Archive for January, 2007

AMR Research has put out a new article discussing the unique challenges of globalization. The article references input from the Supply Chain Council’s recent Executive Retreat of over 100 leading companies.

Source: AMR Research

The article went on to say “a survey of the 100 attendees showed reliable supply—managing variable, yet long cycle times—as a top issue in an increasingly global environment. Next on the list was building the global organization, with 40% of those polled saying their company built global supply chain centers of excellence. For the other 60%, the primary reporting relationship is through manufacturing. Sometimes, a focus on manufacturing can hinder supply chain growth.”

The issue of globalization and its impact on supply chains is something we deal with a lot. What I’ve seen is that the companies that are thriving in this environment are one’s that thing of partnering rather than strictly outsourcing and build competencies around how to coordinate effective response to change across their multi-enterprise supply networks. The realization that each party has unique capabilities and competencies that must be orchestrated to all work together in the face of constant change is essential.

This is a new way of thinking for many. It’s very different than doing everything yourself as you did when you only manufactured internally. Globalization and the move to supply networks with multiple 3rd parties have changed the game and brought with it many new challenges.

SupplyChainDigest recently carried an article summarizing research that shows that Supply Chain Management is not high on the IT priority list. According to the article, “a recent survey of CIOs by CIO Insight highlights this disconnect. Supply chain management ranked only 13th on the list of IT priorities, as ranked by these CIOs, behind such exciting investment areas as IT system load balancing and mobility applications.”

I think there are a couple of issues here worth mentioning. First, it’s been my experience that manufacturing has dropped a notch in IT priority as more and more manufacturing has been outsourced. At the surface, this makes sense since less investment would appear to be required in an area that the company has outsourced. However, outsourcing brings with it a whole new set of supply chain management issues, mainly the need for multi-enterprise visibility and Response Management capabilities to ensure proper coordination across the supply network and fast and effective response to change.

Second, I also believe supply chain management is becoming a more strategic component and competitive differentiator for many companies. Virtually every industry is more competitive today than it was 5-10 years ago. Competition is now global. With this increasing customer choice there is also greater pricing/margin pressure. This also drives faster innovation to be a market leader. When you add all of this up, it’s not only great sales/marketing and product leadership that are keys to winning today, but you also have to have a supply chain that is efficient and responsive to change. Because if you can’t get your great new product onto the shelves and have the ability to turn on a dime when the trends change, you’re not going to win.

IT clearly has a lot of priorities to sort through and limited resources and funds to work with. But the market dynamics are increasingly making excellence in supply chain management a competitive differentiator that companies like IBM, Dell, Wal-Mart and many others are leveraging to great success.

By Doug Colbeth, President and CEO, Kinaxis

As CEO of Kinaxis, I always make the point to prospective customers that nobody wanted to buy from us. Early in this decade enterprises went to great lengths to rationalize their number of software vendors. It even felt like many had resorted to “hoping and praying

Technology Evaluation Centers (TEC) has a series of articles (Part I, Part II, Part III, Part IV - free registration required) talking about Software as a Service (SaaS), including specific information on supply chain management solutions that are available as the SaaS model. There’s also specific information on Kinaxis here.

Supplychainer has an article talking about new AMR research predicting spending increases on operational and supply chain risk management solutions. According to the article, the study found that 46% of firms plan to implement or evaluate technology for risk management in the next 12 to 24 months.

I think like many things in the supply chain, there are risks that you can plan for and there are those that you can’t. Having a solid Response Management strategy and solution that helps you deal with unexpected change throughout an extended supply chain is a critical component to a risk management strategy. Many companies that have deployed Response Management solutions have found that their ability to deal with unexpected risk is substantially improved, and they can leverage the simulation and analysis capabilities of Response Management tools to determine the appropriate risk management plans to put in place as well.

I know one company that simulated the impact of a potential strike and then used their Response Management solution to also simulate various action alternatives to continue to operate if the strike actually took place.