estimates that total outsourcing is projected to grow from just over $200 billion in 2005 to nearly $380 billion by 2010.

While brand owners continue to realize benefits from outsourcing, there’s a convergence of events taking place that are creating significant new challenges. Outsourcing results in supply networks that are both multi-enterprise and global. When combined with increasing demand volatillity, ever shrinking product lifecycles and global competition, supply chain management and execution become critical to success in the market. With so many constantly moving parts, there’s not a plan in the world that can foresee everything that is going to happen on a given day. The leaders will figure out how to respond to what happens each day in a way that maximizes customer satisfaction and profit. The companies that don’t figure this out won’t survive in this new environment.

I found this quite interesting. MIT’s Space Logistics Center is kicking off a project where “the overall objective of this project is to develop an integrated capability for guiding the development of the interplanetary supply chain that will be required to enable sustainable space exploration of the Earth-Moon-Mars system and beyond.”

Boy, if there’s ever been a need for Response Management, this is it!

In the latest issue of Theory & Practice, a complimentary, biweekly newsletter from IDC’s Manufacturing Insights, IDC talks about fast decision making processes. The article is entitled “Collaboration and Fast Decision Making Processes are the Key to Survival in the Manufacturing Industry.” Anyone who’s read this blog knows that this is a core theme that we’ve talked about repeatedly.

The article goes on to say that “a company that is able to make decisions quickly due to visibility over the operations and with a connection to strategic goals is a company that has a competitive advantage as it is able to quickly react to unforeseen events.” This is precisely what we focus on and the value that our customers realize.

The article also talks about the challenges in large companies of achieving this. We have found, however, that as our software “grows” within an organization, it tends to move into various groups and get broad adoption. Why is this? Because the response process is inherently a distributed and collaborative process that requires active participation from throughout the organization to succeed. So, focusing on empowering the organization to respond more effectively to change by giving them the information and tools to do so inevitably helps break down the walls of the silos and gets the organization working more closely towards a common goal that increases customer satisfaction and reduces operating costs.

Here is a list of the top 100 contract manufacturers from Electronic Business Magazine. We’re pleased to count many of these companies as our customers.