Archive for April, 2011

The Four Keys to S&OP Effectiveness.

Published April 28th, 2011 by Lori Smith 0 Comments

As mentioned last week, we just completed an S&OP e-book called “S&OP in the 21st century: Your system for navigating the modern business landscape.”

I thought I’d share a short excerpt of the beginning of the third chapter to give you a taste of what this e-book is all about:

If Excel, ERP, and legacy planning aren’t the right tools for the job, what is?

Imagine a pilot flying from New York to Los Angeles at night without any navigation systems or instruments to measure his location, wind speed, or altitude. Instead, every two hours he checks the stars with a sextant, extracts data from the flight recorder about his throttle settings, and draws in the plane’s likely location on a map.

What are the chances of that pilot actually getting to LA? Can he arrive on any predictable timetable? You’ll likely agree his chances are slim to none.

A modern pilot embarks with a general flight plan, but then monitors a continuous readout of key metrics, which he uses to make numerous small course corrections to help arrive at the proper destination on schedule.

It’s the same for business. Every company needs a sophisticated navigation system to help determine where you are going, where you have been, when you are off course, and how to get back on course.

Successful S&OP provides a navigation system and a set of instruments for piloting a company through our turbulent times.

This chapter describes 4 keys to highly effective S&OP:

  1. East-West integration, bringing together demand and supply planning
  2. North-South integration, bringing together Finance and Operations
  3. Tying together volume and mix plans
  4. S&OP on demand, not only on schedule

Any enterprise that can find all four of these keys will unlock the door to S&OP and take a big step up the maturity staircase.

Want to continue reading? Download your copy today.

Posted in Sales and operations planning (S&OP)

Who knew learning from senior supply chain executives could be so fun?

Published April 27th, 2011 by Lori Smith 0 Comments

Just a short post today to let you know that Kinaxis will be attending the Gartner Supply Chain Executive Conference 2011 in Scottsdale, AZ on June 1-3 2011.

This event is one of the world’s most important gatherings of supply chain leaders, designed to provide attendees with supply chain advice and expertise from industry analysts and thought leaders who have over 150 years of collective supply chain and end-user experience.

At the conference we’ll also be hosting an episode of our LATE LATE SUPPLY CHAIN SHOW with host and Kinaxis business consultant, Bill Dubois. Bill will interview senior supply chain executives to get to the heart of their response management challenges and strategies.   Find out how market leaders are synchronizing their actions across several tiers of the extended value chain to respond quickly and profitably to customer demand. Presented in a late night show format, this high-energy session will be equally entertaining as informative.

Thinking of attending the conference? Then come be part of the live audience of our show!

By the way, if you register at with priority code SCCKXS, you can save $400!

We hope to see you there!  And please contact me if you would like to arrange a meeting with Kinaxis while you are there.

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Posted in General News

Happy (early) Earth Day! Green your supply chain with these resources.

Published April 21st, 2011 by John Westerveld 2 Comments

Happy (early) Earth Day to you! In honor of Earth Day tomorrow, I got you a little present. I put together a helpful list of links to sites that help you in your quest for a sustainable supply chain. No, No…it’s OK. You didn’t have to get me anything…but if you DID feel the need to do something special for earth day, comment back with your favorite green supply chain site.

Ok, so here’s the list;

Sustainability is Free:  The case for sustainable supply chains: My first pick is a helpful little PDF put out by the “Sustainable Supply Chain Project” at the University of Reno.  It provides a nice rundown of some of the factors for making a business case for sustainable supply chain management. So, if you are (heaven forbid) just starting out on your sustainable supply chain project and need to make a business case, this is a must read.

MHIA – Green resources: This handy site is managed by the Material Handling Industry of America and has a great collection of resources for greening the supply chain.  The site covers manufacturing issues, logistics and distribution, product design and energy and building considerations.  Also, they have a section on making a case for green manufacturing and on government standards and regulations.  Finally, they have a 4-minute video on 10 steps to a greener supply chain. Again, if you are just starting out, this is great information for developing your plan.

