Gartner Supply Chain Executive Conference – Why ‘Flash Boys’ want to Know Sooner; Act Faster

TrevorMiles

new sales model vs old sales modelSeveral of us from Kinaxis took the annual trip to Phoenix for the Gartner Supply Chain Executive Conference. It has been interesting to follow the evolution of the conference from the early AMR Research days, when only a little over 100 people attended and no vendors were allowed, to a conference with over 1200 end user attendees (excluding Gartner and vendor attendees) in which the vendors are an integral part of the program. I am sure for some of the participants there are pluses and minuses that the vendors attend too. For those who prefer to keep the vendors at arm’s length Gartner still runs peer forums, which are very popular. The peer forums give the end-user participants an opportunity to discuss key adoption and change management issues in a ‘safe’ environment.

The level of interest at our booth was phenomenal. The knowledge these visitors had of Kinaxis was very high. The quality of the keynotes was excellent. The sessions were very well attended and very informative. Compared to 10 years ago the topic of SCM has matured tremendously. While most certainly we see a trend in the direction of self-serve and self-education, there is still a propensity toward following the old model of engagement.

I made a bold prediction that visibility would be a hot topic at the conference. In fact I predicted that the data issue at the heart of visibility would be a hot topic. I was correct about visibility, but not correct about the data aspect. The data aspect was almost a non-topic, but visibility was a hot topic. More importantly the discussion of visibility is maturing beyond the simple ‘lights on’, ‘where’s my stuff’ discussion, to a richer discussion of ‘is my stuff in the right place’ with all the attendant analysis of what are the costs and consequences of it not being in the right place, and what do I do about it?

schneider electric logoAnnette Clayton of Schneider Electric gave a great keynote about their supply chain transformation. The manner in which they have coupled customer and supply chain segmentation with end-to-end supply chain planning and visibility is phenomenal and an example for many. Annette referred to this as a ‘tailored supply chain’ in which they have 10 main customer segments, each with different needs, 4 main supply chain manufacturing models breaking out into 7 supply chain delivery models, all supported by 6 supply chain transformation axes. This was the best keynote by far. The transformation Annette has brought about in a short time is amazing enough, but they have tangible benefits to prove the value of these changes:

  • About 6 pt improvement in net promoter score since 2011
  • About 1.5 pt reduction in inventory as a proportion of revenue
  • Over €500M cumulative saving in 2012-13Tom Peters Gartner keynote

The one time the issue of data came up at the conference was in the Tom Peters’ keynote. Tom was as entertaining and bombastic as ever. On his blog Tom writes that

Logistics have always been important. No doubt of it. (My first slide is a quote from General Omar Bradley, commander of U.S. forces on D-day: “Amateurs talk about strategy. Professionals talk about logistics.” Incidentally, the 70th anniversary of D-Day is just two weeks away.) But, if possible, the role of the logistics—supply chain—exec is becoming more important. By an order of magnitude. In the “Age of the Internet of Everything” and “Social Business” … everything truly is connected to everything else. And concocting and managing and harvesting maximum value from this ubiquitous web/moving target is arguably Corporate Job ONE.

The issue of data is embedded in his statement that “everything truly is connected to everything else. And concocting and managing and harvesting maximum value from this ubiquitous web/moving target is arguably Corporate Job ONE”.  Almost as an aside he mentioned the book “Flash Boys: A Wall Street Revolt” by Michael Lewis. There is a great 60 Minutes interview of Michael Lewis for those with little time to read the whole book, though I do recommend reading the book. Tom Peters quoted a passage from the book – “Steve, you’re costing me a hundred nanoseconds. Can you at least cross it diagonally?” – which refers to the laying of a high speed fiber optic cable between the Futures Market in Chicago and the stock exchanges in New Jersey that cost over $300M to shave off 3 milliseconds from the fastest route. At one point they needed to make 2 sharp turns to cross a road at right angles. Crossing the road diagonally would reduce the speed loss. They sold access to this cable to high-frequency tradersfor $10M, plus infrastructure costs, a pop. Apparently one HFT suggested that they sell access for a lot more so that the pool of companies that could access the cable was reduced

Now it must be noted that there is a lot of controversy about the legality of how the speed is being used to ‘front run’ many trades by high-frequency traders. Nevertheless the book brings out the real value of speed, whether to stock trading or to supply chain. Knowing sooner and acting faster are the business outcomes that add value. Solving the data problem in multi-tier supply chains is the equivalent of laying a $300M fiber optic cable to shave off 3 milliseconds. But until we solve the data problem we will not be able to make progress and reap the potential financial and operational benefits of supply chain visibility.

At some point speed is quality.Cook medical

The last presentation I attended had the most focus on data. Dave Reed of Cook Medical, a $2B medical device manufacturer, presented on “Optimizing Data Standards in the Healthcare Industry”. For those of you less familiar with the healthcare industry, there has been a 10 year debate about the adoption of serialization or an EPC (Electronic Product Code), but now the drug and device manufacturers have to comply. The California sequenced adoption requires that:

  • Manufacturers (generic and brand) must pedigree:
    • 50 percent of their products by 2015
    • remaining 50 percent by 2016
  • Wholesalers and repackagers must accept and pass pedigrees by July 2016
  • Pharmacies and pharmacy warehouses must accept pedigrees by July 2017

Part of the serialization is the adoption of GTIN (Global Trade Identification Numbers) and GLN (Global Location Numbers), which are part of the GS1 standard. And now the Apparel industry is looking to adopt GS1 too. I work with countless manufacturers that use different item numbers for the same item in different ERPs, let alone sharing a common item number with all their suppliers and customers. This level of data quality is one of the biggest barriers to end-to-end supply chain visibility, let alone end-to-end supply chain planning. While Master Data Management (MDM) is a start, until we adopt standards, like the radio and television broadcasting industries, we will be stuck in time consuming point-to-point integration.  I am very excited about the adoption of GS1 and look forward to watching the progress over the next few years.

It was a good way to end the Gartner conference, especially as I had dinner with Christian Titze, who is leading Gartner’s efforts in supply chain visibility, that evening. We had a lot to discuss.

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TrevorMiles

As vice president of Thought Leadership, Trevor serves as an expert source for Kinaxis customers, prospects, industry analysts and journalists. Known throughout the supply chain field, he has published many articles, presented at various industry events, and is the primary contributor to the Kinaxis 21st Century Supply Chain blog. Trevor helps Kinaxis seek new market opportunities within the company’s distinctive competence and is instrumental in the company’s competitive and market intelligence. He helps key customers achieve the operational control tower vision, guiding their priorities and architectures to realize the full potential of RapidResponse. Having lived, worked, and studied in Canada, the United States, Europe and Africa, Trevor brings a global perspective to market needs and customer requirements. Prior to joining Kinaxis, Trevor worked for i2 Technologies where he held a number of sales & marketing roles and worked with global industry leaders such as Continental, Volkswagen, Nokia, and Thomson. Previous to i2, he worked for Coopers & Lybrand performing several studies in supply chain reengineering for companies such as Levi’s, Burmah Oil, TNT Logistics, AGA Gas, and Schneider Electric, among others. Trevor has degrees in Chemical Engineering and Industrial Engineering.

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