Posts categorized as 'Best practices'

Sense and Respond – A Concept In Need of More Than Just Lip Service

LoriSmith
  • by Lori Smith
  • Published

“Sense and Respond”, or as we position it, “Know Sooner, Act Faster”, is a favorite topic on the Kinaxis blog. Many have had a lot to say on the topic (see here, here and here as examples). And now, so do our customers.

Before we get to that, let me ask you, do you know what the first step is that leads to being able to sense and respond? Acceptance – a recognition that you can’t plan perfectly. I suspect you are thinking to yourself, “everyone knows this and accepts this already”, right? Well, in theory and in their words they might, but in execution… not so much. For example, at a meeting with a prospect recently the team talked at length about their need to be more responsive and flexible. They said they needed to advance their processes and bring them together to be able to be more agile and effective in their planning, analysis and decision making. Awesome… music to our ears! And when the conversation turned to the capabilities they were seeking, guess what happened? They presented a series of feature checklists for each individual function, primarily focused on planning capabilities. Hmmm.

When an organization truly recognizes the difference between planning better and knowing sooner, acting faster, it means they are looking at the problem differently. And equally important, they start looking at the solution differently. The conversation changes from looking at ways to optimize the plan, to looking at ways to optimize decision-making processes when there are variances. They consider a set of capabilities that are fundamental to creating a competency in “sensing and responding” – from getting harmonized data, to being able to do quick simulations, to bringing teams together to make informed risk decisions and business tradeoffs.

We’ve posted a series of Kinaxis customer clips, among them are a few that speak to this theme. There are some pretty good insights that are definitely worthy of a listen.

TERADYNE

“…we haven’t been able to accurately forecast for a long time, and it was just fooling ourselves, and so years ago we really embraced this philosophy that, “No we can’t, so what can we do about it?”… and so what we began doing was… ”

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Sales and Operations Planning (S&OP) in the NOW, is happening NOW!

MattBenson
  • by Matt Benson
  • Published

A woman reviews an S&OP related documentAs I was presenting at the European Supply Chain and Logistics Summit last week, the overriding memory I’ll take away was the number of people that were nodding and pointing at the screen when I talked about how unplanned supply chain events that occur need to be addressed immediately and that they cannot wait to be included as part of a new S&OP cycle.

Traditionally, an S&OP cycle is a process geared towards taking a medium/long-term forecast, balancing with aggregate level resources and generating questions/answers to establish preventative action. Usually it’s seen as a monthly process that follows this cycle:

  1. Collate actual data and perform performance analysis
  2. Start demand planning cycle
  3. Establish supply status
  4. Perform balancing and establish variances
  5. Agree on corrective action and present solutions
  6. Executive decision and commit to the business

However, this process makes several broad assumptions:

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Top 25 Supply Chains Pt. 2: Epiphany About Speed

CJWehlage
  • by CJ Wehlage
  • Published

Amazon utilizes speed to become top supply chainIn part one of this blog series, I noted the changes, or lack thereof, to Gartner’s list of the Top 25 Supply Chains. After realizing little has changed, with the exception of creating a new “Masters” category, which doesn’t really fix anything in the rankings, I had two important thoughts and an epiphany.

Amazon’s #1 Position makes me think of two things:

Where in the world is Google?

Amazon is a software company that built expertise around services and distribution. That distribution model is fantastic for getting fast delivery. In the same light, I would advocate FedEx, UPS and DHL be in at least the Top 50 ranks.

Google is an internet company. Sure, they are known as a search engine, maps, communications, advertising, and services company. However, the key message from Gartner this year was the “digital” aspect of supply chains.

We tend to think of a traditional hardware company adding digital to its product and supply chain. However, let’s take direction from Guy Kawasaki (the Keynote speaker at the conference), and “Jump to the Next Curve”. What about a digital company that adds hardware? Google is adding cars, glasses, mobile, tablets, and even contact lens. And I believe Google should be added to the list.

Put Apple (and P&G) back in the Top 25

This isn’t because I used to work at Apple. I get it. People are tired of seeing Apple there every year. But, the problem isn’t fixed.

As I said in my May 2014 blog, where I predicted Amazon to be #1, Amazon has done everything great, except pull a profit. There’s been a lot spending on assets these past few years at Amazon. And soon that asset spending will be seen in their significant revenue growth. They’ve already finished in the top five, five years in a row, even with 0.0% ROA in 2015! My bet is that Amazon will be #1 for 2016 and 2017 (and then placed in the Masters category). Yet, the problem that left Apple at #1 for seven years, and potentially place Amazon at #1 for three years, will not have been fixed.

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The Supply Chain Dilemma – Do I Make House Repairs or Do I Redesign the Home?

LoriSmith
  • by Lori Smith
  • Published

Home renovations mimic supply chain dilemmaI live in a 40 year old house and in some ways it is certainly showing its age. When there is something that isn’t working, not meeting my needs, or simply has gotten out of date, I find myself asking the question of do I try to fix up what I have or replace it? There is a lot of maintenance needed to keep things running around the house, but for some things there comes a time when you have to ask “how far is this repair/upgrade going to take me?” If I keep investing just to maintain what I have, and at best, see an incremental improvement, when I am ever going to have the resources for re-designing and making real renovations? It is indeed a balancing act… and not at all unlike the decisions being made in managing supply chains.