United Nations Global Compact – Sustainable Supply Chains: Resources & Practices: This site was launched at the 2010 UN global compact leader’s summit and is a resource for businesses seeking information about supply chain sustainability. While the site appears to be somewhat European centric, there is a healthy resources section and a corporate practices section that will help sustainability programs regardless of your region.

Portal for Responsible Supply Chain Management: This is another European centric site (I have to give credit to the Europeans for their leadership in sustainability). The focus of this site is slightly broader in that the look at issues beyond sustainability (child labor, forced labor, corruption, etc). This site has a very interesting set of resources from the buyer’s perspective and from the producer’s perspective and also has a rich set of resources including forms for self-assessment.

Green Supply Chain: This site is sponsored by GSX.COM (a B2B e-commerce company). They have some helpful resources including videos and best practices. They also have a nifty counter on the main page showing how much wastewater, solid waste, CO2, trees and energy GSX has saved through their customer’s use of B2B. Yes, it’s a bit of an advertisement, but I think I can let that go.

The Green Supply Chain: Not to be confused with “Green Supply Chain”,  THE Green Supply Chain website is published by the people at Supply Chain Digest.  The site is focused more on sustainable supply chain news, but also has case studies, reports and other resources.

Green Supply Chain Network: The Green Supply Chain Network is a blog sponsored by the Supply Chain Network and has a series of articles that deals primarily with supply chain logistics and transportation.

Dave Meyer’s Green Supply Chain Blog: Any discussion of a greener supply chain would be incomplete without mentioning Dave’s green supply chain blog over on the Supply Chain Expert community sponsored by Kinaxis. Definitely worth checking out!

So there you have it; my Earth Day present to you. I hope some of these links help you and your company on your quest for a greener, more sustainable supply chain. I’m under no illusions that I’ve captured all the resources out there, so if you know of one that I missed, please comment back and add it to the list. The earth will thank you!

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Posted in Best practices

Master scheduling and constraint planning – How important is this?

Published April 20th, 2011 by Carol McIntosh 2 Comments

The role of the Master Scheduler has existed for years but organizations are still trying to determine the optimal way to manage supply. This has become more difficult over the years due to the volatility in demand, the increased pressure of balancing fulfillment, and the cost of capital.

Organizations are striving to be demand-driven, but they require some degree of stability in the supply plan for supply assurance and for managing their capacity constraints― both internal and external.

There are a number of factors that influence the master schedule. These may include:

a)  The implementation of a postponement strategy or ‘delayed differentiation.’ Organizations that implement postponement strategies design a generic configurable product with customization closer to customer demand. The master schedule is generated at the generic product level.

b) Organizations that outsource. If you outsource you may be providing your partner a production plan which represents the plan at a higher level in the hierarchy. For example, product family. The partner will then be responsible for translating this to the item level master schedule.

c) Sales profile. If your product sales accelerate significantly at the end of the quarter (typically driven by sales incentives), a master schedule decoupled from the sales plan may be more important to you than other organizations. This is particularly important if you have long lead times or capacity constraints. Level loading inside a firm horizon will reduce the risk of supply to support the end of quarter sales.

d) Asset Utilization. Your organization may have significant investments in capital equipment that influence the master schedule. You may be faced with tradeoffs between capacity utilization and lean JIT strategies.

Once the master schedule is created, a big challenge is the monitoring of the master schedule against your production plan and your sales plan. How do you ensure that you are building the right amount of product to meet your organizational objectives? This can be a fine balancing act.

You may want to ask yourself:

  • Can you easily reconcile the production plan and master schedule at multiple levels of the hierarchy in units and value?
  • Do you model your key bottleneck capacity constraints? Are they internal and external (ie. supplier) constraints?
  • Do you have a clear view of your capacity constraints and their impact on your master schedule?
  • Do you understand the impact your master schedule or changes to your schedule have on customer demand?
  • Are you able to compare multiple versions of your schedule and analyze the impact on your KPIs?
  • Do you use an alerting system to proactively identify when your master schedule is at risk of meeting your sales plan?
  • Are you responsive enough to act before it is too late? What is your response management strategy?

We all understand the concept of creating a plan, but what about monitoring and responding to the plan? I am interested in hearing your point of view. Has the traditional role of the master scheduler changed? How important is this role in supporting an organization’s Sales and Operations Plan?

Posted in Best practices

New S&OP E-book: Four ways to make S&OP the GPS system for your business.

Published April 19th, 2011 by Lori Smith 0 Comments

We recently completed an e-book called “S&OP in the 21st century: Your system for navigating the modern business landscape.”

It’s a great resource for those who want an overview of what an advanced S&OP process should look like and what it takes to get there. Flip through the pages to get a quick outline of the modern-day challenges, benefits, tips, and best practices for S&OP. If you want to dive deeper on any one topic, there are a multitude of links for you to access further resources such as blogs, surveys, research reports, and white papers. And of course, we added some lighter content just for laughs.

What is covered in the e-book?

What is Sales and Operations Planning?

  • The Ingredients of S&OP
  • Why Bother with S&OP?
  • Where Does Your Company Sit on the Maturity Curve?
  • The Four Dimensions of Change

Do You Need Technology? What Kind of Technology?

  • What’s Wrong With Excel?
  • What About ERP?
  • Are Legacy Apps Yesterday’s News?

Four Keys to S&OP Effectiveness.

  • East-West Integration: Demand + Supply
  • North-South Integration: on: Finance + Operations
  • Tying Together Volume and Mix Plans
  • S&OP On Demand, Not Only on Schedule
  • The Rise of Integrated Business Planning

The Technology You Need for Success.

  • A Single Data Model Goes Deep and Broad
  • “What-If” Is Vital
  • Collaboration is the Bedrock
  • Dashboards and Scorecards Keep Track
  • Moving Up the Maturity Model Staircase

Download your copy today and stay tuned for future posts on the S&OP e-book!

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Posted in General News, Sales and operations planning (S&OP)

Observations from a trip around the world – Part 2: Are we ready for the China ‘tsunami’?

Published April 15th, 2011 by Trevor Miles @milesahead 3 Comments

I am fascinated by the social and cultural changes taking place throughout the world, driven largely by the emergence of the so-called BRIC countries, and hastened by the predominantly Western recession in 2008. I used to love the fact that only certain products were available only in certain countries and regions. When I write ‘used to’ I don’t mean that I now no longer love this, but rather that the distinctions and uniqueness’s are no longer available. We can buy Nutella in Canada now, no need for my kids to visit my in-laws in Germany to get one of their favorite bread spreads.

I was boarding a plane in Frankfurt to fly to the UK, surrounded by a bunch of kids from the Culham European School, about which I know nothing. But while boarding, some of the boys were making the usual boorish comments English people reserve for German. Nothing unusual in that except four of the boys then swapped into French, and with French accents to boot, while just a second before they were talking English with middle class English accents. It turns out that they are French, attending a school near Oxford. Well, when last have you heard a French person speaking English with an English accent?  I think the French accent is something to cherish and to enjoy. I love the differences that make up cultures, warts and all.  I much regret the homogenization of cultures. But times, they are a-changing.

Having struggled for a week with, and been embarrassed by, my non-existent Mandarin, I am happy to report that I did see the future at the Shanghai airport while checking in for my flight to Frankfurt. Next to me was a 25-30 year-old German speaking in what I can only assume to be fluent Mandarin. I wish I could report that he was speaking Mandarin with a German accent, but I regret to say that I could not tell.  He was the first Westerner I had come across in my week in China who did not speak Mandarin like I speak French: With more hope than expectation of being understood. This reminded me of a guy I worked with in the mid-1990′s who now has a pretty fancy title with SAP in China. Nice guy, but not one that would have been chosen to be very successful in his yearbook. Turns out that he studied Mandarin at university in the early 1990′s. I wish I had his foresight, and that I had not underestimated him.