A theme that resonated for me at the Gartner Supply Chain Executive conference the other week was the notion of “managing” versus “transforming”. There was a panel discussion on the Chief Supply Chain Officer (CSCO) Imperatives for Executing the Global Supply Chain Strategy where each of the panelists said that among their main priorities was balancing continuous improvement with transformative innovation. You have to do both. And of course technology investment is a key factor, given that most, if not all supply chain innovation will be supported by technology.

This point really hit home during Dwight Klappich and Chad Eschinger’s session where they discussed the results of their Supply Chain Technology User Wants and Needs Study. A key takeaway from the study was that SCM IT investment and supply chain maturity/performance go hand in hand.

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Why Having a Green Supply Chain Has Become a Necessity

AlexaCheater

A green supply chainIn honor of Earth Day I thought I’d take the opportunity to outline in my humble opinion why having a green supply chain is no longer a nice-to-have – it’s a necessity. Gone are the days when consumers would look the other way while companies rode roughshod over the environment in pursuit of a more profitable supply chain. Nowadays even governments (the good ones at least), are actively involved in making sure Mother Nature is protected, at least to some extent. Are you doing your part?

There is a growing need for sustainability integration into supply chain management and if you haven’t already started down the path to greener pastures you’re falling dangerously behind the trend, and it could be costing you more than you know.

According to a recent World Economic Forum report written in collaboration with Accenture, companies like UPS, SABMiller, DHL, Unilever and Nestle are among 25 multinational companies that have increased their revenue by up to 20% while cutting supply chain costs as much as 16% thanks to a focus on sustainability. Beyond Supply Chains: Empowering Value Chains outlines 31 best practices for businesses to follow in order to see similar results, in what they’ve termed “the triple supply chai

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Know sooner, act faster and accelerate your supply chain performance!

JohnWesterveld

A globe with highlighted routes representing supply chain performanceWhen things happen in supply chain, knowing sooner and acting faster can mean the difference between a major catastrophe and a minor hiccup in your supply chain performance. It can mean the difference between late orders and angry customers and the ability to win additional market share. It can mean the difference between getting fired and getting a promotion.

Imagine this scenario; you are a supply chain executive for a major U.S.-based electronics manufacturer. It’s a Sunday morning in May 2008. You’ve woken up and are reading the Sunday news. Suddenly you read something that makes you spill your coffee. There has been a major earthquake in Chengdu, China… where several of your key items are manufactured. This is bad…. very bad, but you know you have the tools to respond. By end of day Monday, you have identified the key items that are manufactured in that region, identified the customers and revenue impacted by the loss of those items, identified alternative sources, and were able to shift to new suppliers and reschedule orders. All with minimal impact to your customers.

Is this kind of performance too good to believe? Can you imagine your supply chain planning team being able to pull this off? Supply chain performance like this is not out of your grasp. It takes two things:

  1. Knowing sooner
  2. Acting Faster

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Push vs. Pull Strategies: Dealing with the On-Demand Market

AlexaCheater

Analog rabbit ears represent push strategies, streaming represents pull strategiesOur partner Celestica recently published the following article, ‘Staying Ahead of Today’s On-Demand Market: Push Versus Pull Strategies.’ The author, Robert Rejano, Processes and Applications Advisor, Celestia, discusses the key differences between push and pull strategies and their impact on the supply chain.

Rejano asks ‘So why does technology even matter when supply chain principles haven’t really changed in decades?” We explore the answer.

You can start the show… whenever you’re ready

Using an interesting analogy centered on the rapidly changing television industry, Rejano suggests push strategies are akin to old analog rabbit ears – you can watch the programs you’re interested in, but only when the network decides to air them. Pull strategies are more like today’s on-demand options. Think digital video recording (DVR) and online streaming. They allow you to choose what you want to watch, and when you want to watch it.

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Forecast Accuracy: Keep Your Demand Management Process Honest

AlexaCheater

forecast accuracy represented by a dart boardOur partner Celestica recently published the following article,Are you keeping your demand management process honest? The author, Eric C. Lange, Director of Demand Planning and S&OP Services at Celestica, examines forecast accuracy and the main components of a demand management measurement tool and process. We’ve outlined his recommendations below so you can help improve your forecast accuracy, leading to improved business operations and ultimately greater success.

Reporting Forecast Accuracy

Even with an established Sales and Operations Planning (S&OP) process, if you’re neglecting forecast accuracy measurement and reporting you’re missing a critical piece of the puzzle for demand management success. Yes, it’s often a difficult, time-consuming and complex endeavor, but not doing it limits the prospects for success for the entire process.

While calculating forecast accuracy is important, it’s not enough. You also need measurement and accuracy reports to determine the effectiveness of the entire demand management process.

There are three main components of a demand management measurement tool and process:

  • Decide the method to calculate forecast accuracy
  • Determine how to calculate and eliminate any forecast bias in the process
  • Manage all necessary data to evaluate the effectiveness of the demand management process

Once these components are in place, it’s time to move on to determining added value in the forecast.

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