During the two day conference in Shanghai there was only one presentation in Mandarin; the rest were all in English. Based upon the simultaneous translation, it was a fantastic presentation by Haier.

I couldn’t understand the slides since they were in Chinese script, but wish I could have at least got the basics. According to OneSource Haier’s revenue in 2010 was about $14B, and likely to become the largest white goods manufacturer in the world in 2011 in terms of revenue.  They are already the largest in terms of units shipped. I had at least heard of them. One of my colleagues had not even heard of them. My point isn’t to pick on my colleague’s lack of knowledge, but rather to point out that in general there is a woeful lack of knowledge in the West of what is truly happening in China.

A few weeks ago, we had a visit from a friend who is a bigwig in the music industry and travels frequently to China looking for Classical talent. His opinion is that if items cost as much in China as they do in the West there would be much greater parity between China’s GDP and that of the US. He thinks China is already the world’s defacto leading economy and that we in the West are simply uninformed or have our heads in the sand. After this trip, I agree, even though the World Bank numbers indicate otherwise.

What is interesting in my friend’s statement and consistent with the Haier story is the emergence of China as a market, not just some place where nearly everything in the West is produced. Many companies, like Haier, are building brands little known in the West. There was also a presentation by Siemens, the giant German engineering company, on how much they have not only shifted manufacturing to China, but how much R&D they are doing in China, and how big a market China is for Siemens. What I see emerging is brands headquartered in the West with the majority of their sales, R&D, and operations in China. How long will it be before the HQ is deemed to be out of touch and moves to China?

I picked up Vinnie Merchandani’s book “The New Polymath” before I started on my journey. I wouldn’t put it into the same category as Tom Friedman’sThe World is Flat“, perhaps only because “The World is Flat” came first, but also because Vinnie is actually writing about something else than the emergence of the BRIC countries. But there are some fascinating sections on the manner in which competition from China and India is going to change how Western companies will do business. No, I don’t mean securing business as Siemens and other western companies did in the 2000′s through bribery but rather how they will need to win and deliver business through superior execution. He writes about how a factory in China, with living quarters for the workers above the factory floor, was designed in less than a week and how the contractor submitted a quote for construction in less than 24 hours. I am sure many readers will immediately smirk about safety standards and quality of build. Perhaps some of that’s warranted, but it also misses the point about the speed of business, and the associated costs. No Western company I know of could compete in the design and build business at this speed. We can question government regulation and oversight as much as we want, the reality is that this is the speed and flexibility required to do business in this area. Thankfully, Chinese software companies will likely have more business in China than they know what to do with for the next 10 years, giving us in the West some time to adapt. But as I reflect on my trip I cannot but wonder about the software companies in China and India about which I know nothing, and whose products may already be competitive with products from the West. Have you heard on the ERP system called Kingdee? Look it up.

Some months ago I was interviewed by our Marketing team. One of the questions was what advice would I give to young people entering the supply chain market, to which I replied “Go East young man”. I’d like to revise that to “Go East young man. Go NOW.”

I am not naive enough to think a week-long trip to China makes me an expert. There are real political, environmental, cultural, and economic issues that must be addressed in China. A Western education is still a prized possession in China, especially a graduate degree.  It is simply that I am staggered by how much I am out of touch with reality despite reading a lot about the rise of the BRIC countries, and China in particular. The wave isn’t coming, it is here, and it is a tsunami.

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Posted in Milesahead

It’s earth day for the supply chain too!

Published April 13th, 2011 by John Westerveld 0 Comments
"The Blue Marble" is a famous photog...

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April 22 is Earth day. Like many people, our family will do the superficial things that people do on Earth Day like turn down the lights, and pick up trash that people throw along the side of our road.  However, Earth Day needs to be more than just superficial actions. It should be a time to reflect on how what we do as individuals impacts the environment. Likewise, a company’s environmental policies must be more than superficial actions designed to get good PR and instead be instilled in the corporate culture. The fun thing is that when this happens, when environmental factors are embedded in corporate culture, the benefits can be surprising. I saw this article recently in IndustryWeek – the article described how Dow Chemical has leveraged a 2 billion dollar investment in green technologies into a 9 billion dollar savings. Not bad any way you look at it!

This is yet another data point that back’s up my assertion that a carefully thought out environmental policy actually saves a company money while helping to reduce the impact on the planet. So, how did Dow do it?  According to IndustryWeek, there are really two keys;

1)      Embed sustainability considerations into all decisions…in other words, embed environmental factors into the corporate culture!

2)      Sustainability must be a top down focus, driven by the CEO. Like so many initiatives, if the top executive doesn’t buy into something, it is very difficult to make it happen. In Dow’s case, the environmental push came from the CEO and as a result, things happened!

So, what is stopping you from looking at ways to make your company more environmentally responsible? Maybe the environment isn’t high on your priority list. If so, I’d encourage you to check out Ted Talks, specifically their videos on the environment (if you’ve never seen a Ted Talk, it’s worth checking out!) You can find the environmental articles here; I’ve never come away from one of these videos without a sense of urgency that we have to do something.

Let’s look at the other benefits of a top down sustainability program;

1)      Save money. Wasted energy and material is wasted money.  Look at Dow…7 billion in savings…enough said.

2)      Gain customer mind share. When your company is constantly in the news for environmentally sound actions, people are drawn to that. It indicates (at least to me) that this is a company that I want to be associated with. I look at Google and the myriad things they do to reduce energy consumption (solar power, shuttle bus service for employees, just to name a few). Needless to say, I’m a big user of Google services (it doesn’t hurt that they make good products too!)

3)      Get ahead of the regulations. The government is under significant pressure to reduce environmental impacts and will continue to create new laws and regulations to address these issues.  When these regulations come out, companies need to respond…unless, of course,  you are already meeting them. If you are exporting to other countries, you need to conform to their environmental laws as well. Having a strong environmental position will make this easier.

4)      Employees feel good about the company. This is somewhat ‘touchy-feely’ (forgive me if you don’t go for that), however, it is an important factor. People want to work for companies that they can be proud of. If your company is recognized as an industry leader in environmental issues, that is something people feel good about.    Happy people are more productive and creative and that is better all the way around.

So what are you doing to make your company more sustainable? You may not save 7 billion dollars, but over time, you will save money and help the environment. Do you agree? Do you think I’m a tree hugging nut ball? Comment back and let me know.

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Posted in Best practices

Observations from a trip around the world – Part 1: Response is cheap, by comparison.

Published April 12th, 2011 by Trevor Miles @milesahead 0 Comments

I have been on a trip literally around the world, well, the Northern Hemisphere actually. My trip was originally to take me to Tokyo to meet some customers, Shanghai to speak at a conference, and, finally, London to speak at a conference and meet with Gartner. The terrible earthquake and tsunami, and the resultant issues at the Fukushima nuclear power station meant that I went to Hong Kong instead of going to Tokyo.

The need to reroute to Hong Kong is a great example of the difference between planning and response, and the costs that are embedded in a design or plan.  It turned out that for my original trip, given that I had three lay-overs of more than 24 hours, it made sense to buy a Star Alliance ‘Round the World’ ticket.  It was considerably cheaper than buying each leg from a different carrier, and considerably easier to book and manage given that there is a single web site and service center for all legs. In addition, the flexibility of the ticket is great though there are moderate change fees.  The catch is that the ticket is not refundable (in-built cost) and that you have to have at least three lay-overs of at least 24 hours (in-built inflexibility). With the Tokyo leg cancelled I still had to fly somewhere for at least 24 hours or forfeit the entire ticket. But I had to buy my ticket with sufficient lead time in order to get a good fare, meaning I had to buy it before the earthquake in Japan. However, had I bought a ticket at shorter notice to Shanghai and London only, it would have been quite a bit less if we include the costs associated with my stay in Hong Kong, not to mention the opportunity cost of me being away for longer.

What I find interesting in this description is to contrast it with a theme emphasized by several speakers at the Manufacturing Supply Chain Officers conference in Shanghai, particularly John Gattorna, but by others too (Incidentally we received a copy of John’s book titled “Dynamic Supply Chains – Delivering Value through People” as part of the event.)  The theme is that planning is good, responsiveness is expensive. The underlying assumption is that if we could only plan better we good run a very efficient (in other words low cost) supply chain. What we so often forget to evaluate is the in-built costs created by the plans we make. In my example above, I would have saved money by buying my ticket later. What cost me money was ‘planning’.  Being ‘responsive’ would have saved me money. But my management, all the way up to the CEO through the CFO would have shot me for buying the ticket within the 14 day period. My trip wasn’t any more expensive than if I had gone to Tokyo ($125 for a change fee), but I had to spend more than 24 hours in Hong Kong doing ‘nothing’.  Actually, I did some site seeing in the late afternoon and evening. Great for me; not necessarily the right thing for the company.

OK, I agree, on average it would be cheaper to buy the ticket 14 days in advance. But that is not my point. My point is that we measure the cost of responsiveness, but we don’t measure the cost of inflexibility. Had John Gattorna brought up the built-in cost of inflexibility and the need to balance between the cost of inflexibility and the cost of responsiveness, I would have no issue with his statements. But I would go further than this and say that there are ways of providing profitable response to changing circumstances, provided you haven’t built in too much inflexibility into your supply chain through ‘better’ planning.  I just don’t buy into the either/or assumption that is made about efficiency versus effectiveness in supply chain management.  We have to look for the AND.  To John Gattorna’s credit, he did bring up the issue of ‘brittleness’ of the supply chain, but only in the context of the last recession in which companies drew down inventories to unsustainably low levels.  I did not hear him state that ‘brittleness’ is a side effect of not only the recession, but also of planning and systems that only focus on efficiency. And that there are costs associated with this brittleness that we do not measure. Instead, I heard John state more than once that we need to plan better because responsiveness is expensive. Na-uh! It is only expensive if you approach supply chains from the perspective of efficient OR effective, rather than efficient AND effective.  To be fair to John, I have not finished his book yet, so I can only go by the statements he made during the conference.

I was perhaps even more startled by a presentation given by a company whom I will keep nameless other than to say that they are a mobile handset manufacturer. The central theme of the talk was don’t be different, because being different is expensive. Wow.  Needless to say, this company does not have a large share of the market.  But to be fair, the focus of the presentation was on logistics, and there I agree.  While there are opportunities to do Logistics ‘smartly’, it is a commodity and should really be outsourced to 3/4PL’s.  It was during the Q&A session that I was really surprised.  When asked (challenged?) about Apple’s success in this space, the speaker said that Apple doesn’t do anything different in there supply chain.  What?  Guess the speaker missed the part about Apple spending close to $4B earlier this year to buy up the majority of the flat panel displays used in mobile phones and tablets for the next umpteen years.  Obviously I am not privy to the actual contracts, but my interpretation of what I have read is that Apple hasn’t given the suppliers a long term delivery schedule by part, but rather they have put money on the table to ensure that they secure a huge portion of the available production capacity.  In other words, Apple made the decision that spending on flexibility is cheap.  This is smart.

So where do you think your next breakthrough in performance come from?  From learning to plan better?  Or from learning to respond profitably to real demand?

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Posted in Milesahead, Response Management, Supply chain management